PETALING JAYA: Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz (pic) has reaffirmed the government’s preparedness to provide additional fiscal support.
In addition to the RM530bil stimulus measures announced, of which RM83bil came directly from its coffers, the government stands ready to unveil new fiscal assistance if needed.
This is to preserve the well-being of people and businesses as well as strengthen the national healthcare system, while minimising the scarring to the overall economy.
“Should the need arise again, we will provide fiscal support through a combination of cost rationalisation, dividend from the government ecosystem as well as increasing the debt ceiling in order to facilitate more borrowings,” he said.
However, Tengku Zafrul pointed out that the country would have to face a larger fiscal deficit this year, even without new stimulus measures in the near term.
“The fiscal deficit in 2021 is expected to increase from 5.4% (previous estimate) to 6.5% to 7%, with our statutory debt level expected to increase to above 60% and hence, hitting the ceiling by the end of the year.
“When the crisis subsides in the mid to the longer-term, the government will resume its path of fiscal consolidation, guided by our medium-term fiscal framework and supported by the gradual implementation of the medium-term revenue strategy which aims to improve the country’s revenue base.
“This will balance our short-term fiscal requirements with long-term fiscal and economic sustainability,” he said during the virtually-held national recovery summit, on Winning the war against Covid-19 – The road to recovery, yesterday.
It was jointly organised by the National Recovery Council, the Economic Club of Kuala Lumpur (ECKL) and the KSI Strategic Institute for Asia-Pacific.
Since the onset of the Covid-19 pandemic, the government has introduced eight assistance packages in addition to Budget 2021.
“All in, over RM260bil has been disbursed as at end-July, benefiting over 20 million rakyat and 2.4 million businesses, with RM300bil left to be spent this year.
This includes a further RM10bil which will be disbursed of not only direct aid for Bottom 40 and Mid 40 groups, but also targeted assistance for gig workers, the hardcore poor, the unemployed, as well as increased support for mental health issues,” he said.
In the immediate term, the Finance Minister said the National Recovery Plan (NRP) and Budget 2022 are key policy measures that would aid the hardest-hit sectors and most affected households through targeted measures. Budget 2022 is conceptualised as a recovery budget to complement the government’s wider and longer-term reform efforts under the 12th Malaysia Plan.
“It is my hope that the NRP and Budget 2022 will serve as a template not just on how to exit the pandemic, but also on how to navigate the more pressing challenges. We will harness data to help us be more agile and responsive, underscored by the spirit of inclusivity, to serve us on our continued path towards better resilience,” he said.
Tengku Zafrul also highlighted that a critical ingredient for the country’s recovery is the Malaysian Digital Economy Blueprint or MyDigital, to drive the business sector to compete on the global arena by addressing both digital infrastructure and digital ecosystem.
It includes investments through the National Digital Network or Jendela project, investments to strengthen connectivity to the international submarine cable network until 2023, a 10-year plan for the implementation of 5G nationwide and in cloud services.On 5G aspirations, Tengku Zafrul said the government is accelerating the development and growth of high-speed, affordable and reliable 5G connectivity and coverage.
“We will kick-start Phase One with 10% 5G coverage in Kuala Lumpur, Putrajaya and Cyberjaya by end-2021.
Thereafter, it is planned to reach 40% coverage in popuated areas by the end of 2022 and will be extended nationwide to cover other urban and rural areas and industrial parks, with a target of 80% coverage in populated areas by end-2024.
Meanwhile, ECKL chairman Tan Sri Abdul Wahid Omar said during the virtual summit that no amount of stimulus packages or financial assistance will be enough as long as the economy remains substantially closed.
“We welcome the announcement of Klang Valley moving into Phase Two of the NRP from Sept 10. As more economic activities are permitted gradually in line with the NRP, the prospects of achieving 4% gross domestic product growth in 2021 will become clearer,” he said.
Wahid, who is also the chairman of Bursa Malaysia Bhd, said the government must continue with additional reform agenda, following the introduction of the Perkukuh Pelaburan Rakyat initiative last month to reform the mandate of government-linked investment companies.
He called for labour reform to be undertaken in Malaysia which involves, among others, a gradual planned increase in minimum wage moving towards “living wage” and reviewing the national policy on recruitment of foreign labour.
On foreign labour, the allegations of forced labour and modern slavery affecting some plantation companies and rubber glove manufacturing companies need immediate attention, according to Wahid.
“This is a major pressing issue that needs to be addressed by the government in two areas.
“One is in respect of engaging with the US government to secure the upliftment of the Withhold Release Orders (WRO) by the US Customs and Borders Protection issued to four Malaysian companies.
“Second is in respect of the policy on the appointment of the foreign recruitment agents which charge exorbitant fees on the foreign workers,” he said.
Unless addressed urgently, Wahid warned that the WRO and the categorisation of Malaysia as a tier-three country under the Trafficking in Persons report will cause untold damage to the Malaysian economy.
“In line with the global commitment towards sustainability or environmental, social and governance, many global businesses will exclude companies that are accused of engaging in forced labour practices and modern slavery from the supply chain. If this spreads to the electrical and electronic sector, the damage will be irreparable,” he said.