Permai, the fifth economic stimulus package since the start of the Covid-19 pandemic, was unveiled yesterday by Prime Minister Muhyiddin Yassin. It was said to be worth RM15 billion and came on the back of the RM305 billion stimulus packages last year.
“While the government did not indicate direct fiscal injection from the Permai stimulus package, we estimate that the combined additional government expenditure incurred at no higher than RM2 billion or 0.1% of GDP (gross domestic product),” CGS-CIMB economists Michelle Chia and Lim Yee Ping wrote in a note today.
“The swift announcement of fiscal support provides some short-term reparations to affected households and businesses, although it does not completely offset the downside risk to the economic outlook.
“We expect each fortnight of MCO 2.0 to shave RM10 billion or 0.7% from our headline GDP growth forecast of 7.5% in 2021, which has not imputed the effects of MCO 2.0,” they added, referring to the second movement control order (MCO) imposed in several states and federal territories since Jan 13 due to the surge in Covid-19 cases.
The pair calculated the total sum of direct fiscal injection to be RM2.04 billion.
Apart from RM1 billion to extend the wage subsidy programme, they also took into account the RM650 million expansion of the Prihatin grant for small- and medium-sized enterprises, the RM150 million to recruit 3,500 frontliners, the RM100 million for private hospitals to admit patients, and a food basket programme worth RM50 million.
They also included RM24 million which will be allocated to fund delivery riders’ full contributions under Socso’s self-employment social security scheme and the RM66 million earmarked for 14,000 tour guides and 118,000 taxi, school bus, tour bus, e-hailing and rental vehicle drivers – who are set to receive a one-off financial aid of RM500.
The duo also said the scope for significant fiscal expansion may be constrained by the government’s debt ceiling and concerns over potential sovereign ratings action following Fitch’s downgrade in December.
Former finance minister Lim Guan Eng, meanwhile, estimated the direct spending under Permai to be around RM3.87 billion.
The Bagan MP said the initiatives from Permai were recycled from the 2021 budget or previously announced economic stimulus packages, adding that the package did not provide for any new cash injections to the economy.
Lim also pointed out that Permai did not provide any rental relief or subsidies for businesses suffering without any income, going on to question how Permai would slow down retrenchments, prevent business closures and save the livelihoods of ordinary Malaysians.
“The RM15 billion Permai aid package is too little and a far cry from the RM305 billion Prihatin economic stimulus package with a fiscal injection of RM45 billion unveiled last year to mitigate the negative impact on our economy from MCO 1.0,” the DAP secretary-general said in a statement.
“Despite such measures, the economy still slipped into recession and recorded the highest unemployment rate in decades of 4.8% in November 2020.
“How can a RM15 billion aid package, with an estimated direct spending of a mere RM3.87 billion repurposed or redirected from existing spending priorities, help our economy to recover?
“This ‘old wine in new bottle’ approach can be seen by Muhyiddin’s own admission that the funds required is not new money, but reallocated from existing funds in Budget 2021.”