Malaysia: Further stimulus to aid the economy – UOB

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting reviewed the recently announced extra set of stimulus measures in Malaysia.

Key Quotes

“The government announced a MYR 35bn short-term recovery plan (PENJANA) on 5 June. This is in addition to the PRIHATIN economic stimulus package announced in March and April worth MYR 260bn. This brings the total fiscal package to ~MYR 295bn or 20% of GDP.”

“The PENJANA plan covers some critical areas to save and create jobs, addresses SME funding and cash flow problems, assisting digital adoption, encouraging businesses to adhere to safety related measures, social protection for gig workers, tourism support, encouraging flexible work arrangements, property incentives, spending initiatives, tax incentives for foreign investments, and commodity sector support.”

“The fiscal deficit is now expected to widen to 5.8%-6.0% of GDP in 2020 after taking into account the additional measures without further revenue enhancements. The debt-to GDP ratio is expected to exceed the 55% self-imposed threshold. The government is likely to seek Parliament approval to raise the threshold.”