GDP target within reach


PUTRAJAYA: Malaysia has revised its gross domestic product (GDP) to range from 3.2% to 4.2%, but is confident that the RM20bil economic stimulus package will enable the economy to achieve the higher side of the estimate, said Tun Dr Mahathir Mohamad (pic).

The interim Prime Minister said the revision was necessary following the global economic scenario and the impact of the Covid-19 outbreak.

The government had initially forecast Malaysia’s GDP growth for 2020 to be at 4.8%.

Dr Mahathir said in 2003, Malaysia experienced a similar situation with the outbreak of the Severe Acute Respiratory Syndrome (SARS), which saw growth going down, but the economy still recovered as a result of a comprehensive economic stimulus package.

“In formulating this stimulus package, the government exercised prudence with respect to its fiscal position. As a result of the stimulus package, fiscal deficit is estimated to increase slightly to 3.4% of the GDP, compared to the original target of 3.2%,” he said when unveiling the Economic Stimulus Package 2020 here yesterday.

On how the government plans to finance the package, Dr Mahathir said the country has RM2 trillion to RM3 trillion in savings, which can be used for this purpose.

“At the moment, we have enough sources of money, but if necessary, we may issue bonds,” he said.

To ease cash flow for businesses, the government will allow deferment of monthly income tax instalment payments for businesses in the tourism sector, and companies affected by Covid-19 can revise their profit estimates for 2020 with respect to monthly income tax instalment payments, without penalty.

The government will also provide a 15% discount on monthly electricity bills to hotels, travel agencies, airlines, shopping malls, conventions and exhibition centres starting April all the way to September.

“We are also proposing to exempt the 6% service tax for hotels, effective March to August,” he said.

The government will also provide financing facilities for affected companies, where Bank Negara will provide special relief facility worth RM2bil in the form of working capital for small and medium enterprises at an interest rate of 3.75%, and RM200mil in microcredit facility with an interest rate of 4%.

“All banks are required to provide financial relief in the form of payment moratorium comprising restructuring and rescheduling of loans for affected businesses and individuals,” he said.

To boost the people’s income and reduce cost of living, four initiatives will be undertaken, including a facility of RM1bil to promote food production to meet domestic and export demands.

Fama will be allocated RM10mil to provide food storage facilities to help reduce food prices and grants of RM1,000 will be given to 10,000 local entrepreneurs to promote their products on e-commerce platforms.

Dr Mahathir said in addition, the government will allocate an additional RM2bil for immediate implementation of small infrastructure repair and upgrading projects in rural areas.

To boost business confidence, the government will accelerate investment projects for 2020 such as the solar power generation, the national fibrerisation and connectivity plan, and Tenaga Nasional Bhd’s projects for LED streetlights, transmission lines and rooftop solar installations.

“The implementation of the economic stimulus package cannot be successfully delivered by the government alone. We call on the private sector to play their part in ensuring the stimulus package is successful.

“At the same time, we call on the people to remain steadfast, brave and diligent in prevailing over the current challenges, and emerge even stronger after this episode,” he said.

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