This article first appeared in The Edge Financial Daily on February 14, 2020

KUALA LUMPUR: The upcoming economic stimulus package by the Malaysian government to address the Covid-19 virus outbreak is expected  to involve all federal government ministries.

This was reported by Bloomberg yesterday, quoting Transport Minister Anthony Loke.

And the package will be introduced at end-February, according to Economic Affairs Minister Datuk Seri Mohamed Azmin Ali in a separate statement.  

The government, Mohamed Azmin said, will ensure that the stimulus package, as well as development projects that have been approved for this year, be implemented promptly.

The government is taking proactive steps to encourage domestic economic activities, he said, while continuing to encourage exports particularly for healthcare products, electrical and electronic products and palm oil-based products.

Earlier this week, the ministry of international trade and industry met associations representing key industries such as manufacturing and services to obtain input on the impact of the virus on their businesses.

So far, the government has identified transport, tourism, and manufacturing sectors as those that will be affected by the virus outbreak.

The outbreak has already affected the hotel industry, as cancellations soared after China announced a travel ban on its citizens. As of Sunday, booking cancellations have caused hoteliers to lose over RM40 million in revenue.

“Our best hopes are to minimise losses,” Malaysian Association of Hotels head Yap Lip Seng was quoted as saying in the Bloomberg report. “If the government doesn’t step in ... the industry may just collapse,” he reportedly said.

On Tuesday, Finance Minister Lim Guan Eng said the stimulus package would be brought forward to end-February or early March in light of the virus outbreak. The government had initially planned for the package to address potential risk from the US-China trade war which had already affected Malaysia’s economy in the fourth quarter of 2019.

This week, Bank Negara Malaysia (BNM) announced that Malaysia’s gross domestic product growth slowed to 3.6% for the last quarter, bringing 2019’s growth to 4.3%, the lowest since the global financial crisis a decade ago.

On Wednesday, BNM governor Datuk Nor Shamsiah Mohd Yunus said the virus will impact Malaysia’s economy “particularly for the first quarter”. She said the federal government has the capacity to push for the stimulus package, adding BNM has “ample room” to cut interest rate further from its current nine-year low of 2.75%. The last cut of 25 basis points was done in January.