● Government is set to announce a stimulus package on 27 February to offset the damage to the economy arising from the COVID-19 outbreak.

- Businesses that are affected directly by the outbreak are being severely impacted, facing cash flow and financial constraints due to travel cancellations, a sharp drop in spending and investment as well as supply-chain dislocation. Affected companies need to act promptly in exploring alternative sources of revenue, minimising the short and long term impact on their operations.

- Expeditious action: A swifter roll-out of fiscal measures this time around would be imperative to avert prolonged economic fallout. To recap, stimulus package announcement for SARS was two months after the first reported case in Malaysia compared to one month for the COVID-19 epidemic.

● Comparison of measures deployed during SARS in 2003 and Singapore’s COVID-19 stimulus package:

- Malaysia’s SARS stimulus package (RM7.3b; 2.0% of GDP): comprised of 90 measures designed to provide immediate relief to affected sectors. Measures include special relief guarantee facility, reduction of employees’ EPF contribution, rental rates reduction at Malaysia Airport Holdings Bhd. premises and one-off reduction in road tax for taxis.

- Singapore’s COVID-19 stimulus package (SGD6.4b; 1.3% of GDP): amount exceeds its SARS stimulus package (SGD230m; 0.1% of GDP). Consists of stabilisation and support package (SGD4.0b) for workers and enterprises, care and support package (SGD1.6b) for households and fund for front-line agencies fighting the outbreak (SGD800m). Measures include wage cost incentives, corporate income tax rebates, one-off cash payout ranging from SGD100-300 for citizens aged 21 and above, as well as property tax rebates and rental waivers for sectors directly hit by the outbreak (i.e. tourism, aviation, retail, food services, point-to-point transport services).

Source: Kenanga Research - 24 Feb 2020