Malaysia forms panel to combat economic impact from virus, oil price crash

Malaysia's Prime Minister Muhyiddin Yassin speaks during a news conference in Putrajaya, Malaysia, 11 March - Reuters

KUALA LUMPUR (Reuters): Malaysia’s new government will set up an economic action council to tackle serious risks to the economy, notably the impact of the coronavirus epidemic on trade and a crash in global oil prices, Prime Minister Muhyiddin Yassin said on Wednesday.

Muhyiddin was sworn in as premier last week after days of political chaos following the abrupt resignation of veteran leader Mahathir Mohamad last month.

While Malaysia has reported 129 cases of coronavirus, the epidemic elsewhere poses a huge risk to its export markets, and the oil price crash will hit earnings from exports of liquefied natural gas.

The economic action council, to be formed with senior ministers, the central bank governor and other experts, will review the country’s finances to decide whether there is a need to recalibrate the government’s budget, Muhyiddin told reporters after chairing his first cabinet meeting.

“The cabinet is cognisant that the situation facing the country is not good,” he said. “This is an immediate step to show the country we are not waiting on the sidelines.”

Muhyiddin said a 20 billion ringgit ($ 4.73 billion) stimulus package announced last month will be re-tabled after a review to see whether additional funds were needed.

“This is to ensure that targeted groups can get the benefits of this stimulus package, as well as to restore investors’ confidence…,” he said.

The government will also “consider all options”, Muhyiddin said when asked whether he plans to reintroduce the Goods and Services Tax. The unpopular 6% consumption tax was removed by Mahathir’s administration in 2018, cutting off a significant source of government revenue.