Putrajaya’s Covid-19 rescue plan set to create history as largest ever

An empty Suria KLCC, the mall annexed to the Petronas Twin Towers in Kuala Lumpur. Experts warn that businesses will lose billions of dollars as a result of the movement control order.

KUALA LUMPUR: Putrajaya is set to unveil what will be Malaysia’s biggest stimulus package ever, dwarfing all other emergency economic measures in recent memory, sources tell FMT.

This comes as authorities begin getting the hang of the movement control order (MCO), which initially created panic and anxiety but has now turned cities and towns nationwide into a picture of calm.

That image, however, belies the frightening scenario that billions of ringgit in livelihoods and businesses will consequently be wiped out.

The sum of the stimulus package, to be announced by Prime Minister Muhyiddin Yassin today, will be “more than 10 times” the amount announced by his predecessor during the height of the political crisis last month, sources familiar with the matter told FMT.

“The government has pulled out all the stops to ensure it can deliver its promise that no one will be left behind,” it said.

Fulfilling that promise is all the more crucial as the administration, barely a month old, has been thrust into managing the country’s biggest crisis since independence.

Economists have given gloomy predictions on the economic toll of the deadly virus and the MCO forcing millions of Malaysians to stay at home.

Most agree that the result will be a spike in unemployment, and catastrophic for small and medium businesses affected by the MCO.

One estimate says some 2.4 million people will be jobless by the end of the crisis, most of whom hold non-salaried jobs, with unskilled workers making up two-thirds of the figure.

Announcing a two-week extension of the MCO on Wednesday, Muhyiddin promised a comprehensive economic stimulus package that would take into account all sectors, including e-hailing drivers, farmers, hawkers and restaurant owners.

“No one will be left behind,” he said in a speech telecast live.

The source said it would not be wrong to describe the stimulus package as “astronomical”, although much needed if the government is serious about including everybody.

“From fishermen in Terengganu, farmers in Sarawak, taxi drivers in Kuala Lumpur, the disabled to small and medium enterprises (SMEs) in every state, there is something for everyone,” the source said, citing conversations with those involved in preparing the package.

While refusing to give an exact figure, the source said the total amount would be “almost double” that of Singapore, which has so far set aside S$54.4 billion (RM163 billion) to support businesses, workers and families in the city-state.

By rough estimate, it could be anywhere around RM250 billion, which is almost one-fifth of the gross domestic product.

If true, this would be four times more than the RM60 billion announced by the government in 2009 in the wake of the global financial crisis.

It is understood that half of the amount to be announced will go towards ensuring the welfare of the public, with the bulk of the remainder going towards businesses.

On Feb 27, then-interim leader Dr Mahathir Mohamad announced a RM20 billion stimulus package to cushion the impact of Covid-19, to be implemented over a period of six months.

It included a 15% discount on electricity bills for airline companies and malls, as well as measures to put more money into people’s pockets by slashing workers’ contribution to the Employees Provident Fund from 11% to 7%, unlocking some RM10 billion in private consumption.

Days before Muhyiddin said he would announce another round of financial measures, experts, think tanks and politicians had warned of the need for a package that comprehensively addresses the havoc which the virus has wreaked on the people’s finances.

The Socio-Economic Research Centre called for a focus on easing cash flow and operating costs of SMEs while helping employers maintain their workforce.

The think tank’s executive director Lee Heng Guie told FMT they are proposing that the government provide wage subsidies of up to 70% to employers for up to six months to help companies with their cash flow.

“The government can also consider establishing a designated payroll fund to address cash flow needs for pay checks.”

That plan is already being carried out by governments worldwide.

The UK government said it would cover 80% of lost wages up to £2,500 a month. Closer to home, Singapore is offsetting 25% of wages for every local worker up to a monthly wage cap of S$4,600.