Dr M: Malaysia can tap RM2 trillion savings to further stimulate economy

PUTRAJAYA (Feb 27): Malaysia has the flexibility to further tap RM2 trillion worth of savings in the country to help counter the negative impact of the COVID-19 outbreak.

“Malaysia has a lot of savings. Malaysia has almost RM2 trillion of savings, we will make use of some of these savings. Some with Tabung Haji, Bank Negara, KWAP, KWSP... All of them hold big reserves. And in the case of KWSP, it is almost RM1 trillion,” interim prime minister Tun Dr Mahathir Mohamad (pictured) told reporters after announcing a RM20 billion economic stimulus package to minimise the economic risks associated with the coronavirus outbreak.

“But there are other savings, [which] we can use to pay,” he added, without elaborating.

The newly announced RM20 billion stimulus package include the potential freeing up of up to RM10 billion for consumption boost by the 4% reduction of the minimum Employees Provident Fund (EPF) contribution by employees from 11% to 7% from April 1 to Dec 31, 2020. Malaysian workers have the option to maintain their contribution rate.

The EPF’s total investment assets stood at RM924.75 billion as at end-2019. The Retirement Fund Inc (KWAP)’s total fund size stood at RM136.5 billion as at end-2018.

Asked if the government will be issuing bonds to fund the stimulus package, Dr Mahathir said: “At the moment, we have enough source of money. But if necessary, we may issue bonds.”

On how the funds will be disbursed, Dr Mahathir said all the measures that have been listed in this stimulus package will be expedited in “terms of bureaucratic procedures”.

It is not immediately certain how much of the RM20 billion stimulus package require additional spending by the government or how much revenue it is giving up.

When delivering the stimulus speech, Dr Mahathir said the country’s fiscal deficit will rise to 3.4% of GDP from the original projected 3.2% of GDP.

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