Another stimulus package needed to fight economic headwinds, says Penang CM’S adviser
GEORGE TOWN: There might be a need to inject a second stimulus package into the economy as Malaysia could be edging into a “perfect storm” of uncertainties due to the pandemic and political chaos.
Special Investment Adviser to the (Penang) Chief Minister Datuk Seri Lee Kah Choon said that it was timely that the newly formed federal government had expedited the first package which was essentially aimed at the services sector, particularly tourism.
However, due to the prolonged external issues and the prevailing effect from Covid–19, he said there is a need to further consolidate the economy through more stimulus measures and be prepared for shocks from the external front.
As global oil prices collapsed to below USD$30 per barrel due to a supply disagreement between Saudi Arabia and Russia, he said it will have serious implication on Malaysia’s revenue considering that the oil price assumption is US$62 per barrel under Budget 2020.
Moreover, the pandemic has already wreaked havoc in the tourism industry, scuttling the “Visit Malaysia 2020” campaign’s projected revenue.
If it spreads to the manufacturing sector, the impact is huge as it contributes 20% to the gross domestic product (GDP).
Lee said it is now up to the newly minted Finance Minister Tengku Zafrul Tengku Abdul Aziz to implement the revitalisation plans as soon as possible.
“The task for him is a tough one though. It is very brave of him to take up this job at this difficult time. We, as Malaysians, should give all the support he needs to tackle all these challenges.”
He opined that the immediate task is to shore up the financial market’s confidence in Malaysia.
“The growth rate of 3.6% for Q4 in 2019 is the slowest in years. With all the external headwinds, it is expected that Q1 2020 will be even worse.”
Lee also noted that Malaysia is being scrutinised by the global rating agencies and any downgrade to the sovereign ratings will impact the country and jack up cost of borrowing.