Highlights of the short-term Economic Recovery Plan
05 Jun 2020
Prime Minister Tan Sri Muhyiddin Yassin announced the short-term Economic Recovery Plan (Penjana) on June 5, 2020.
Malaysia’s unemployment rate is expected to reach 5.5% in 2020, according to the Department of Statistics Malaysia (DOSM). It saw a 3.9% unemployment rate, representing 610,000 jobless people, in March.
- 2.7 million employees or 83.5% had started work as at June 2, compared with 10.2 million in May.
- A RM5 billion, three-month extension for the wage subsidy programme to support 2.2 million workers.
- Forty initiatives worth RM35 billion to stimulate the economy, of which RM10 billion will be direct fiscal injections by the government.
- Six months’ salary for the unemployed under a hiring incentive programme, worth RM800 per month for those aged below 40, and RM1,000 per month for the disabled and those aged above 40.
- RM2 billion to be allocated for skills improvement programmes for youths and the unemployed, benefiting over 200,000 people.
- Incentives on taxes and employee insurance, such as income tax exemption of up to RM5,000 for employers that provide employees with benefits like mobile phones and laptops.
- 300,000 single moms and disabled listed by the Department of Social Welfare to receive a one-off payment of RM300 before Hari Raya Aidiladha.
- An additional allocation of RM50 million for SKIM PEKA B40 (for the bottom 40% income group) to be utilised for healthcare expenses.
- Free Internet data of 1GB for all users from 8am to 6pm every day to surf educational webs and for videoconferencing until Dec 31, 2020, as well as data for unlimited access to government websites, including MySejahtera.
- Grants and loans worth RM700 million for more companies to adopt digitalisation, including a RM100 million digital grant placed under telecommunications companies, a RM500 million SME (small and medium enterprise) technology transformation fund, and a smart automation grant worth RM1 million
for each eligible company.
- SME Bank via the SME Go programme to provide financing for 16,000 G2 and G3 contractors that have received projects under the Prihatin package. No collateral is needed.
- RM1 billion to be offered for tourism-related SMEs for transformational
initiatives to operate in the new normal amid Covid-19, with details to be
announced by Bank Negara Malaysia (BNM) in July.
- A tax rebate of RM20,000 per year for three years for new SMEs between July 2020 and December 2021, with conditions.
- RM10 million matching grants under the Malaysian Global Innovation & Creativity Centre (MaGIC) for social enterprises to use innovative means to assist target groups.
- More e-counters, including for stamping, claims and online interviews for government scholarships.
- A National Stimulation Fund worth RM1.2 billion, of which RM600 million is from the government, with the other RM600 million from domestic investors, to be channelled into business digitalisation efforts. RM100 million will be used to establish the National Technology & Innovation Sandbox.
- Sales tax exemption of 100% for locally assembled passenger vehicles, and 50% for imported passenger vehicles purchased from June 2020 to Dec 31, 2020.
- RM50 to be credited into users’ e-wallet, matched by a RM50 cashback or
discounts by e-wallet operators, benefiting 15 million Malaysians aged above 18
with annual income below RM100,000.
- Real property gains tax (RPGT) exemption for Malaysians for disposal of up to
three properties between June 1, 2020 and Dec 31, 2021.
- A RM50 million matching grant for gig-economy platforms to allocate Social Security Organisation (SOCSO) and Employees Provident Fund (EPF) contributions for their employees.
- Stamp duty exemption for mergers and acquisitions (M&A) for completed transactions between July 1, 2020 and June 30, 2021.
- Reintroduction of the Home Ownership Campaign, which offers stamp duty exemption for memoranda of transfer (MoTs) and financing agreements for properties priced from RM300,000 to RM2.5 million. The exemption for MoTs applies to the first RM1 million of the property value, while for financing agreements it is 100%, applicable to sale and purchase agreements (SPAs) inked between June 1, 2020 and May 31, 2021, subject to a minimum 10% discount provided by developers.
- A 0% tax rate across 10 years for new investments of RM300 million to RM500 million in fixed assets for manufacturers, expanded to 15 years for investments above RM500 million. The location transfer and operation ramp-up must be done within a year from the approval date, while the amount must be invested within three years.
- A RM350 million agro-food fund to be set aside to ensure continuity for farming and commodities entrepreneurs in this sector. Mobility of the farming workforce will be strengthened through incentives given to pioneer companies to train and teach workers. Urban farming entrepreneurs will also be given aid of RM500 per person and RM50,000 per community.
Source: The Edge Markets