KUALA LUMPUR, Feb 6 (Reuters) – Malaysia’s government is willing to undertake “radical” measures to boost demand in the export-dependent economy, the country’s deputy prime minister said.
Malaysia has already injected $2 billion to boost the economy and a source familiar with the government’s plans told Reuters on Tuesday it is now looking at a second fiscal package which could be presented as soon as March. [ID:nKLR417925]
“We will not hesitate to take drastic, and even radical measures, if necessary,” Najib Razak, who is also the finance minister, told a finance industry event late on Thursday, according to state news agency Bernama.
The first fiscal package, funded largely from savings on a fuel subsidy scheme, has been criticised for being too small and for not reaching those it was intended to help.
By the standards of other Asian countries that are heavily dependent on exports, Malaysia’s response to the crisis has been muted. By contrast, neighbouring Singapore has announced a S$20.5 billion fiscal boost.
Malaysia’s government still forecasts that it can expect economic growth of 3.5 percent this year, a level most economists say is not achievable amid collapsing global demand for exports.
Major Malaysian investment bank CIMB on Friday cut its 209 growth forecast for the country to 0.8 percent from 3.0 percent and said that it expected gross exports to slow by 10-12 percent compared with an earlier estimate of a 3-6 percent fall.
CIMB said in a report that possible new measures to boost the Malaysian economy could include a retraining allowance, a temporary reduction of employers’ contributions to the state pension fund, as well as the lowering of electricity tariffs.
“Regardless of the size of the economic stabilisation package, the agencies and ministries involved must implement the projects efficiently and without delay,” CIMB said.
“In the current economic conditions, spending increases, and targeted tax cuts and transfers are likely to have the highest multipliers,” it said in a report.
Source : Reuters