EDB requests President for ‘Malaysian’ stimulus
By Charindra Chandrasena
Considering the impact of coronavirus (COVID-19) on Sri Lanka’s raw material imports, the Export Development Board (EDB) has formally requested the Government to provide a stimulus package similar to that offered by the Malaysian Government.
This request has been made by EDB Chairman Prabhash Subasinghe from President Gotabaya Rajapaksa in a letter, seen by The Sunday Morning Business, dated 3 March.
Imports from China account for 21% of Sri Lanka’s overall imports, much of which is used as raw materials for its exports. China is Sri Lanka’s largest source of raw materials such as fabric, cotton machinery, iron, steel, and plastics.
The stiumulus package Subasinghe refered to was announced by the Malaysian Government on 27 February to cushion the impact of COVID-19 and reinvigorate economic growth and is titled “Economic Stimulus Package 2020”.
The stimulus package comprises three main strategies. Firstly, mitigating the impact of the COVID-19 outbreak; secondly, catalysing economic growth for Bank Rakyat, an Islamic co-operative bank in Malaysia; and thirdly, promoting quality investment.
Under the package, the Malaysian Government will restructure or reschedule the loans of borrowers in tourism and other affected businesses, thereby easing the financial strain on them due to COVID-19.
Furthermore, it says the 100% exemption of stamp duty will be given on loans between borrowers and financial institutions from 1 March 2020 to 31 December 2020.
The Central Bank of Malaysia will establish a Malaysian ringgit (RM) 2 billion “Special Relief Facility” to assist the cash flow of affected small and medium-sized enterprises (SMEs). It will be offered to them as loans for working capital at an interest rate of 3.75% per annum to borrowers. For further assistance, the Malaysian Government will provide banks an 80% guarantee on loans under this facility at a concessionary fee of 0.5% per annum.
In order to cushion the impact of COVID-19 on small businesses, Bank Simpanan Nasional (BSN) will offer a RM 200 million microcredit scheme for companies in the tourism and other affected sectors at an interest rate of 4%. The repayment of instalments only begins after six months of disbursement of the loan.
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EDB Chairman Prabhash Subasinghe
Photo Krishan Kariyawasam