What Is In The 2020 Economic Stimulus Package? [Updated]
Former Prime Minister Tun Dr Mahathir Mohamad had announced the first 2020 economic stimulus package back in February, designed to counteract the adverse effects of the COVID-19 virus. The package targets businesses and individuals in the tourism and travel industries.
Yet, there are also provisions to promote domestic tourism. Giving even regular Malaysians a little something to encourage them to keep the local economy going.
While there are substantial benefits for companies, we will just keep focused on the benefits for individuals.
|Everyone||Personal income tax relief of up to RM1,000 on expenditure related to domestic tourism.
|Digital vouchers for domestic tourism of up to RM100 per person for domestic flights, rails and hotel accommodations.|
|Minimum Employees Provident Fund (EPF) contribution by employees will be reduced from 11% to 7% from April 2020 to December 2020. Malaysians will still be able to opt out of this change.|
|Bantuan Sara Hidup (BSH)||Payments scheduled for May 2020 will be brought forward to March 2020.|
|An additional RM100 will be paid into the bank accounts of all BSH recipients in May 2020.|
|A further RM50 in e-tunai will also be paid out.|
|Taxi, tourist bus, and trishaw drivers; tourist guides||A one-off RM600 payment.|
|Government medical personnel||A special monthly critical allowance of RM400 for doctors and personnel directly involved with containing COVID-19.|
|Immigration staff||A special monthly critical allowance of RM200 for immigration and related front line staff.|
The overall stimulus package is expected to be worth RM20 billion, and includes additional breaks for tourism related companies and individuals. These include income tax deferments, a 15% discount on electricity bills, and service tax exemptions from April to September 2020.
In his speech, Mahathir also called on all industry players to do their part in sharing the burden; asking for hotels to offer discounts and for shopping malls to temporarily reduce the rent for tenants.
Malaysia Airlines Holdings Berhad has already pledged to do its part by providing rebates on rental at its premises at the airport; including those for parking and landing.
COVID-19 and the resulting economic environment is expected to put Malaysia’s gross domestic product growth for 2020 in the 3.2% to 4.2% region. However, this also increases the estimated fiscal deficit from 3.2% to 3.4%.
Malaysia is not the only country to be feeling the effects of the growing health scare. Markets across the globe are shaken due to reduced manufacturing output from China; with technology giant Apple also feeling the pinch.
This package, now worth some RM250 billion covers a wide range of economic aspects. It also provides much needed relief to not only the B40, but also those in the lower middle income group.
|Government medical personnel||Special monthly critical allowance increased from RM400 to RM600 per month until the end of the pandemic|
|Personnel enforcing the MCO||RM200 per month until the end of the pandemic for police, army personnel, civil defence members, and RELA.|
|Households with income below RM4,000||RM1,600 (RM1,000 to be paid in April and RM600 in May 2020)|
|Households with income between RM4,000 and RM8,000||RM1,000 (RM500 to be paid in April and RM500 in May)|
|Single individuals above the age of 21 and earning less than RM2,000 per month||RM800 (RM500 to be paid April, RM300 in May)|
|Single individuals above the age of 21 and earning between RM2,000 and RM4,000 per month||RM500 (RM250 to be paid in April and in May)|
|Higher education students of all levels (IPTA, IPTS, Polytechnic, Matriculation, Community College)||RM200 one-off payment|
|PTPTN||Repayments delayed for 6 months.|
|Civil servants Grade 56 and below (including contract workers)||RM500 one-off payment|
|Employers||RM600/month/employee if the business has had a 50% dip in earnings since January 1 2020|
|E-hailing drivers||RM500 one-off payment|
|Electricity||- 50% discount for electricity usage below 200 kWH
- 25% discount for electricity usage between 201 kWH and 300 kWH
- 15% discount for electricity usage between 301 kWH and 600 kWH
|Internet||Free internet plans from April 1 until the end of the MCO.|
The Prime Minister set out to reassure the public that this government has the welfare of everyone in mind when outlining it’s plans to cushion the current economic downturn. He had only days before announced that the MCO would be extended past the March 31 deadline to April 14. Adding an additional two weeks of businesses being shut and the public being advised to stay at home unless performing essential tasks.
Additional steps have also been taken by Bank Negara Malaysia issuing a six month moratorium on the repayment of loans and financing.
However, it is currently unclear as to how the free internet packages will be deployed; although local telcos have already been pledging free data cap upgrades to customers for the duration of the MCO.
We are also compiling a list of everything you need to know about the COVID-19 pandemic in Malaysia. So check out our survival guide every now and then to see if you missed anything.