RM45bil Covid-19 Fund law tabled in Parliament

Reports by MARTIN CARVALHO, HEMANANTHANI SIVANANDAM, TARRENCE TAN and FATIMAH ZAINAL

A BILL to set up a RM45bil Government Covid-19 Fund has been tabled in Parliament for first reading.

The Temporary Measures for Government Financing (Coronavirus Disease 2019 (Covid-19)) Bill 2020 was tabled by Deputy Finance Minister Mohd Shahar Abdullah and is expected to be passed during the present Dewan Rakyat meeting.

The RM45bil Covid-19 Fund will be used for the economic stimulus packages announced by the government due to the pandemic.

The Bill, once passed, will operate retrospectively beginning Feb 27 this year and will be in force until Dec 31,2022.

It will allow government borrowings to increase from the current permissible statutory level.

The proposed Bill will raise the ceiling with regard to the total amount which the government is allowed to raise under the Loan (Local) Act.

The proposed Bill will also raise the ceiling with regard to the total amount the government is allowed to receive under the Government Funding Act for the purpose of setting up the Covid-19 Fund.

The current ceiling amount which the government is permitted to raise and receive is 55% of the nation’s gross domestic product (GDP).

The Bill, when passed, will raise the ceiling to 60% of the GDP and allow the government to increase its borrowings.

On July 15, Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said Malaysia’s outstanding public debt was about the ratio of Malaysia’s accumulated debt to GDP at the end of June, which was 53.2%.

He warned that the country’s debt level could hit the statutory limit of 55% of the GDP by the end of the year following implementation of economic stimulus packages to “save lives, protect livelihoods and stimulate the economy due to the Covid-19 pandemic”.

The government had announced a total of four economic stimulus packages since Feb 27 this year.

A total of RM16.8bil from the Covid-19 Fund will be used for wage subsidy, job retention, workers’ hiring and training assistance.

The Covid-19 Fund will also be used for Bantuan Prihatin Nasional (RM11.2bil), small-scale projects (RM4bil), skills and training (RM2bil), Penjana SME financing (RM2bil) and the Perihatin SME grant (RM1.9bil).

The fund will also be used for microcredit loans (RM1bil), the Health Ministry (RM1bil), food security (RM1bil), special allowance for frontliners (RM1bil), the Penjana national fund (RM600mil), ePenjana (RM520mil), electricity bills (RM500mil), Bantuan Sara Hidup (RM300mil) and higher education student assistance (RM600mil).

Also coming under the Covid-19 fund are bumiputra relief financing (RM200mil), the MY30 subsidy (RM200mil), assistance to affected commercial drivers (RM160mil), vulnerable groups (RM110,000,000), automation (RM100mil), MyCreative Venture (RM100mil), gig economy protection and training (RM75mil), E-Dagang for SMEs and micro enterprises (RM70mil) and Peka B40 (RM50mil).

The fund will also be used for Shop Malaysia Online (RM70mil), childcare centres and kindergartens (RM50mil), digital content (RM35mil), NGOs (RM25mil), digitisation of government delivery system (RM20mil), the Cultural Economy Development Agency (RM10mil) and MyAssit SME (RM5mil).