|Malaysia Analytical Update | April 6, 2020
Authors: Kim Yaeger, Tina Jamaluddin, Marc Mealy, Emma Tabatabai, Alberto Coria, Nick Zuroski
Following the announcement of a comprehensive RM250 billion stimulus package on March 27 aimed at mitigating the economic impacts of COVID-19, on April 6 Prime Minister Muhyiddin Yassin unveiled an additional RM10 billion in special stimulus focusing on small and medium enterprises (SMEs) that make up 40% of the country’s economy.
The new package expands on the previous assistance offered for SMEs in the March 27 announcement, highlighting stimulus measures in fiscal spending and financial/tax relief. The government will increase wage subsidies for SMEs with employees earning RM4,000 and below, with rates as follows: RM600 per employee for companies with more than 200 employees; RM800 per employee for companies with 76 to 200 employees; and RM1,200 per employee for companies with fewer than 76 employees. The package also establishes an RM2.1 billion PRIHATIN grant that offers RM3,000 in relief funding to eligible micro SMEs that register with the Inland Revenue Board (IRB). That grant funding is expected to assist approximately 700,000 SMEs across Malaysia. Various government-linked companies (GLCs), such as Petronas, UDA, PLUS, and PNB, will provide SME rent relief in the form of exemptions and discounts.
With regard to financial relief, the package diverts RM200 million toward interest rate reduction to 0% within Bank Simpanan Nasional’s Micro Credit Scheme and TEKUN Nasional funding for up to RM10,000. SMEs will be provided a 30-day moratorium on submission of statutory documents to the Companies Commission of Malaysia (CCM) and will have the option to apply for loans and receive funding advice through the IMSME.com.my portal. In addition, SMEs with financial years ending September 30 to December 31 that apply with CCM will receive a deadline extension of three months after the MCO to submit financial statements. In his speech, Prime Minister Muhyiddin urged lenders to implement a six-month moratorium on repayments starting in April.
Tax relief measures entail tax breaks that equal reduced rent between April and June for landlords of SMEs who waive rent fees or offer rental discounts of at least 30%. Additionally, SMEs with employee permits expiring between April 1 and December 31 will be granted a 25% foreign worker levy reduction.
The additional package followed the meetings and consultations of a Special Cabinet Committee co-chaired by MITI Minister Datuk Seri Azmin Ali and Defense Minister Datuk Seri Ismail Sabri Yaakob. That committee was formed last week to assess the government’s policy responses to address both the public health and economic impacts of the COVID-19 pandemic. Fiscal and monetary stimulus remains crucial to the Malaysian government after the extension of the MCO until April 14, especially in consideration of the reduction of essential goods list during the MCO’s second phase. As of April 6, Malaysia had 3,973 confirmed COVID-19 cases—the highest number in Southeast Asia—62 deaths, and 1,241 recoveries.