The RM250 billion stimulus was announced yesterday. Article here. The discussion has already started in FB. Some say thank you. Some say it’s not enough. Some say it should be more detailed. Some say where is the money going to come from? Well, how about just hear what the Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz has to say about the state of the economy currently.
Article in malaymail.com Tengku Zafrul said, “I’m confident the financial system can support us as liquidity is still present in financial markets and that’s the reason why we are able to offer this huge financial package which amounts to RM250 billion. Our fiscal position is strong and, in these three to six months, more companies will start thinking outside the box.”
Tengku Zafrul said he and everyone in the ministry were worried about the Malaysian economy. One solution to ensure the economy continues to flow is to put money in the pockets of Malaysians. Beyond this, he added, “The solution must not be a ‘business as usual’ one. The important thing to do is to kickstart the economy with fiscal injections and the package announced by the government today does just that.” Please do refer to the full Article in malaymail.com
Monetary policy alone will not enough. Overnight Policy Rates (OPR) has been cut. (earlier article here) The Statutory Reserve Requirement (SRR) has also been lowered. (earlier article here) Many times, money which people may get may not be spent and instead kept in the bank instead because of the handed out may not be spent but is saved instead. We can look to Japan to understand how people kept saving even though they have already saved a lot simply because they were worried for the future.
Thus, it is important for the government to kickstart the economy through fiscal policies. The continuation of the infrastructure projects will definitely ensure many multiplier effects to the economy. More jobs for the contractors means more workers and these workers will also get money to spend and the economy continues to move. Hopefully we will be able to come out of this stronger. Stay home please.
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