What Is In The Government’s New RM35 Billion Economic Recovery Plan?
Prime Minister Muhyiddin Yassin unveiled a new short-term economic recovery plan – titled “Pelan Jana Semula Ekonomi Negara” or “PENJANA” – on June 5, 2020. The plan – worth RM35 billion – will include a direct RM10 billion fiscal injection in the Malaysian economy.
Following are the key highlights of the 40 initiatives provided in this new plan.
Some RM9 billion will be directly used to address rising unemployment and benefit over three million workers nationwide.
Firstly, the Wage Subsidy Programme that was introduced in the PRIHATIN economic stimulus package will be continued for another three months. It will provide subsidy of wages at a rate of RM600 per employee for each qualifying company.
Companies that were not allowed to operate during the conditional movement control order (MCO), and have put employees on unpaid leave, can also apply for the subsidy on the condition that the funds go directly to the employees themselves.
Additionally, financial incentives will be put in place to encourage companies to recruit unemployed individuals as follows:
|Employers||RM800 a month for employing unemployed individuals who are below the age of 40|
|RM1000 a month for employing unemployed individuals who are above the age of 40 or OKU.|
|RM600 a month for providing internships for fresh graduates and school leavers.|
|Unemployed individuals||Claim RM4,000 training allowance under the Employee Insurance Scheme; even if they have never contributed to it.
|Gig economy||RM50 million in matching grants for companies to make SOCSO and EPF contributions for their employees.|
These incentives are set to run for a period of six months.
Fighting unemployment through alternative means like providing Flexible Work Arrangements (FWAs) will also receive government assistance in the form of further tax deductions for employers who implement FWAs.
Meanwhile, employees who receive a computer, tablet, or smartphone from their employer will be allowed to claim income tax exemption of up to RM5,000 each.
Childcare, Transportation, Internet
Grants are also provided for daycare centre operators to conform to the new mandatory standard operating procedures (SOP) set out by the National Security Council.
Parents that book nanny and childcare services online will qualify for RM800 in e-vouchers to subsidise their childcare costs. Income tax relief for fees paid to kindergartens and daycare providers will also be increased to RM3,000 from the current RM2,000.
For those who take public transportation, a new My30 unlimited pass will be available from June 15 until the end of 2020. This pass allows for unlimited rides on public transportation operated by Prasana in the Klang Valley for only RM30 per month.
At the same time, local telcos have jointly announced that they will be providing 1GB of free mobile data for all Malaysians each day. This is available from between 8am and 6pm, and is meant to be used for educational purposes and work productivity.
Additionally, mobile data connections to government websites and COVID-19 applications will be zero-rated.
Encourage domestic spending
The government is allocating RM70 million under its Shop Malaysia Online campaign to be used for e-commerce promo codes and discount vouchers. This amount will be matched by the e-commerce sites with their own promotions.
To encourage Malaysians to use contactless payments, the government is yet again allocating funds to be distributed as e-wallet credit. Each Malaysian citizen earning below RM100,000 per year will be entitled to claim RM50 when applications open in July 2020.
A special individual tax relief of up to RM2,500 will also come into effect on June 1 for the purchase of handphones, computers, and tablets.
The Home Ownership Campaign (HOC) will be introduced. Stamp duty exemption on the transfer of property and loan agreement for home purchases between RM300,000 and RM2.5 million between June 1, 2020 and May 31, 2021 will be implemented. A real property gains tax (RPGT) exemption is also implement for Malaysians disposing up to three properties from June 1, 2020 to December 31, 2021
Finally, locally assembled cars will see a 100% sales tax exemption from June until December 31, 2020. Imported cars will see a 50% discount on sales tax during this same time.
More assistance is being extended to SMEs to ensure that they are able to continue operating, with many funds being distributed through multiple avenues.
|PENJANA SME Financing||RM2 billion; threshold of RM50,000 per SME|
|PENJANA Microfinancing||RM400 million in microcredit; RM50 million allocated for female entrepreneurs|
|PENJANA Tourism Fund||RM1 billion for tourism industry|
|Bumiputera Relief Financing||RM500 million for bumiputera-owned businesses|
This is not a complete list of the government’s efforts, but only a snapshot of the ones we believe are the most relevant to our readers. Numerous other funds are also being established for more focused purposes, including ones to encourage social enterprises.
These efforts are a continuation of the last economic stimulus package that was announced on March 27, 2020. Many of the schemes outlined in that package were designed to help individuals cope with what was expected to be an extended shut down of the economy.
This PENJANA package is instead designed to jumpstart local spending by encouraging people to get out and start spending again; and to provide financial support for businesses that are trying to get back on their feet.