Author: Crowe Malaysia
In 2020, the Malaysian Government announced four stimulus packages worth RM305 billion to keep the economy running against the backdrop of a global pandemic. Coupled with the initiatives under Budget 2021, it was hoped that 2021 would be a year of swift economic recovery given Malaysia’s past success in managing the Covid-19 outbreak. However, record high cases and widespread community infection had necessitated the re-imposition of the Movement Control Order (MCO 2.0) and a declaration of a National Emergency, the first of its kind for the country in this century.
In response to these new developments, the Malaysian Government has announced the PERMAI Assistance Package worth RM15 bil. This round of economic assistance aims to at provide vital support to businesses and the general public who may be affected by MCO 2.0. Continued cash assistance to selected groups, improvements in the i-Sinar program, tax reliefs for screening and detection, and the loan moratorium extensions stand out as key policy announcements to help uplift the ailing Malaysian economy amid this crisis.
Despite many hoping that that 2021 would see a return to “business-as-usual” practices, it seems that greater uncertainties now lie ahead. For now, the only thing that remains certain is that economic challenges remain and may only abate once global vaccine rollouts have reached optimum levels. In the meantime, taxpayers are faced with further economic uncertainties along with questions as to how these initiatives will help them weather this storm.
Key Highlights at a Glance
The focus is on the extension and enhancement of existing schemes that were introduced in 2020, including various tax exemptions and relief, cash assistance. This includes bringing forward the final payment of the Bantuan Prihatin Nasional (BPN 2.0) to 21 January 2021, while households earning up to RM5,000 per month will receive RM300 each, with single individuals earning up to RM2,000 per month receiving RM150 as the first instalment payment under phase one of Bantuan Prihatin Rakyat (BPR) scheme.
Other highlights include:
- Expansion of tax relief for full health screening expenses, increased from RM500 to RM1,000 under Budget 2021, to cover COVID-19 screening.
- The period of claiming special deduction on rental discounts given by landlords of private business premises to Small and Medium Enterprises (SME) is extended to 30 June 2021 and the deduction is expanded to include rental reduction given to non-SMEs.
- The period of claiming the special tax relief of up to RM2,500 on the purchase of mobile phones, computers and tablets is extended to 31 December 2021.
- The period of full Sales Tax exemption for purchase of locally assembled cars and 50% exemption of Sales Tax for purchase of imported passenger cars is extended to 30 June 2021.
- Enhancement and extension of the Wage Subsidy Programme for a further period of 1 month with subsidy of RM600 per employee per month for all eligible employers operating in the states affected by the Movement Control Order (MCO).
- Relaxation of the condition for Excise Duty and Sales Tax exemption on the disposal of taxi owned more than a period of 7 years to 5 years.
- Extension of the effective period of inability to perform contractual obligations under the Temporary Measures for Reducing the Impact of COVID-19 Act 2020 to 31 March 2021.
Employers and Businesses
In a bid to curb an economic recession, the government has pledged to continue schemes that aim to distribute funds, speed up processes and delay loans. Discounts have also been promised for essential services, with an electricity rebate to all Tenaga Nasional Berhad (TNB) users at a rate of 2 sen per kilowatt-hour from 1 January 2021 to 30 June 2021. Six business sectors will also receive 10% off on their electricity bills from January to March 2021, comprising of hotel operators, theme parks, convention centres, shopping malls, local airline offices as well as travel and tour agencies.
Other highlights include:
- Moratorium on MARA loans will be given until 31 March 2021 and MARA will provide a 30% rental discount on business premises for 6 months from November 2020 to April 2021.
- A guarantee of RM1 billion is given for the Bus and Taxi Hire Purchase Rehabilitation Scheme where a 50% guarantee on financing from hire purchase and leasing companies will be provided for selected buses such as sightseeing buses, and taxis.
- The implementation of microcredit schemes to micro-enterprises and SMEs that had been announced previously will be expedited.
- One-off financial assistance of RM500 will be given to tourist guides, drivers of taxis, school buses, tour buses, rental cars and e-hailing vehicles.
- An allocation of RM300 million is provided to accelerate the implementation of the SME and Micro SME e-Commerce Campaign and Shop Malaysia Online campaign.
- Enhancement of the Danajamin PRIHATIN Guarantee Scheme with the maximum financing limit increased to RM1 billion and the scope of financing expanded to include working capital with a guarantee period of up to 10 years. The scheme is also now open to foreign-owned companies operating in Malaysia as long as Malaysians make up at least 75% of their workforce.
- The conditions for the Employment Insurance Scheme program will be relaxed for those who lost their jobs during the enforcement of the MCO.
- An allocation of RM24 million is provided to fund the full contribution under SOCSO’s Self-Employment Social Security Scheme for delivery riders.
- An additional allocation of RM650 million is given for the expansion of the Prihatin Special Grant Plus assistance to cover 500,000 SMEs in the 7 MCO states with a payment of RM1,000 each, while 300,000 SMEs in other states will receive RM500 each.
For citizens, the various allocations are aimed at sustaining the general population, especially those in the B40 and M40 categories, with a focus on essential goods and services that aim to tide them through this trying period of time. RM50 mil will be allocated to the Food Basket Program, which will provide essential food items worth RM100 for each eligible household, while the Employees Provident Fund (EPF) will advance RM1,000 from the amount applied under the i-Sinar Category 2 facility.
Other highlights include:
- The free internet connectivity of 1Gb per day initiative will be extended until the end of April 2021.
- A matching grant with government-linked companies of RM25 million is allocated under the GLIC/GLC Disaster Relief Network for the provision of community assistance to the elderly, homeless, disabled and flood victims.
- Electricity rebates to all TNB users, both domestic and non-domestic at a rate of two sen per kilowatt-hour, which is equivalent to a reduction in electricity bills of up to 9% for a period of 6 months, from Jan 1 to June 30, 2021
- Moratorium facility including extension of the moratorium and restructuring of loan repayment will continue to be offered by banks.
- PTPTN borrowers affected by the pandemic or floods can apply for a 3-month PTPTN loan repayment moratorium and application for this moratorium can be made until 31 March 2021.
There are several initiatives being extended to frontliners who are tirelessly serving the nation, with funds allocated to healthcare services and personnel in a bid to ensure that the fight against Covid-19 will continue. A one-off payment of RM500 to healthcare frontliners and RM300 to other frontliners will be paid in the first quarter of this year, while the existing special monthly allowance of RM600 to healthcare frontliners and RM200 to other frontliners will continue until the COVID-19 pandemic is over.
Other highlights include:
- An additional 3,500 healthcare personnel will be recruited at the end of January 2021 with an allocation of RM150 million.
- An allocation of RM1 billion will be provided to the Ministry of Health, National Security Council and other relevant agencies for supplies specifically for the healthcare frontliners.
- An allocation of RM100 million is dedicated for private hospitals to treat Covid-19 and non-Covid-19 patients.
- RM3 billion is allocated for the Covid-19 National Immunisation Programme.
Accelerating the Bantuan Prihatin Rakyat (BPR) Assistance
Bantuan Prihatin National (BPN) 2.0 was introduced by the Government in a special announcement under Kita Prihatin on 23 September 2020. Currently, the amount of assistance channelled under BPN 2.0 is as follows:
- B40 households – RM1,000
- B40 single individuals – RM500
- M40 households – RM600
- M40 single individuals – RM300
- The BPN 2.0 payment will be made in two instalments. The first instalment payment was made on 26 October 2020 and the second instalment is expected to be paid in January 2021.
A similar scheme known as the Bantuan Prihatin Rakyat (BPR) was introduced by the Government in the Budget 2021 to replace the previous Bantuan Sara Hidup. However, information on this payment scheme was not made available during the Budget 2021 announcement. It is proposed that the second instalment payment of the BPN 2.0 will start from 21 January 2021 onwards, but there was no mention on the payment date for BPR.