Malaysia Issues Stimulus Package to Combat COVID-19 Impact
- In February 2020, the Malaysian government issued an emergency stimulus package worth US$4.8 billion to counter the impact of the COVID-19 outbreak.
- The package implements strategies that include spurring economic growth, promoting investments, and encouraging businesses to adopt automation and digitalization in their processes.
- Some US$453 million will go towards the tourism industry, one of the hardest hit by the pandemic.
In February 2020, the Malaysian government issued an emergency stimulus package worth US$4.8 billion to counter the economic impact of the coronavirus (COVID-19) outbreak.
The package implements strategies that include spurring economic growth, promoting investments, and encouraging businesses to adopt automation and digitalization in their processes.
The fallout from the virus has caused havoc over supply chains in Malaysia, particularly since China has been Malaysia’s largest trading partner for the last 10 years. Trade between the two nations was valued at US$68 billion in 2019.
Investors should seek help from qualified local advisors to better understand how to benefit from these incentives.
Mitigating the immediate impact of COVID-19
The government has devised a number of measures to mitigate the short-term impact of the COVID-19 outbreak, aimed primarily at the tourism industry. Below are some of the key features.
Restructuring and rescheduling of loans
The government has asked financial institutions to provide financial relief to borrowers by rescheduling or restructuring loans, as well as offering payment moratoriums. There will be a 100 percent stamp duty exemption arising from these rescheduling, restructuring, or moratoriums. The exemption is given from March 1, 2020, until December 31, 2020.
Assisting the cashflow of small and medium-sized enterprises
Bank Negara Malaysia (BNM), the country’s central bank, will provide 2 billion-ringgit (US$453 million) worth in loans for small and medium-sized enterprises (SMEs). The funds will be distributed through commercial banks at an interest rate capped at 3.75 percent per annum.
Each SME will be eligible to receive up to 1 million ringgit (US$226,000) with a tenure of 5.5 years – this includes a 6-months payment moratorium. The government will provide banks with an 80 percent guarantee on the loans.
Moreover, the government has prepared a 200 million ringgit 500 million ringgit (US$43 million) micro-credit scheme for small businesses in the tourism industry.
Here are the highlights of the Prime Minister's speech on Monday (April 6):
* The government will increase the wage subsidy of RM600 (Euro 127,22) monthly for employers from RM5.9bil (Euro 1.25bil) announced on March 27 to RM13.8bil (Euro 2.93bil), an additional RM7.9bil (Euro 1.68bil).
* The creation of a RM2.1bil (Euro 0.45bil) Prihatin Special Grant for all SME companies that qualify.
* The Government will provide a Special Grant of RM3,000 (Euro 636) to each company, and is expected to benefit nearly 700,000 micro SMEs nationwide. These SMEs must register with the Inland Revenue Board (IRB) to enjoy this facility. The Government will obtain a list of eligible SMEs from the Local Authorities and Companies Commission of Malaysia (SSM).
* The government will be abolishing the 2% interest rate for the RM500mil (Euro 106.01mil) Micro Credit Scheme under Bank Simpanan Nasional.
* The micro loan scheme for micro businesses was extended to Tekun Nasional with a maximum loan limit of RM10,000 (Euro 2120,28) per company at no interest. For this purpose, a sum of RM200million (Euro 42.41mil) will be provided. Applicants can only choose from one of these schemes.
Tax exemptions and deferments
Travel agencies, hotels, airlines, as well as businesses in the tourism industry, will be given a deferment of their monthly tax installments for six months starting April 1, 2020. Hotels will also be exempt from service tax from March 1, 2020, until August 31, 2020.
Discount vouchers for tourism
To support the tourism industry, the government has allocated US$113 million in the form of:
- Travel discount vouchers – the government, in collaboration with airlines, resorts, and hotels, will offer discount vouchers of to 100 ringgit (US$22) per person, starting March 2020; and
- Increased tourism promotion – 30 million ringgit (US$6 million) will be provided to Tourism Malaysia, the country’s tourism board, to increase promotion on Malaysian tourism in the Middle East, Europe, ASEAN, and South Asia.
Tax relief for domestic tourists
A special income tax relief worth 1,000 ringgit (US$226) is available to individuals for expenses on domestic tourism from March 1, 2020, to August 31, 2020.
This is limited to entrance fees for tourist attractions and expenses on accommodations at premises registered with the Ministry of Tourism, Arts, and Culture.
Extra funding for skills training
The government will provide 100 million ringgit (US$45 million) to help businesses affected by COVID-19 to upgrade the skills of its workers. This includes for sectors, such as retail, hospitality, and tourism in addition to electrical, electronic, and automotive manufacturing.
Another 50 million ringgit (US$11 million) will be provided to finance short courses, in particular, to improve the digital skills of employees, and 20 million ringgit (US$4.5 million) will be allocated to fund short courses for employees in the manufacturing sector.
Spurring economic growth
The package aims to spur economic growth by boosting household income and implementing ‘people-centric projects’.
Reducing the employee contribution towards the Employee Provident Fund (EPF)
The Employee Provident Fund (EPF) is a compulsory saving and retirement plan for private-sector workers in Malaysia. Employees usually contribute between 11 percent to seven percent from their monthly salary. This has now been reduced to four percent, potentially increasing cash in the hands of households by some 10 billion ringgit (US$2.2 billion).
Financial assistance to low-income households
Low-income households will begin receiving a monthly payment of 200 ringgit (US$45) scheduled for May to be paid in March. Families will also receive an additional one-off payment of 100 ringgit (US$22).
Implementing small scale infrastructure projects
The government has allocated 2 billion ringgit (US$450 million) for infrastructure projects, such as maintaining roads, bridges, streetlights, drainage systems, and water supplies, among others, at the federal, state, and local government level. This is aimed at assisting small-scale contractors and encouraging economic activities.
From this budget, 200 million ringgit (US$45 million) is assigned to the repair and maintenance of housing and public amenities whereas 150 million ringgit (US$33 million) will go towards the maintenance of alternative electricity and water supply in rural areas.
BNM has allocated a loan scheme for SMEs involved in the food production industry totaling 1 billion ringgit (US$226 million).
The loan scheme is available for a period of eight years at 3.75 percent interest; an eligible SME will able to receive 5 million ringgit (US$1.1 million).
In addition, the government will allocate 40 million ringgit (US$9 million) to help SMEs in the agriculture sector. This fund will be used to enable SMEs to sell their products on e-commerce platforms and therefore to a larger pool of consumers.
Encouraging investment growth
To sustain economic growth and private consumption, the government will provide incentives to encourage more private investments, while also accelerating public investments.
This includes accelerating the estimated 3 billion ringgit intended for the National Fiberization and Connective Program (NCP). The NCP aims to improve broadband quality and coverage and provide internet access across the country to all spectrum of society. A further 13 billion ringgit (US$2.9 billion) is planned in expenditure for the installation of LED street lighting, rooftop solar panels, and transmission lines.
The government will also open the tender for a 1,400 MW solar power project this year, which is expected to generate 5 billion ringgit (US$1.1 billion) in investments.
Funding for startups
Some 500 million ringgit (US$113 million) will be available for early stage and growth stage Malaysian companies. This fund will be co-funded by the government and the private sector.
SME digitalization and automation
A total of 300 million ringgit (US$68 million) in loans has been prepared for SMEs looking to digitalize or automate their business. The financing can be used to help purchase hardware, software, and other IT solutions and services, in addition to equipment and machinery.
Eligible SMEs can receive up to 3 million ringgit (US$679,000) with the tenure offered up until 10 years.
Sales tax and import duty exemption on equipment and machinery
This incentive is exclusive for port operators who need to import machinery or equipment, used in port operations. The incentive is valid from April 1, 2020, to March 31, 2023.
Waiver of listing fees
The Securities Commission and Bursa Malaysia will waiver listing fees for companies seeking to list on the LEAP or ACE market. This waiver is valid for a 12-month period. The incentive is also open to companies with a market capitalization of less than 500 million ringgit (US$113 million) seeking to list on the Main Market.
Friday, 3 April 2020
FOR IMMEDIATE RELEASE
MINISTER OF TRANSPORT
TOPIC: SECOND PORT CLEARING EXERCISE TO EXPEDITE MOVEMENT OF CARGO FROM PORTS NATIONWIDE
The Ministry of Transport has agreed after consultation with the National Security Council to allow freight forwarders and hauliers another four (4) days to expedite the movement of cargo from congested ports nationwide, starting Saturday, 4 April 2020.
Companies whose goods are stored at Port Klang, ports in Johor, Penang, Kuantan, Melaka, Bintulu, Sarawak and Padang Besar bordering Thailand are advised to move their goods out of those ports from Saturday, 4 April 2020 to Tuesday, 7 April 2020.
This follows an earlier decision announced on 26 March 2020, which had proven effective in greatly reducing near 100% congestion at major ports nationwide.
However, to ensure the smooth and continued flow of much-needed daily essentials for households, it has been proven necessary to conduct these port clearing exercises from time to time to allow companies to expedite the movement of their cargo.
This exercise ensures that essential goods are delivered unhampered to the communities that need them in the second phase of the Movement Control Order, which is in effect from 1-14 April 2020. Based on the positive response shown by the Ministry’s allowance to federal ports, state-owned ports including those in Sabah and Sarawak have proceeded to allow companies to expedite their goods out of their respective ports to reduce congestion and ensure essential goods reach their intended destinations. The Ministry has shared its standard operating procedures to those ports and those in foreign countries that had requested it.
This latest port clearing exercise is in line with the Prevention and Control of Infectious Diseases Act 1988 (Measures within the Infected Local Areas) (No. 2) Regulations 2020 which takes effect during the EMCO from 1 to 14 April 2020.
Pursuant to the amendments made to Regulations No. 2, port, dock and airport services and undertakings, and transportation by land, water, or air constitute essential services. This means that any activity and process in
the supply chain of port, dock and airport services and undertaking and transportation by land, water or air are also deemed as essential services. For further information, please contact our officers at email@example.com,
019-2907723 (WhatsApp), 1-800-88-7723 HOTLINE (8am-8pm), or log on to cccovid19.mot.gov.my. lternatively, please call the National Operations Management Centre of the National Security Council at 03- 88882010.
DATUK SERI IR. DR. WEE KA SIONG
MINISTER OF TRANSPORT
3 April 2020
EXAMPTION OF IMPORT DUTY, EXCISE DUTY AND SALE TAX FOR GOOD MATERIALS FOR SANITIZER MANUFACTURERS (3808.94.9000)
Following the outbreak of the COVID 19 pandemic, the flexibility was given to hand sanitizer manufacturers (3808.94.9000) to obtain import duty exemption, excise duty and sales tax on used undenatured ethyl alcohol and denatured ethyl alcohol raw materials.
The application should include the following information:
i. Manufacturer License issued by MIDA;
ii. Release information ready;
iii. Maximum quantity of company production for one year;
iv. Input / output ratio;
v. Manufacturing process flow chart; and
vi. Manufacturer License issued by the Ministry of Health Malaysia.
The application must be submitted to the Tax Division, Ministry of Finance Malaysia at the following address:
(Mrs. Noor Zuraini bint Aziz) Email: firstname.lastname@example.org Tel: 03-8882 3344/8878/4060
Fax: 03-8882 3885
Secretary of the Tax Division
Finance ministry Malaysia
No. 5 premieres,
Precinct 2, Federal Government Administrative Center,
Treasury Tax Division of Malaysia March 28, 2020
As at 28th April, 2020
Ministry of International Trade and Industry
INCREASE OF OPERATIONAL CAPACITY TO REBUILD THE ECONOMY
As at 5th May, 2020
Minister of Finance
YB Tengku Dato' Sri Zafrul Tengku Abdul Aziz,
FOURTH LAKSANA REPORT IMPLEMENTATION OF THE PRIHATIN ECONOMIC STIMULUS PACKAGE (PRIHATIN)
As at 5th June, 2020
Short-Term Economic Recovery Plan June - December 2020 (source: Ministry of Finance)
COVID-19: Short-term Economic Recovery Plan (source: Ernst & Young Advisory Services)
Malaysia is Open for Business (source: Malaysia Investment Development Authority - MIDA)