KUALA LUMPUR, June 29 ― The National People’s Well-Being and Economic Recovery Package (Pemulih) is critical in aiding affected Malaysians as the nation could possibly remain in Phase 1 of the National Recovery Plan (NRP) for the whole of next month, according to Public Investment Bank.

In a research note today, it said that this was due to an elevated number of daily Covid-19 cases which is off the mark from the threshold set at below 4,000 cases for seven consecutive days.

The country is also way off the second determinant (moderate intensive care unit bed occupancy) though we are ahead of the third deciding factor (11 per cent adult population vaccinated versus around 10 per cent threshold), the bank added.

"Phase 2 of the NRP, which will run for two months after Phase 1 ends, may not entail full economic openings as various social activities and inter-state travel will still not be allowed.

"This suggests a delay in recovery for key services-based sectors like retail, wholesale and aviation,” it said.

The bank also noted that the direct fiscal injection of RM10 billion from Pemulih is smaller than Pemerkasa (RM11 billion), though bigger than Pemerkasa+ (RM5 billion) and the Permai package (RM6.6 billion), respectively.

 It said that the latest round of fiscal injection for Pemulih is set to widen the fiscal deficit though this may be cushioned by higher oil revenue following the better-than-expected oil price performance.

"The government may also recalibrate and defer their spending on big-ticket projects due to various challenges as a result of the pandemic including labour shortages and mandatory operational closure.

"We also do not rule out additional fiscal borrowing to finance the latest fiscal stimulus expenditure though no details were given yet,” it added.

Meanwhile, in a separate note, CGS-CIMB said the extension of cash handouts announced in the Pemulih package is expected to help reduce the impact of weaker consumption due to the extended full lockdown.

"The loan moratorium, together with the new Employees Provident Fund (EPF) withdrawal scheme for its members called i-Citra, may not lead to a significant jump in participation from retail investors due to political concerns and concerns over corporate earnings risks as expectation bars are set higher by the market.

"The electricity bill discounts announced (ranging from 5.0-40 per cent for three months beginning July) is expected to have minimal impact on Tenaga Nasional Bhd as we gather that the funding will come mostly from the government,” the stockbroking firm said. ― Bernama