COVID-19 temporary measures to brace govt's economic revival efforts

The Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (COVID-19) Bill 2020 which received an aye at the Second Meeting of the Third Term of the 14th Parliament that ended yesterday will brace the government’s efforts to revive the country’s pandemic-ravaged economy.

Economic activities almost came to a complete standstill when steps such as the movement control order were taken to flatten the coronavirus curve, causing the country’s gross domestic product (GDP) to contract by 17.1 per cent in the second quarter of 2020.

The bill tabled by Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz for the third reading on Aug 24 was passed by majority vote.

The nod provides for an additional RM45 billion to be injected into the COVID-19 Fund and the federal government’s statutory debt limit raised to 60 per cent of the GDP from 55 per cent.

The higher percentage was necessary to finance the inevitable deficit following the implementation of the economic stimulus and recovery packages through direct fiscal injection, Tengku Zafrul had said when winding-up the debate for his ministry on the royal address at the Dewan Rakyat on Aug 6.

The minister said the accumulated debt-to-GDP ratio, which was set at 55 per cent, encompassed Malaysian Government Securities (MGS), Malaysian Government Investment Issues (MGII) and Malaysian Islamic Treasury Bills.

The 25-day parliamentary sitting which began on Aug 13, deliberated on various issues related to the economy, national debt, commodities, targeted moratoriums and the organisation of the Asia-Pacific Economic Cooperation (APEC) 2020 summit amid the COVID-19 pandemic.

In the last week of the session, Tengku Zafrul also revealed that Pakatan Harapan during its administration had awarded 101 projects worth RM6.61 billion via direct negotiations, which prompted an uproar among members of parliament both from the government and opposition.

On Wednesday, the Ministry of Finance (MoF) followed up the revelation with the list of ministries and departments that received government procurement approval via direct negotiation.

On the first day of the session, Prime Minister Tan Sri Muhyiddin Yassin pledged that no Malaysians, particularly those in the B40 group would be left out of the Prihatin Rakyat Economic Stimulus Package (PRIHATIN).

“We will ensure that all groups, especially those in Sabah and Sarawak will not be neglected in getting government assistance to ease their burden in light of the COVID-19 pandemic,” he said.

The government has since put into gear, the implementation of the PRIHATIN worth RM250 billion, PRIHATIN Plus worth RM10 billion and National Economic Recovery Plan (PENJANA) worth RM35 billion to mitigate the effects of COVID-19.

Senior Minister and Minister of International Trade and Industry Datuk Seri Mohamed Azmin Ali said the APEC 2020 summit would be held at the end of the year as scheduled.

Malaysia has taken proactive steps for APEC’s work programme to proceed using the virtual or digital conference format at the working group and senior official level.

Meanwhile, the extension of the moratorium for businesses and individuals affected by COVID-19 was among the issues raised in the Dewan Rakyat.

Former finance minister Lim Guan Eng (PH-Bagan) proposed that the moratorium on loans and financing be extended for another six months.

Former prime minister Datuk Seri Najib Tun Razak (BN-Pekan) proposed that the motion to raise the statutory debt limit be moved immediately.

The move would afford the government sufficient fiscal space to provide the necessary assistance in rejuvenating the economy, post COVID-19.

There is no provision under the Loan (Local) Act 1959 (Act 637) and the Government Funding Act 1983 (Act 275), to allow the government to borrow again when the national debt exceeds the statutory debt limit-GDP ratio.

The value of Malaysia’s palm oil exports this year is expected to be between RM65 billion and RM70 billion in spite of the impact of COVID-19 on the world, as compared to RM63.73 billion in 2019, said Plantation Industries and Commodities Minister, Datuk Dr Mohd Khairuddin Aman Razali.

The Federal Land Development Authority (Felda) is said to be negotiating with the Finance Ministry in Government Guaranteed Sukuk issuance for its loan restructuring.

If the bid is successful, it will be the second sukuk issuance for Felda after the first one in 2018 worth RM2 billion, said Minister in the Prime Minister's Department (Economy), Datuk Seri Mustapa Mohamed.

He said the government had set up a special team chaired by Tan Sri Abdul Wahid Omar to find the best approach in ensuring Felda’s independence and financial sustainability for the benefit of the settlers.

The Malaysian Investment Development Authority (MIDA) has identified 433 potential projects for investment worth RM97.4 billion within the country.

Senior Minister and Minister of International Trade and Industry, Datuk Seri Mohamed Azmin Ali said the high-impact projects will have a direct impact on the country's economic growth.

Despite being hit by the COVID-19 pandemic, various initiatives have been implemented by the government, in particular, the tax exemptions under the PRIHATIN initiative, he said.

The Dewan Rakyat also passed the Temporary Measures for Government Financing (Coronavirus Disease 2019 (COVID-19)) Bill 2020 on Monday and the Insolvency (Amendment) Bill 2020 to amend the Insolvency Act 1967 (Act 360) on Tuesday.

Aside from that, four motions moved by the Ministry of Finance on government funding and taxation were approved unanimously.

The motions were on the transfer of Malaysian Government Investment Issues (MGII) to the Development Fund under the Government Funding Act 1983 (Act 275), Customs Duties Order, Excise Duties Order, and Sales Tax Order.

The Cooperatives (Amendment) Bill 2020 was also tabled for first reading by Entrepreneur and Cooperative Development deputy minister Datuk Mas Ermieyati Samsudin. The second reading will be tabled at the next Dewan Rakyat sitting.

During the last week of the session, issues on disbursement of Prihatin Nasional 2.0 assistance, national debt, and vacancy tax to be imposed on owners of properties left vacant and unsold within a certain period also gained attention.

Tengku Zafrul said the Prihatin Nasional 2.0 assistance would be reviewed from time to time and that the government was prepared to provide additional stimulus if necessary. To date, more than one million Malaysians have received the RM50 e-Penjana initiative.

Government debt stands at RM854.1 billion or 57.7 per cent of the GDP and is at 53.2 per cent of the statutory limit.

The Ministry of Plantation Industries and Commodities said various efforts had been initiated to explore new markets for palm oil such as the interior of China, Central Asian countries, the Balkans, Eastern Europe, the Caribbean Islands and African countries.

Promotion missions to such countries are also meant to strengthen existing bilateral cooperation frameworks and facilitate acceptance of Malaysian palm oil on the best export terms.