The Covid-19 Government Economic Stimulus Package

(announced on February 27, 2020)

The Covid-19 Government Economic Stimulus Package
(announced on February 27, 2020)

 

Ministry of Finance Announcement >

https://www.treasury.gov.my/pdf/pre2020/Booklet_2020_Economic_Stimulus_Package.pdf

THE RM20 BILLION ECONOMIC STIMULUS PACKAGE

The stimulus package valued at RM20 billion is anchored on three strategies as follows:

Strategy I: Mitigating impact of COVID-19;

Strategy II: Spurring rakyat centric economic growth; and

Strategy III: Promoting quality investments

The Covid-19 Government Economic Stimulus Package for
Individuals
(announced on February 27, 2020)

 

Financial Aid

One-off Payment for Tourism-related Workers

A one-off cash incentive of RM600 in April 2020 to taxi
drivers, tour bus drivers, tour guides and trishaw drivers who are active and registered since 31 December 2019.

 

Special Monthly Allowance for Civil Servants Directly Involved in Covid-19

A special allowance of RM400 per month for doctors and other medical personnel. The allowance is
payable effective from 1 February 2020 until the outbreak is contained.

BANTUAN SARA HIDUP (BSH) ENHANCEMENTS

The Government will

i) bring forward BSH payment of RM200 scheduled by May 2020 to be paid in March 2020;

ii) additional one-off cash payment of RM100 will be made to all BSH recipients in May 2020; and

iii) a further RM50 will be subsequently channelled through e-tunai.

Increase cash in the hands through lower EPF Contribution

For the period of nine months from 1 April to 31 December 2020, the minimum employee contribution to the Employees Provident Fund (EPF) will be reduced by 4% percent from 11% to 7%.

Prepare for High Unemployment

Employment Insurance System (EIS) fund will relax the eligibility criteria for retrenched workers from affected sectors by waiving the minimum requirement of three (3) months contribution.


EIS will be enhanced by increasing the training fee ceiling from RM4,000 to RM6,000 and provide trainees with a training allowance of RM30 per day.

 

The Government will provide HRDF with a matching grant of RM100 million on a one to one basis to train and reskill retrenched workers from sectors affected by COVID-19, which include hotels, tourism and retail, electrical and electronic and automotive manufacturing.

The Government will provide RM50 million to provide a subsidy towards financing short courses, particularly in digital skills. Such courses, include those provided through online means in fields such as coding, digital marketing and data science. 


The Government will provide an allocation of RM20 million to fund short courses conducted by the 13 state skills development centres (SSDC). The funding will focus on TVET skills training and benefit more than 1,600 trainees working with manufacturing companies.

The Covid-19 Government Economic Stimulus Package for
Businesses
(announced on February 27, 2020)

MITIGATING IMPACT OF COVID-19 FOR AFFECTED BUSINESSES

A. Financing Businesses

1. Existing Financing and Loans

Bank Negara Malaysia (BNM) to ensure that all financial institutions provide assistance by way of restructuring, rescheduling and providing repayment moratorium for Covid-19 affected business and individual loans.

Stamp duty exemption of 100% will be given on loan agreements from 1 March 2020 to 31 December 2020.

2. New Financing Facilities

  • Bank Negara Malaysia (BNM) to establish a RM2 billion Special Relief Facility to provide cashflow assistance through low interest (3.75%) working capital to affected Small Medium Enterprises (SMEs). In addition, Syarikat Jaminan Pembiayaan Perniagaan (SJPP) will provide the banks an 80% guarantee on these loans. Each SME can borrow up to RM1 million and the loan tenure is up to 5.5 years.  The repayment only starts after the 6 months payment moratorium.

 

  • Bank Simpanan National (BSN) to provide RM200 million low-interest (4%) Microcredit loans to affected businesses.

B. Taxation Breathers

1. Monthly Income Tax Deferments

Businesses in the tourism industry such as travel agencies, hoteliers and airlines will be given a deferment of their monthly tax instalments for six (6) months from 1 April 2020 to 30 September 2020.

Other businesses affected by current economic developments, will be allowed to revise their monthly tax instalments earlier, on the taxable amount due in the third
month of instalments, should the third instalment falls in the year of 2020.

 

2. Service Tax Exemptions

Service tax on accommodation services provided by hotels, defined as operators of accommodation premises as prescribed under Group A, First Schedule of the Service Tax Regulations 2018 are exempted from levying service tax on taxable services provided for a period of six (6) months from 1 March 2020 until 31 August 2020.

 

3. Tax Deductions
Expenses incurred by companies to provide employees with disposable Personal Protective Equipment (PPE) such as face masks are eligible for tax deduction under
subsection 33(1) of ITA 1967. Whereas, expenses for non-disposable PPE products can be claimed as a capital allowance.

C. Reduce Business Operating Costs

1. Exemption from the Human Resource Development Fund Contribution
To help reduce costs for companies affected by COVID-19, an exemption from HRDF levies for a period of six (6) months effective 1 April 2020 to 30 September 2020 will be given. The eight (8) categories of businesses covered by this exemption are air travel,
domestic ground transport, convention centres, shopping malls, travel tour operators, hotels, franchises & hypermarkets.

2. TNB's 15% Discount on Electricity Bills

TNB's will give a 15% discount on electricity bills to six categories of businesses, namely hotel operators, travel agencies, local airlines offices, shopping malls, convention centres and theme parks for a period of six (6) months from 1 April 2020 to 30 September 2020

 

C. Initiatives to Stimulate Tourism-related Businesses

 

1. Rental Rebates at Airports

Malaysia Airport Holdings Berhad (MAHB) will provide rebates on rental for premises at the airport as well as landing and parking charges.

2. Spur Duty-free Purchases
The eligibility period for the purchase of duty-free goods by individuals entering Malaysia is reduced from 72 hours to 48 hours and the threshold for duty-free goods is increased from RM500 to RM1,000 from 1 April 2020. This is applicable at duty-free shops located at the international airports.

 

3. Income Tax Relief for Spending on Domestic Tourism

A special income tax relief of up to RM1,000 is allowed for individuals' spending on domestic holidays from 1 March 2020 to 31 August 2020. The allowed spending is limited to: i) Accommodation expenses at premises registered with Ministry of Tourism, Arts and Culture Malaysia (MOTAC); and ii) Entrance fees to tourist attractions.

4. RM100 Domestic tourism voucher

Digital vouchers for domestic tourism of up to RM100 per person for domestic flights, rails and hotel accommodations for all Malaysians.

 

5. Matching grant for tourism promotions

RM500 million matching grants for the vouchers and tourism promotions.

 

6. Government guidelines relaxation

Relaxation of existing guidelines limiting the use of hotels by Government agencies as part of mitigating the reduced demand.

Financing to Sustain and Expand Agro-Food SMES

 

RM1 billion fund to provide food-producing SMEs low-interest rate loans of up to RM5 million per SMEs that can be used for working capital and also for capital expenditure. Fund will be offered for a maximum 8 years tenure and low financing rate at 3.75% per annum. 

 

In addition, the Government will allocate RM40 million towards helping small and
medium enterprises involved in agriculture and food production enhance their incomes,
through the following initiatives:
i) Establish wider network of storage facilities for food by FAMA to stabilise fluctuation of food items due to disruption of supplies;

ii) Grant to small enterprises to sell and market products on e-commerce platforms, such as enabling fishermen to sell directly to consumers; and
iii) Scaling up eUsahawan programs, particularly to facilitate Pusat Internet Desa as a hub for facilitating e-commerce, providing small scaled entrepreneurs to access wider pool of customers.

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The Covid-19 Government Economic Stimulus Package for
The Overall Economy
(announced on February 27, 2020)

 

New Fund Allocation to Spur Economic Activities through Small-scale Projects

The small-scale projects to be implemented are as follows:
i) RM350 million through state governments to
undertake public infrastructure maintenance (PIA) and basic infrastructure (PIAS) projects as well as Rural Basic Infrastructures (RBI) projects;
ii) RM250 million to the Ministry of Works for federal road maintenance jobs, implemented by new contractors via open tender called by concessionaires and government agencies, where the cost of project will be based on the standard rate agreed in the concessionaire’s agreement. On top of that, another RM50 million also will be allocated for slope maintenance;
iii) RM100 million to the Ministry of Education to ensure the cleanliness of schools and promote health and personal hygiene of students. The allocation will include initiatives undertaken in partnership with the Parent Teacher Association (PTA) involvements through gotong-royong concept. Another RM100 million to be allocated for schools' hostel facilities include furniture and equipment;

iv) RM150 million to the Ministry of Housing and
Local Authorities, to be channelled to all local authorities to undertake maintenance of local public infrastructure, including ensuring upkeep of tourist sites;
v) Repair and maintenance of housing and public amenities in FELDA areas with an allocation amounting to RM200 million;
vi) RM150 million to the Ministry of Rural Development to undertake the repair of rural connection roads and also
maintenance of rural infrastructure relating to alternative water and electricity supply;
vii) RM100 million to undertake repair and maintenance works at low-cost flats, including repainting and maintenance of lifts. This is to help ensure residents of low-cost housing enjoy a clean and safe environment;
viii) RM50 million to MARA to undertake refurbishment of business premises which will benefit business facilities for
Bumiputera Entrepreneur, particularly for rural small traders. The upkeep for business premises includes replacing pipes, electrical and repainting jobs;
ix) RM25 million to undertake social projects to improve the quality of life for poor families and disadvantaged communities. The allocation will be also utilised on a matching grant basis to undertake projects such as improving livelihoods through income generation
programmes and enhancing the quality of life such as providing alternative water projects. This is to promote volunteerism and collaboration with NGOs and social enterprises;
x) RM25 million to undertake maintenance of facilities at KEMAS centres to ensure that our children have a comfortable environment to learn;

xi) RM50 million for repair and maintenance of jetties,
irrigation feeder/plantation roads and MAQIS equipment;
xii) RM50 million to maintain retention pond, upgrade and maintenance of bund, riverbanks and rivers nationwide;
xiii) TRM50 million for maintenance of Armed Forces Family Housing (RKAT)/ government quarters and government buildings;
xiv) RM75 million to organise sport events, upgrade and maintenance of sports facilities nationwide;
xv) RM40 million for maintenance of buildings under the Asset Management Division of Prime Minister’s Department; and
xvi) RM185 million for Mesra Rakyat projects.

Federal and State Governments' Initiatives

In the News Snippets & Links 

STRATEGY III: PROMOTING QUALITY INVESTMENTS

24. To bolster business confidence, the Government is committed to sustaining public investments and in particular, expedite in 2020, the tenders and implementation of development expenditure projects.

25. In addition, agencies and Government linked companies (GLCs) will also accelerate planned investment projects for 2020, including:

First: Ministry of Energy, Science, Technology, Environment and Climate Change (MESTECC) will open for bids quota of 1,400MW for solar power generation. This is expected to involve RM5 billion of private investments and generate 25,000 jobs;

Second: Malaysian Communications and Multimedia Commission (MCMC) will implement up to RM3 billion on works related to the National Fiberisation and Connectivity Plan (NFCP); and

Third: GLCs such as TNB will invest RM13 billion in 2020, including accelerating projects such as LED street lights, transmission lines and rooftop solar installations.

26. To enhance greater national competitiveness, the Government will promote higher value-added private sector investments through:

First: A Co-Investment fund of RM500 million to be coinvested and matched by private investors on a ratio of at least 1 to 3 which will make the total funds amount to RM2 billion for investment in early-stage and growth-stage Malaysian companies;

Second: waiving of the listing fees by Securities Commission and Bursa Malaysia for one year, for companies seeking listing on Leading Entrepreneur Accelerator Platform (LEAP) or Access, Certainty, Efficiency (ACE) markets, as well as companies with market capitalisation of less than RM500 million seeking listing on the Main Market;

Third: BNM will provide an SME Automation & Digitalization Facility of RM300 million at an interest cost of 3.75%;

Fourth: the Government will provide accelerated capital allowances over a two-year period on expenses incurred on machinery and equipment including ICT;

Fifth: The government will provide a tax deduction of up to RM300,000 on renovation and refurbishment cost; and

Sixth: Import duty and sales tax exemption on importation or local purchase of machinery and equipment used in port operations for 3 years commencing 1 April 2020.

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