These Are The Incentives To Look Out For In The New 2020 Economic Stimulus Package
The plan to mitigate effects of COVID-19 on the country's economy is valued at RM20 billion.
By May Vin Ang — 28 Feb 2020, 06:05 PM
Interim Prime Minister Tun Dr Mahathir Mohamad just unveiled the government's plan to address the country's economy that has been adversely affected by the COVID-19 outbreak
According to Bernama, Tun Dr Mahathir stated that an immediate effect has been the sharp decline in tourist arrivals throughout the country, badly affecting hotels, airlines, travel companies, as well as the tourism-dependent retail industry.
The 2020 Economic Stimulus Package that he announced yesterday, 27 February, is valued at RM20 billion to mitigate the novel coronavirus epidemic's impact.
It will be implemented in a three-part approach:
- First, ease the cash flow of affected businesses,
- Second, assist affected individuals, and
-Third, stimulate demand for travel and tourism.
The economic stimulus involves a variety of measures, including cash aid and incentives to individuals, to ease the cash flow in the country
According to Malaysiakini, among the measures listed in the plan include:
- RM600 one-off payment to taxi drivers, tourist bus drivers, tourist guides, and registered trishaw drivers.
- RM400 special monthly critical allowance for doctors and medical personnel directly involved in containing COVID-19.
- RM200 for immigration and related front line staff from February until end of the epidemic.
- RM200 Bantuan Sara Hidup (BSH) payment for May will be moved forward to March.
- An additional RM100 will be paid to BSH recipients in May.
- An additional RM50 will be added to BSH recipients' e-wallets.
- Up to RM1,000 personal income tax relief on expenditure related to domestic tourism.
- Up to RM100 worth of domestic tourism digital vouchers for domestic flights, rails, and hotel accommodation for all Malaysians.
- 4% reduction of Employees Provident Fund (EPF) contribution, from 11% to 7%, effective from 1 April until 31 December 2020.
The last strategy alone will potentially unlock up to RM10 billion worth of private consumption, said Tun Dr Mahathir, but assured that Malaysian employees have the option to opt out and maintain their contribution rate.
The package also lists other incentives to help businesses most adversely affected by the coronavirus outbreak
For a period of six months, from April until September 2020, these businesses are able to enjoy:
- Deferment on their monthly income tax instalments,
- 15% discount in monthly electricity bills to hotels, travel agencies, airlines, shopping malls, conventions, and exhibitions centres,
- Exemption from Human Resource Development Fund (HRDF) levies for hotels and travel-related companies, and
- Exemption of 6% tax for hotels, but earlier from March until August 2020.
Here are a few other incentives that may involve individuals:
- RM2 billion special relief facility, in the form of working capital, will be provided to small and medium enterprises (SME) by Bank Negara at an interest rate of 3.75%.
- Malaysia Airport Holdings Berhad will provide rebates on rental for premises at the airport as well as landing and parking charges.
- RM100 million grant that must be matched by HRDF to fund an additional 40,000 employees from the tourism and other affected sectors.
- RM50 million to subsidise short courses in digital skills and highly skilled courses for 100,000 Malaysians.
- RM6,000 increased claimable training cost for retrenched Malaysian employees by the Employment Insurance System (EIS), with a daily RM30 training allowance for trainees.
- RM1,000 grants to be given to to 10,000 local entrepreneurs to promote the sale of their products on the e-commerce platform.
In his speech, Tun Dr Mahathir said he hopes the 2020 Economic Stimulus will be as successful as the one implemented in 2003
Malaysia had experienced a similar situation that year when the Severe Acute Respiratory Syndrome (SARS) outbreak happened which caused the gross domestic product (GDP) to shrink.
However, he said as a result of a comprehensive economic stimulus package, the country's economy recovered by the end of the year.
"I believe the economic stimulus package will enable the Malaysian economy to achieve the highest point of the [GDP growth] range," he said.
"The government calls on the rakyat to remain steadfast, brave, and diligent in prevailing over the current challenges and emerge even stronger after this episode," he added.
