Question

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Since the emergence of the Coronavirus Disease 2019 (COVID-19), Malaysia is imposing movement control order (MCO) and the government has announced an RM250 billion stimulus package for the economy due to the Covid-19 pandemic. The stimulus package announced on March 27 generally comprises loan deferments, one-off cash assistance, credit facilities and rebates as well as a direct fiscal injection of RM25bil from the government.

(a) Critically discuss the consequences of the disease on:

(i) International payment. (10 marks)

(ii) Malaysia’s gross domestic product (GDP). (10 marks)

(b) How would the stimulus package affect the country risk in Malaysia? (10 marks)

(c) Many companies such as DRB-Hicom, YTL Corporation Berhad and Titijaya Land Berhad have donated masks and monetary aids to assist in the nation’s fight against the Covid-19 outbreak.

Is the giving charity good for the companies? Discuss. (10 marks)

[Total: 40 marks]

Answer 1

Coronavirus or Covid-19 is the most dangerous disease, affecting not only Malaysia but all countries in the world.

1. Considering international payments, due to COVID-19, most transactions have become digitized worldwide. With the help of e-commerce, business and trading activities were carried out to the maximum extent. There is no doubt that the coronavirus will also seriously affect international payments. First, the stock market has become sluggish, which directly affects the country's currency value.

The global payment environment has shown a recoil in COVID-19. For payment service providers, the most important change is the increase in non-performing loans and the decrease in wealth.

2. COVID-19 has had a significant impact on Malaysia’s GDP. The country's GDP fell to -0.1%. GDP is severely affected. Tourism contributes about 50% of GDP. Therefore, the main reason for the decline in GDP is this. Most people lost their jobs. The cash flow in the Malaysian economy is very low.

b. The stimulus package reduces the risk in Malaysia. Therefore, stimulus programs have been used to reduce the economic impact of COVID-19. Second, the program helps to prioritize development and helps economic stability and effective implementation to enhance people’s confidence.

c. Many large non-profit companies donate masks and financial assistance to the people. They are donating to the best of their ability. The reason behind this is that they want to help the poor or those who have difficulty making money just to survive. The company is taking this step as a measure to control communism among the people. So, not bad.