Malaysia business news: Due to the current COVID-19 pandemic, Malaysia is undergoing a rising unemployment rate.
Dr Mohd Afzanizam Abdul Rashid, chief economist of Bank Islam Malaysia Bhd said the job market will remain an issue as the unemployment rate will likely stay higher.
“The challenge is how jobs can be created swiftly at a time when there are restrictions on economic activities. Hence, businesses will focus on their available resources, which include labour,” he said.
In the fourth quarter of 2020 (4Q20), the country’s economy reduced by 3.4%. This has caused the gull-year GDP performance in 2020 to decrease by 5.6%, the largest decline since 7.4% in 1998.
Datuk Nor Shamsiah Mohd Yunus, Bank Negara Malaysia (BNM) governor noted the 2021 economic outlook will be shown in BNM’s annual Economic and Monetary Review report that will be released next month.
Besides, Nor Shamsiah said the 125-basis-point reduction in Overnight Policy Rate (OPR) in 2020 would continue to provide stimulus to the economy in 2021. The Monetary Policy Committee considers the stance of monetary policy is accommodative and suitable.
Moreover, she added that the fiscal space for the pandemic has to be remodelled. Multiple reform initiatives and a medium-term fiscal plan have guided the fiscal space. The reform initiatives include the formulation of the Fiscal Responsibility Act and the initiation of a medium-term revenue plan.
The Ministry of Finance is working hard to reduce leakages, enhance the tax framework, and expand the revenue base. All these efforts will ensure the long-term sustainability of Malaysia’s economic position. The fiscal deficit target maintained at 5.4% of GDP in 2021.
1.4 million Malaysians have applied for repayment assistance and about 45% of borrowers are hoping for a reduction in monthly instalments.
Licenses of BNM
The faster the pandemic is under control, the faster the domestic spending to complement strengthening export demand will recover.
Besides, 40 parties have registered their interest with BNM to register for digital banking licenses. Five digital banking licenses may be given to qualified applicants and the central bank may receive the licenses in 1Q22.
BNM issued the Exposure Draft on Licensing Framework for digital banks that form part of the series of the banks’ initiatives. The central bank has set June 30, 2021, as the deadline for submission of applications for digital banking licenses.
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