Malaysia’s Pemulih Stimulus Package: Supporting Businesses and Individuals
On June 28, 2021, Malaysia announced its latest economic stimulus package, named Pemulih, in response to the indefinite extension of the national lockdown. The 150 billion-ringgit (US$36 billion) package includes 10 billion ringgit (US$2.4 billion) in direct fiscal spending by the government in the form of wage subsidies, unemployment assistance, and cash aid.The package also provides special grants for micro, small, and medium-sized enterprises (MSMEs), and more financial support for struggling households. Finally, the package aims to increase the capacity and expedite the provisions of vaccines, which includes 400 million ringgit (US$96 million) for vaccine purchases.
Since 2020, Malaysia has issued seven stimulus packages, totaling US$91 billion, to mitigate the economic impact caused by the pandemic. The last stimulus package (Pemerkasa Plus) was issued as the country entered its latest lockdown, which was imposed on June 1, 2021. The full lockdown was originally due to end on June 28, 2021, but was extended after the country failed to reach its target of less than 4,000 covid cases per day — Malaysia is still averaging above 5,000 cases per day four weeks into the lockdown.
What support is available for businesses?
Extension of the wage subsidy program
The government has allocated 3.8 billion ringgit (US$915 million) to extend the wage subsidy program for the next four months.
Under this program, the government will subsidize 600 ringgit (US$144) for up to 500 employees per employer. Previously, there was a salary cap of 4,000 ringgit (US$963), but this has now been waived. There will be a payment for two months for all sectors in phase two of the National Recovery Plan (NRP), and the next two months specifically for sectors categorized in the negative list (not allowed to operate) in the third phase of the NRO.
The government is aiming to target 2.5 million workers with this initiative.
Special grants for MSMEs
Malaysia’s central bank, Bank Negara Malaysia (BNM), will provide an additional 2 billion ringgit (US$481 million) in financial support to MSMEs. To date, there is still an existing 6.6 billion ringgit (US$1.5 billion) out of 25 billion ringgit (US$6 billion) provided by BNM for the benefit of new applicants.
Additional payments for Prihatin Special Grant receivers
The Prihatin Special Grant (PSG) was first issued in 2020 to assist micro-entrepreneurs in Malaysia and has since helped more than 900,000 MSMEs, with a total allocation of 3.58 billion ringgit (US$862 million).
Under Pemulih, the government has provided an extra 1,000 ringgit for each participating business, divided into two installments of 500 ringgit (US$120) each, paid in September and November 2021.
Government guarantee scheme
The government has increased the ceiling of its government guarantee scheme to assist SMEs for 2021 from 10 billion ringgit (US$2.4 billion) to 36.5 billion ringgit (US$8.7 billion).
The program is administered by the Syarikat Jaminan Pembiayaan Perniagaan Berhad (SJPP), a company wholly owned by Malaysia’s Ministry of Finance to administer and manage government guarantee schemes.
The scheme is available to SMEs in all sectors with at least 51 percent of their shares controlled by a Malaysian. Furthermore, the minimum financing amount from this program is 100,000 ringgit (US$24,000) and the maximum is 10 million ringgit (US$2.4 million).
Enhancement of micro-loans
There is an additional 1.1 billion ringgit (US$265 million) in financing facilities for micro-enterprises provided by Bank Simpanan Nasional (500 million ringgit (US$120 million)), AgroBank (500 million ringgit (US$120 million)), and the National Entrepreneur Group Economic Fund (100 million ringgit (US$24 million).
This additional funding, together with existing funding, means some 3 billion ringgit (US$722 million) in micro-financing is available for micro-enterprises.
Loan moratorium for MSMEs
A six-month loan moratorium is available for qualifying MSMEs as well as individual borrowers (only for those categorized as B40, M20, and T20 segments).
MSMEs will have to undergo a review by the bank and applications open on July 7, 2021. Since the introduction of the Pemerkasa Plus package, over 250,000 borrowers have had their moratorium applications automatically approved. Borrowers can only choose between a three-month loan repayment moratorium or a 50 percent reduction in their loan repayments for six months.
The government has prepared a discount on electricity bills ranging from five and 40 percent on maximum usage of 900 kilowatt-hours (kWH) a month.
For electricity usages below 200kWH, there is a 40 percent discount available and a 15 percent discount for usages of between 201kWH and 300kWH for three months starting from July 2021.
Moreover, tour and travel agencies, hotel operators, convention centers, shopping malls, and theme parks will receive a 10 percent discount on electricity bills between October and December 2021.
Small entrepreneur digitalization empowerment program
To assist micro-enterprises and SMEs in accelerating the digitalization of their business, the government has allocated a total of 300 million ringgit (US$72.2 million) for the following initiatives:
- Encourage the participation of micro-enterprises in e-commerce platforms;
- Support the SME Digitalization Grant, which provides SMEs with grants of up to 5,000 ringgit (US$1,204) to subscribe or purchase for digital platforms; and
- Empower agro-entrepreneurs to utilize technology under the Agriculture Sector Digitalization and Transformation Program.
Human resources development fund levy
Businesses unable to operate during the lockdown are exempted from paying the levy to the Human Resources Development Corp (HRD Corp) for two months. The HRD Corp is a mandatory levy payment imposed on employers from all industries. The funds collected go towards providing training and skills upgrading of the Malaysian workforce.
Extension of the Penjana Kerjaya program
The Penjana Kerjaya program was established to boost job demands among employers and job opportunities among local job seekers. The program was intended to end in June 2021 but has been extended under Pemulih.
The extension will cover several changes to the program, namely:
- The salary eligibility limit has been reduced from 1,500 ringgit (US$361) to 1,200 ringgit (US$289), under the Malaysianisation program, which seeks to push for more local employment; and
- Relax the employment contract from 12 months to six months for employees aged 50 years and above, as well as the disabled.
Assistance for tour agencies
Over 5,000 registered tour agencies will be eligible to receive a one-off payment of 3,000 ringgit (US$722) to help with business operations once the lockdown has been lifted.
Assistance for the creative industry
Malaysia’s creative arts industry has been allocated 100 million ringgit (US$24 million) in the form of incentives for the production of digital content and skills development programs.
What support is available for individuals and households?
The government will provide cash assistance to Malaysians till the end of 2021, amounting to a total of 10 billion ringgit (US$2.4 billion).
Assistance for Malaysians below the poverty line
Malaysian households living below the poverty line will receive 500 ringgit (US$120) in August, 500 ringgit (US$120) in November, and 300 ringgit (US$72) in December 2021.
Single individuals will receive 200 ringgit (US$48) in August and 300 ringgit (US$72) in December 2021.
Assistance for individuals or households in the B40 category
For households in the B40 category, they will receive 500 ringgit (US$120) in August and 300 ringgit (US$72) in December 2021.
Single individuals will receive 200 ringgit (US$48) in August 2021.
Assistance for individuals or households in the B40 category
M40 households will receive 250 ringgit US$69 in August 2021 while single individuals will receive 100 ringgit (US$24).
Income loss assistance
Malaysians who have lost their jobs or who are unemployed can benefit from the 500 million ringgit (US$120 million) in extra funding for the Employees’ Provident Fund (EPF). The EPF is a federal statutory body under the purview of the Ministry of Finance responsible for managing the savings plan and retirement planning for private-sector workers.
The assistance is expected to assist over one million affected Malaysians.
Support for job-seekers
To assist job seekers, the government will enhance two programs:
- The Job-Seeking Allowance — this program will be extended to informal workers and new school graduates. Applicants under this program can receive an allowance of at least 300 ringgit (US$72) and must apply through the MYFutureJobs platform.
- Allocating 125 million ringgit (US$30 million) through the HRD Corp to implement the Place and Train Program. The program helps graduates with career opportunities by enabling applicants to participate in a skills training program through which they can secure employment upon completion.
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