Prime Minister Muhyiddin Yassin has announced an economic stimulus package worth RM250 billion (US$58 billion) on Friday, March 27 to weather the impact of COVID-19. This stimulus package comprises special allowances for healthcare providers, one-off cash aid and microcredit scheme for small- and medium-sized enterprises (SMEs), among others. Of the total, RM128 billion will be spent on public welfare, RM100 billion will be used to support businesses, while RM2 billion will be used to strengthen the country’s economy. The remaining included the RM20 billion economic stimulus package announced by the then interim Prime Minister Tun Mahathir Mohamad on February 27.
This enhanced stimulus package came as Malaysia implemented a movement control order (MCO) beginning from 18th March to rein in the spread of the COVID 19 pandemic. Originally imposed for two weeks, the MCO has been extended by another two weeks until 14th April following an announcement on 25th March. The MCO which accompanied the closure of borders and “work from home” order has brought direct impact to business operations in the nation. This has caused a significant impact on all facets of the economy. Many non-essential businesses were forced to cease their operations.
Below are
the key highlights of the Enhanced Stimulus Package measures announced by Prime
Minister Tan Sri Muhyiddin Yassin:
Healthcare
& Pandemic Control
Additional RM1 billion for the Ministry of Health to purchase equipment and services to contain COVID-19, which include obtaining medical expertise from private healthcare services
A special fund of RM8 million to cover the costs incurred for the screening of up to RM300 per policyholder and takaful medical certificate to undergo the test at private hospitals or laboratories, as instructed by MOH
Increase the special allowance to doctors, nurses and medical staffs involved directly in curbing and preventing the outbreak, from RM400 to RM600 per month effective 1 April 2020 until the outbreak ends
Extend a special allowance of RM200 a month to military, police, customs, civil defence and RELA members who are directly involved in enforcing the MCO
Income
Continuation for Workers, Students & Retirees
Provide the Bantuan Prihatin Nasional, one-off cash assistance with an allocation of RM10 billion and for the first time will also be channelled to the M40 group. This includes the employees in the private sector, FELDA settlers, farmers, fishermen, small traders and those categorised in the M40 group and below. (refer details below)
One-off cash assistance of RM200 per person with a total allocation of RM270 million to students at various levels of tertiary education, including matriculation and community colleges, polytechnics as well as public and private higher learning institutions
Income replacement fee of RM50 per day for those infected with COVID-19, for a maximum of 14 days under MySalam scheme
Allows pre-retirement withdrawals from account B up to RM1,500 per member without any tax penalties between April and December 2020
One-off cash assistance of RM500 to more than 1.5 million civil servants of grade 56 and below, including contract workers, and more than 850,000 government pensioners
One-off cash assistance of RM500 to 120,000 e-hailing drivers with a total allocation of RM60 million. Separately, there will be one-off assistance of RM600 for taxi drivers which will be paid on 1 April 2020
Continuation of salaries for contract services such as cleaning and food supply in schools, public higher learning and training institutions as well as other government agencies, including statutory bodies. This involved a total RM 110 million for more than 80,000 employees
Supporting
SMEs, Micro-entrepreneurs and Business Owners
A RM 5.9 billion Wage Subsidy Programme to assist employers in retaining their workers. Through this programme, the Government will provide a salary of RM600 per month to every employee for 3 months, for workers earning less than RM4,000 and employers experiencing more than 50% decrease in their income since 1 January 2020
Additional funds worth RM4.5 billion which covers 5 key initiatives to assist SMEs, including micro-entrepreneurs:
Increase the Special Relief Facility (SRF) by RM 3 billion to RM 5 billion with a reduced interest from 3.75% to 3.5%
Increase the All Economic Sector Facility fund by RM 1 billion to RM 6.8 billion to enhance access to financing for SMEs
Provide additional funds of RM 500 million under Micro Credit Scheme to a total of RM 700 million for soft loans at 2% interest with no collateral (open to all micro-entrepreneurs in all business sectors including child-care centres, taxi and bus operators as well as the creative industry and online traders)
BizMula-i and BizWanita-i schemes for financing up to RM300,000 under the Credit Guarantee Malaysia Berhad (CGC)
RM5 billion worth of guarantees by SJPP and increase the guarantee coverage from 70% to 80% for SMEs that face difficulties in obtaining loans
Initiatives to address the cash flow constraints of companies owner:
Employer Advisory Services (EAS) programme which includes options for deferral of payments, restructuring and rescheduling of employer contributions
Exempt payment for Human Resources Development Fund (HRDF) levy for all sectors for a period of six months beginning April 2020. This measure is expected to assist the company’s cash flow with a total savings of RM440 million
Postponement of income tax instalment payments to all SMEs for a period of 3 months beginning 1 April 2020
Banking institutions to offer 6-month moratorium, conversion of credit card balance to term loans and restructuring of corporate loans which worth at least RM100 billion in total
Social financing programme to assist B40 entrepreneurs and people who lose their jobs. Social donations will be channelled in the form of initial capital for micro-entrepreneurs using zakat funds and matched with microfinancing at affordable rates
RM50 billion guarantee scheme managed by Danajamin, with a guarantee of up to 80% of the loan amount for the purpose of financing working capital requirements. The facility is targeted at viable businesses in all sectors facing difficulties due to the COVID-19 outbreak
Critical
Utilities
Electricity bill allocation of RM550 million to provide a tiered-discount with rates ranging between 15% and 50% according to electricity usage with a maximum limit of 600 kilowatts per month for 6 months, starting in April
RM 600 million worth of free internet to all customers in collaboration with the telecommunication companies
RM 400 million investment to widen the network coverage and capacity, maintaining stable, high quality and availability of telecommunication services
Infrastructure
and Construction
RM2 billion allocations for a number of small projects such as improving roads, upgrading dilapidated schools in Sabah and Sarawak, cleaning houses of worship and police stations as well as upgrading tourism facilities that will benefit contractors from G1 to G4 class
Continuation of the implementation of all projects allocated in the 2020 Budget including ECRL, MRT2 and the National Fiberisation and Connectivity Plan
Housing
Security
One-month rental exemption for the Projek Perumahan Rakyat (PPR) and Perumahan Awam is now extended to 6 months with a cost of RM3 million borne by the Government. This initiative involves 3,636 units of PPR homes for rental or transit under the Ministry of Housing and Local Government (KPKT)
Six-month moratorium is provided for the rent-to-own (RTO) units, effective April 2020, totalling RM5.7 million, involving 4,649 RTO units. For Public Housing, the Kuala Lumpur City Hall (DBKL) will provide similar exemption which will benefit more than 40,000 tenants
Six-month lease exemption on all premises owned by the Federal Government such as school canteens, nurseries, cafeterias, convenience stores and others
Food
Security
Food Security Fund of RM 1 billion to ensure food supply remains sufficient
Provide RM100 million for the development of infrastructure for food storage and distribution as well as crop integration programme
Provide special funds of between RM100,000 and RM200,000 to each viable Pertubuhan Peladang Kawasan (PPK) and Pertubuhan Nelayan Kawasan (PNK), up to an allocation of RM 64.4 million to develop short-term agro-food projects that can generate income within 3 to 6 months, ensuring sufficient food supply
Food assistance, healthcare and shelter with a total allocation of RM25 million for vulnerable groups such as the elderly and children in shelters, the disabled, the homeless and orang asal.
Criteria for the Bantuan Prihatin National (BPN)
The government intervention is imperative to address the burning issues of the adversely affected socio-economic conditions. The 2020 Economic Stimulus Package is designed to ensure economic risks associated with the outbreak are effectively addressed. Various strategies have been formulated to ensure that the Malaysian economy remains on strong foundations.
