The RM 35 Billion Short-Term National Economic Recovery Plan (PENJANA)
As Malaysia moves into the new phase of Movement Control Order – Recovery MCO (RMCO), our Prime Minister Tan Sri Muhyiddin Yassin announced a short-term National Economic Recovery Plan on the 5th of June that worth RM 35 billion, in addition to the RM 260 billion from the three Stimulus Packages announced. The economic recovery plan, titled “Pelan Jana Semula Ekonomi Negara”(PENJANA) consists of RM 10 billion direct cash injection into the Malaysian economy.
As part of the Government’s commitment to adopt an inclusive and holistic approach to Malaysia’s economic recovery, PENJANA will focus on 3 key thrusts – Empower People, Propel Businesses and Stimulate the Economy. The PENJANA has good coverage on some of the most imminent aspects in the current economy and market dynamics.
Below is the list of 40 key initiatives as tabled in PENJANA.
Key initiatives include:
- RM 5.3 billion for a three-month extension on wage subsidy programme, expected to support 2.7 million workers
- RM 1.5 billion hiring incentives to encourage the hiring of unemployed, expected to benefit 300,000 job seekers
- RM 2.0 billion for reskilling & upskilling programmes, expected to benefit 200,000 youth and unemployed workers
- RM 1.0 billion for tourism-related SMEs on transformational initiatives to operate under the new norm
How has the COVID-19 affected the business & people in Malaysia?
The COVID-19 and national lockdown in the past three months have severely impacted Malaysian lives and livelihoods, with close to 2 million jobs (≈8% of the workforce) estimated to be at risk by the end of 2020. The lighten MCO and reopening of the economy in May has seen an increasing trend in commercial activity and more workers are gradually returning to the work. As at 2 June, about 12.7 million or 83.5% workers have returned to work under the SOPs announced.
The pandemic outbreak and subsequent partial lockdown changed consumer spending behaviour and the consumption level in Malaysia’s economy. During MCO alone, 66% of businesses in Malaysia had experienced a drastic drop in demand that possess threats to business sustainability.
On a positive note, industries such as e-commerce, healthcare-related products and logistics experienced a huge increase in demand. Companies such as Top Glove, Supermax and Hartalega that are producing rubber gloves saw magnificent growth over the last few months. Couriers companies such as Poslaju, DHL and J&T Express were experiencing an unusual spike in parcel volumes during the MCO as many did their shopping via various e-commerce platforms. However, about 25% of businesses still lacked the e-commerce infrastructure to capitalise on the growth of the online shopping market.
27Group’s 9 Transformation Strategies for Malaysia (9TS4M) coincide with the initiatives under PENJANA
We see a great resemblance between our 9TS4M and the nature of the initiatives that focus around job preservation, reskilling and training to help the workforce stay relevant as the 4IR is disrupting the economy, increasing house ownership, and promotion of digital adoption in businesses.
The 9TS4M are nine (9) transformative strategies curated by the Senior Advisors of 27Group, comprised of industry veterans and subject matter experts who have a deep understanding of Malaysia economy as well as unique insights on specific industry dynamic.
These initiatives are expected to serve as a booster to Malaysia’s economy, helping to reduce the financial burden of people and businesses, stimulating consumer spending, and ultimately drive economic growth in the short-term.
Written by Ivan Yee, Senior Consultant at 27 Advisory.
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