The lockdown in Malaysia is placing a pressure on state funds, Minister says

People wearing face masks walk in front of the Petronas Twin Towers in Kuala Lumpur, Malaysia on January 29, 2021.

Xinhua News Agency | Getty Images

Malaysia’s public finances will be “severely constrained” as a surge in Covid-19 infections has forced the country into lockdown again, Minister of International Trade and Industry Mohamed Azmin Ali told CNBC on Friday.

The Malaysian government has announced a new stimulus package worth 40 billion Malaysian ringgit (approximately $ 9.68 billion) to help businesses and households tackle yet another round of “total lockdown” that began Tuesday.

This latest stimulus came on top of six previous packages worth a total of 340 billion Malaysian ringgit (around $ 82.31 billion) launched last year. The government said the additional spending could push the budget deficit above its target of 6% of gross domestic product in 2021.

“Of course this puts a heavy strain on our fiscal space, but here too … we have no other options than to examine different options to support industry, SMEs and also the informal sector so that they can continue their economic activities”, Azmin told CNBC’s Squawk Box Asia.

During the “total lockdown” from June 1st to 14th, companies offering essential services will remain open, while certain segments of manufacturing will be able to operate at reduced capacity.

Azmin and his ministry have been criticized by opposition politicians and the Malaysian public for allowing them to run some non-essential businesses – such as a furniture company and a brewery – during the lockdown, according to media reports.

In a statement Thursday, Azmin said his ministry is not the only one issuing permits to companies that have requested to stay open during the lockdown. He added that according to the statement translated in Malay by CNBC, only 128,150 companies – with 1.57 million employees – had received approval, out of 586,308 that applied for approval.

The Covid-19 outbreak in Malaysia has worsened significantly, despite varying degrees of lockdowns by the government over the past year.

Last week, the Southeast Asian country reported record infections five days in a row and on Wednesday recorded the highest daily death toll since early 2020. In total, Malaysia has confirmed more than 595,000 Covid cases and 3,096 deaths, data from the Ministry of Health showed on Thursday.

The Malaysian Director General for Health, Dr. Noor Hisham Abdullah has urged people to stay home to break the chain of transmission. Noor Hisham, a leading figure in the country’s fight against Covid, warned that the health system could be crippled if cases continue to increase.

Azmin said the government is accelerating its national vaccination campaign. He explained that the strategy is to give more than 200,000 doses a day by the end of this month and double that amount over the next month.

“We assume that the vaccination target of 80% will be achieved by August 2021,” said the minister.

But Malaysia’s vaccination progress has been slow. Only 6.2% of the country’s 32 million inhabitants have received at least one dose of the Covid vaccine, according to the statistics page Our World in Data.