KUALA LUMPUR, Feb 16 – Malaysia’s stimulus package may not be enough to stave off a potential recession.
Ambank research said today that Malaysia needs a stimulus package equivalent to 5 per cent of GDP or RM40 billion and the measures should include middle-income groups and not just low-income groups.
Ambank points out that other countries have unveiled stimulus packages that are, as a proportion of GDP, far larger than Malaysia’s.
It cited cases such as the United States which is spending US$1.5 trillion or 11 per cent of GDP; China – US$586 billion or 16 per cent of GDP; and Singapore US$13.8 billion or 10.7 per cent of GDP.
Malaysia, by contrast has so far announced stimulus spending only about US$2 billion (RM7 billion) or a mere 1 per cent of GDP.
“We think Malaysia’s package, as per GDP ratio, may not be sufficient to prevent a potential recession,” says Ambank.
The research house also believes that the second mini stimulus package to be announced on March 10 will be around RM10-15 billion, which even when combined with the first package, is still well below its recommendation of RM40 billion.
“While increased public spending is a step in the right direction, we are of the view that more money should be injected into Malaysia’s system, especially when external demand is terminally ill and rising unemployment is impacting domestic demand,” says Ambank.
“It would be more effective if the government were to consider one-off cash vouchers or a cash bonus system for middle- and low-income workers as well as a tax-free year for 2008 which we will need to file by April and June this year.”
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Circular No 106/2012: Accountant’s Report 2011
