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Malaysia to re-assess needs to add to stimulus package

Economic council reestablished, will meet weekly to sharpen policy focus

Malaysia's Prime Minister Muhyiddin Yassin speaks during a news conference in Putrajaya.   © Reuters

KUALA LUMPUR (Nikkei Markets) -- Malaysia will re-examine a $4.75 billion stimulus package to assess whether any additional support is needed for the economy where prospective growth faces risks from a widespread coronavirus outbreak, the prime minister said Wednesday.

"Stimulus package that was announced by the previous government will be presented again after we review whether more can be added to the amount that was presented," Muhyiddin Yassin said at a news conference in Putrajaya. "We will relook at the details and in one week-to-two weeks, it will be presented."

In addition, the cabinet has also agreed to re-establish an economic action council that will be chaired by the prime minister and will include finance minister, economic minister, trade minister and other officials to help the government design policies, Muhyiddin said.

Last month, Malaysia announced a stimulus package worth 20 billion ringgit aimed at easing businesses' cash flow, assist COVID-19 affected individuals, and stimulate demand at travel and tourism sector.

In addition, Bank Negara Malaysia have also cut the benchmark policy interest rate on March 3 to its lowest in a decade to support growth as the Southeast Asian nation grapples with rising number of COVID-19 infected cases domestically.

Over 100 COVID-19 cases have been detected in Malaysia as of Wednesday. Globally, nearly 4,300 people have died from the highly-contagious coronavirus and more than 117,000 people have been infected. The outbreak has prompted several plants and offices to shut operations, which have crimped economic activities and disrupted global supply chains.

Meanwhile, the finance ministry has been instructed to look at the federal budget targets set by the previous administration and it will be discussed at the next economic action council's meeting, Muhyiddin said.

"The (council) meeting will be every week on Monday", he noted. "We will see the financial situation of the country, whether it is needed to calibrate (the budget) or not."

The previous government led by Mahathir Mohamad was dissolved in February after lawmakers from his coalition, including Muhyiddin, defected to form a new alliance with parties defeated in the 2018 national elections.

Collapse of the 21-month-old government came even as economists warned that timely implementation of the Mahathir-announced stimulus package is critical to combat any economic shock from the global outbreak that has hurt consumer spending and weighed on business activities.

The current government will also look at options to bolster revenue including the scrapped Goods and Services Tax and the reintroduced Sales and Services Tax regime "for the sake of fiscal policy and to strengthen economic growth," Muhyiddin added.

Fiscal deficit is estimated to stretch to 3.4% of gross domestic product from the original target of 3.2% this year following the stimulus package, according to government projections. Ratings agencies, including Moody's Investors Service have already flagged potential fiscal slippage.

-- Sarah Nadlin Rohim

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