Malaysia Introduces Pemerkasa Plus Economic Stimulus Package
Malaysia’s government has introduced its latest economic stimulus package — Pemerkasa Plus — as a response to the national lockdown measures, which were enforced from June 1, 2021.
Pemerkasa Plus will focus on three aspects: increase public healthcare capacity, continuing welfare programs, and supporting businesses. This includes 2.1 billion ringgit (US$509 million) in grants to small businesses, loan moratoriums, and wage subsidies. The country has rolled out over 340 billion ringgit (US$82 billion) in stimulus measures to cushion the economic impact caused by the pandemic. Its most recent was in January 2021, when the PERMAI stimulus package was launched to support businesses.
Malaysia has seen a surge of COVID-19 cases and the number of daily new cases is higher than India’s on a per-capita basis. Before this surge, the economy was on the path to recovery during the first quarter.
What support is available for businesses?
The government has prepared a number of support measures to assist businesses in the country. These come in the form of extending the wage subsidy program, relief for loan repayments to small and medium-sized businesses (SMEs), and allocation for micro-credit working capital for micro-enterprises, among others.
Extension of the wage subsidy program
The government has allocated 1.5 billion ringgit (US$364 million) to extend the wage subsidy program for a further one month.
Under this scheme, employers can apply for a one-month subsidy of 600 ringgit (US$145) for each employee earning less than 4,000 ringgit (US$970) per month, of up to 500 employees. The government hopes this will benefit some 200,000 employers and 2.5 million employees.
Increase relief for SMEs in the Targeted Relief and Recovery Facility programs
The central bank has allocated 2 billion ringgit (US$485 million) of additional funding to the Targeted Relief and Recovery Facility programs. These programs are designed to provide relief for SMEs impacted by the lockdown. The financing rate is set at 3.5 percent.
Relief for loan repayments for SMEs
SMEs that are not allowed to operate under the lockdown measures are given a choice to either take an automatic approval of a three-month loan repayment moratorium or take a 50 percent reduction in loan repayments for the next six months starting June 1, 2021.
Tax relief for rental discounts for business premises
The government will provide a special income tax deduction to landlords that provide at a rental reduction of at least 30 percent to SME and non-SME tenants until December 31, 2021.
Rental discount for MARA entrepreneurs
Entrepreneurs under the Majlis Amanah Rakyat (MARA) — a government agency tasked with aiding and training local businesses — program will receive a 30 percent discount on the rent of their business premises for three months from May to July 2021.
Additional payments for Prihatin Special Grant receivers
Micro-enterprises that previously received a Prihatin Special Grant (PSG) will receive a further 500 ringgit (US$121), which will increase the grant’s total payout to 1,500 ringgit (US$364) for each recipient. This assistance is expected to benefit some one million businesses.
Further enhancement of micro-credit for micro-enterprises
Government agencies MARA, Bank Simpanan Nasional (BSN), National Entrepreneur Group Economic Fund (TEKUN), and the Small and Medium Enterprises Corporation have allocated a further 1.5 billion ringgit (US$364 million) as micro-credit working capital for micro-enterprises. The financing rates will be as low as three percent.
Extension of electricity discounts for selected industries
Shopping malls, travel agencies, convention centers, theme parks, and hotel operators will continue to receive a 10 percent discount on electricity bills from July to September 2021.
Extension of stamp duty extensions under the Home Ownership Campaign
Under the government’s Home Ownership Campaign (HOC), home buyers were exempt from stamp duty until December 31, 2021. The HOC was initially launched in 2019 and is designed to support homebuyers looking to purchase their first property. At the same time, it also encouraged the sales of unsold properties in Malaysia’s housing market.
Extension of sales tax exemption for motor vehicles
The government has extended the sales tax exemption facility for completely knocked down and completely built-up passenger vehicles until December 31, 2021.
The sales tax exemption on locally assembled passenger vehicles is up to 100 percent while the sales tax exemption on completely built-up vehicles is 50 percent.
Postponing tax penalties
The Inland Revenue Board of Malaysia will consider appeals for the postponement of tax penalties to the year 2022 and will reschedule overdue tax payments for affected taxpayers and businesses.
What support is available for individuals?
Under Pemerkasa Plus, the government has provided short-term cash aid for lower-income groups as well as relief for loan repayments.
Some 2.1 billion ringgit (US$509 million) has been allocated to help low-income households. Households with a monthly income of less than 2,500 ringgit (US$606) will receive 500 ringgit (US$121) as a one-time payment.
Households with a monthly income of between 2,501 ringgit (US$606.93) and 5,000 ringgit (US$1,213) are eligible to receive 300 ringgit (US$72.80). Single Malaysians will receive 100 ringgit (US$24.26).
Relief for loan repayments
Malaysians classified as B40 (bottom 40 percent) who have lost their employment due to the lockdown will be given an option for automatic approval for a three-month loan repayment moratorium or a 50 percent reduction in their loan repayments for six months, starting from June 2021.
Increasing support for healthcare
The government has allocated 1 billion ringgit (US$242 million) in funding, which will be utilized in the following ways:
- 450 million ringgit (US$109 million) to increase intensive care bed capacity for hospitals under the Health Ministry; and
- 550 million ringgit (US$133 million) to support COVID-19 related expenses, such as for the procurement of medicines.
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