Government urged to speed up fiscal spending

KUALA LUMPUR: The implementation of fiscal spending must be sped up in light of the Covid-19 outbreak, The Associated Chinese Chambers of Commerce and Industry of Malaysia (Accim) said.

The government must identify some quick gain and turbocharged projects for fast track implementation, Accim added.

It said a larger deficit than 2020 Budget deficit’s target of 3.2 per cent gross domestic product (GDP) was conceivable to counteract the short-term shock.

Accim said 82.1 per cent respondents of its survey had expected the outbreak to dent their sales in January-March 2020. A total of 42.4 per cent of respondents expected their sales to drop by more than 20 per cent.

“Tourism-related services business will be hardest hit, with more than half (55.2 per cent) of businesses expect sales to plunge by more than 20 per cent, of which 22.4 per cent expect sales to drop by more than 30 per cent, owing to the cancellation of tours and hotels’ reservations. 20.7 per cent of total respondents expect sales to drop by 11-20 per cent.”

Towards this end, Accim said Malaysian businesses and households must remain vigilant and be prepared to brace for economic fallout from the outbreak.

“More importantly, the government must have the capacity and policy space to safeguard our economy against temporary disruptions while continuing to strengthen and reboot Malaysia’s competitiveness and comparative advantages in global market place,” it said in a statement.

Neverthless, Accim believes that Malaysia’s economic and financial fundamentals were resilient to withstand external shocks and the government was much more prepared to manage and contain the Covid-19 compared to the SARS in 2003.

Accim also said it had submitted a comprehensive package of economic and financial measures and initiatives to mitigate the impact.

“These cover health safety preventive measures, financial assistance and industry support as well as sustaining consumer resilience.”

They included a voluntary two per cent reduction in the Employees Provident Fund’s employee contribution rate, a double-deduction on employees’ salary expenses to assist employers through the difficult period as well as reverting the Real Property Gains Tax rate back to zero per cent and setting up a Business Disruption Relief Fund to assist the affected SMEs to obtain financing at a concessionary rate from all financial institutions.

Source: NST