Asia Economy

Malaysia's Covid lockdown puts 'a lot of pressure' on government finances, says minister

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Key Points
  • Malaysia's government finances are becoming "very constrained" as a surge in Covid-19 infections has once again forced the country into a lockdown, said International Trade and Industry Ministry Mohamed Azmin Ali.
  • The government has announced a new stimulus package worth 40 billion Malaysian ringgit (roughly $9.68 billion) to help businesses and households cope with a "total lockdown" that started Tuesday.
  • Malaysia's Covid-19 outbreak has substantially worsened despite the government imposing lockdowns of varying degrees over the past year.
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Malaysia's minister says country is looking to ramp up vaccination program

Malaysia's government finances are becoming "very constrained" as a surge in Covid-19 infections has once again forced the country into a lockdown, International Trade and Industry Minister Mohamed Azmin Ali told CNBC on Friday.

The Malaysian government has announced a new stimulus package worth 40 billion Malaysian ringgit (roughly $9.68 billion) to help businesses and households cope with another round of "total lockdown" that started on Tuesday.

That latest stimulus came on top of six prior packages worth a total 340 billion Malaysian ringgit (around $82.31 billion) rolled out over the past year. The government said the additional spending could push 2021's fiscal deficit above its target of 6% of gross domestic product.

People wearing face masks walk in front of the Petronas Twin Towers in Kuala Lumpur, Malaysia, Jan. 29, 2021.
Xinhua News Agency | Getty Images

"Certainly this is (putting) a lot of pressure on our fiscal space, but again ... we have no other options except to look at various options to support the industries, the SMEs and also the informal sectors so that they can continue with their economic activities," Azmin told CNBC's "Squawk Box Asia."

During the June 1-14 "total lockdown," businesses offering essential services will remain open while certain segments of the manufacturing sector can operate with reduced capacity.

Azmin and his ministry have been criticized by opposition politicians and the Malaysian public for allowing some nonessential businesses — such as a furniture firm and a brewery — to operate during the lockdown, according to media reports.  

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In a Thursday statement, Azmin said his ministry is not the only one granting permissions to companies that applied to remain open during the lockdown. He added that only 128,150 businesses — involving 1.57 million workers — had obtained approvals to do so, out of 586,308 that applied for permission, according to the Malay language statement translated by CNBC.     

Malaysia's Covid-19 outbreak has substantially worsened despite the government imposing lockdowns of varying degrees over the past year.

Last week, the Southeast Asian country reported five consecutive days of record infections and on Wednesday registered its largest daily death toll since the start of 2020. Overall, Malaysia has confirmed more than 595,000 Covid cases and 3,096 deaths, data from the health ministry showed on Thursday.

Malaysian director-general of health, Dr. Noor Hisham Abdullah, has urged people to stay at home to break the chain of transmission. A leading figure in the country's fight against Covid, Noor Hisham warned that the health system could be paralyzed if cases continue to surge.

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

"We expect to reach the 80% vaccination target as early as August 2021," said the minister.

But Malaysia's vaccination progress has been slow. Only 6.2% of the country's roughly 32 million population have received at least one dose of the Covid vaccine, according to data compiled by statistics site Our World in Data.