Malaysia’s Prime Minister Tan Sri Muhyiddin Yassin has announced a new economic stimulus package to tackle the impact of COVID-19, named the Prihatin package, valued at RM250bn.
Of the RM250bn, almost RM128bn will be allocated to protecting the welfare of the people, RM100bn to supporting businesses including small and medium enterprises (SMEs), and RM2bn to strengthening the country's economy. An allocation of RM20 billion was previously announced. Speaking on this, PM Muhyiddin said the package will provide "instant assistance" to ease the burden on everyone, stating that no group will be left out, "no one will be left behind."
The key updates for HR and employers to know, follow below.
New Wage Subsidy Programme to help employers retain workers
"In these difficult circumstances, I do not want to see workers lose their jobs and lose their income," shared PM Muhyiddin. Through this programme, the government will provide a wage of RM600 per month for three months.
The programme is targeted at employees earning less than RM4,000 and employers experiencing a 50% decrease in income since 1 January 2020. "Employers must ensure that they do not dismiss employees or direct them to take unpaid leave for three months after the programme is implemented. Also, employers are not allowed to deduct an employee's existing pay."
The move is expected to benefit 3.3mn workers with an allocation of RM5.9bn.
As for workers with service contracts, for instance cleaning services and food supply in schools, public schools, public training institutions and other government agencies including statutory bodies, the government has agreed to pay salaries incurred by contractors involved during the duration of the Movement Control Order (MCO) even when employees are absent from work.
More than 80,000 employees will benefit from this initiative involving an allocation of RM110 million. In addition, the government has also agreed to extend the term of the relevant service contract by one month as a trade-off with the duration of the MCO.
Coming to civil servant welfare, in recognition of their contribution, the government will provide one-off RM500 cash assistance to over 1.5mn civil servants in grades 56 and under, including contract workers, by April 2020. In addition, the government will provide RM500 one-off assistance to over 850,000 government retirees in the same period.
RM4.5bn allocated for five key initiatives to help SMEs
To assist SMEs, including micro-entrepreneurs, the government and Bank Negara Malaysia will provide RM4.5bn in additional funding covering five key initiatives.
First, is to add funds to the RM3bn Special Assistance Fund for the SMEs, bringing the total to RM5bn. In addition, the interest rate for the entire fund will be reduced from 3.75% to 3.5%. Second, is to increase the size of the fund by RM1bn to RM6.8bn under the All Economic Sector Facility, to enhance financing access to SMEs.
Third, he shared, is to provide additional funds of RM500mn under the Micro Credit Scheme, resulting in a total of RM700mn for easy financing. The scheme will be run by Bank Simpanan Nasional with a 2% interest free-of-charge. Loan eligibility requirements have also been extended with a minimum of six months of operation compared to one year of operation.
Further, the financing amount has increased from a maximum of RM50,000 to RM75,000 per entrepreneur, and this initiative is open to all micro-entrepreneurs in all business sectors including taxi operators, bus and taxi operators, the creative industry and online traders.
Fourth, SMEs with business records of less than four years can also take advantage of the BizMula-i and BizWanita-i Credit Guarantee Malaysia Berhad (CGC) schemes for financing of up to RM300,000. And fifth, the Business Financing Guarantee Company (SJPP) will provide RM5bn worth of securities as well as increase the guarantee rate from 70% to 80% for SMEs that have problems obtaining loans.
PM Muhyiddin said: "Through the initiatives above, I believe that financial institutions will continue to provide strong support to viable SMEs, especially in the face of relatively mild economic challenges today."
He also expressed concerns about the fate of company owners who are experiencing cash flow problems. To address this, the government will take the following steps:
First, the EPF will introduce the Employment Consultation Service programme on 15 April 15 this year, a service which includes options for deferral of payments, restructuring and rescheduling of employer contributions. The measure is expected to provide cash flow savings to employers estimated at RM10bn. The initiative will benefit more than 480,000 SMEs and affected companies, while saving over 8 million jobs.
Second, there will be an exclusion of payment for the Human Resources Development Fund levy for all sectors for a period of six months beginning this April. This measure is expected to assist the company's cash flow with an overall saving of RM440mn.
Third, the government has also allowed the postponement of income tax installment payments to all SMEs for a period of three months beginning 1 April. This is in addition to the deferment of tax installment payments given to businesses affected by the tourism sector. For other affected sectors, they will be allowed to amend the amount of income tax imposed during the third, sixth and ninth installment periods during the basic business period.
Increased special allowance for healthcare workers, to RM600/month, allowance extended to officers directly involved in MCO
On the medical front, PM Muhyiddin shared: "To this end, I have announced an RM500mn allocation to the Ministry of Health (MOH), Malaysia. To further enhance the Ministry's capabilities, the Government will allocate an additional RM1bn for the purchase of equipment and services to combat COVID-19, including obtaining medical specialist services from private health services."
Additionally, in support of the MOH's efforts to conduct more COVID-19 tests, the insurance and takaful industry will set up a special RM8mn fund to cover the cost of screening tests worth up to RM300 for each policyholder, and a medical takaful certificate directed by MOH to undergo a test at either a private hospital or private laboratory.
Family insurance and takaful companies will also offer a three-month suspension of premiums or contributions to contributors whose source of income is affected by the outbreak.
Not forgetting the sacrifices made by the healthcare workers during these tough times - in recognition, the government will increase their special allowance, bringing it up from RM400 a month to RM600 a month. This will start from 1 April 2020, and last until the end of the outbreak.
At the same time, the government has also agreed to extend a special allowance of RM200 a month to military, police, customs, immigration, Civil Defense personnel and RELA members who are directly involved in the implementation of the MCO. This allowance will also be paid from 1 April 2020 until the end of the outbreak. An estimated 169,000 additional employees will benefit from this.
One-off cash payments to households and single individuals, including the M40 group
To help locals in general, the government will provide the National Concerned Aid, a one-off cash allocation of nearly RM10bn, which will, for the first time, be channeled to the M40 group. These include private workers, FELDA settlers, farmers, fishermen, small traders and all who belong to the M40 group and below.
The payment will be broken down as follows:
First, RM1,600 will be given to nearly 4mn households earning a monthly income of RM4,000 and below; RM1,000 will be paid in April 2020 and RM600 in May 2020.
Second, RM1,000 will be paid to almost 1.1mn households earning between RM4,000 to RM8,000. RM500 will be paid in April, and the remaining RM500 in May.
Third, RM800 will be given to three million single individuals aged 21 years and above and earning a monthly income of RM2,000 and below; RM500 payment will be paid in April, and the remaining RM300 in May.
Last, RM500 will be paid to 400,000 single individuals aged 21 and above, earning a monthly income of between RM2,000 to RM4,000, of which RM250 will be paid in April and the remaining RM250 in May.
The remaining cash donations under the ongoing Life Assistance (BSH) programme will be paid in July 2020, totalling RM3.2bn.
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Photo / Screengrab of PM Muhyiddin's speech