Amidst the brouhaha of Malaysia’s political affairs, interim prime minister Tun Dr Mahathir Mohamad announced the 2020 Economic Stimulus Package. Valued at MYR20 billion, the stimulus package is anchored on three pillars: mitigating the impact of COVID-19; spurring people-centric economic growth; and promoting quality investments.
The Malaysian interim premier said the stimulus package is to ensure the economic risks associated with the pandemic is effectively addressed. He added that the various strategies that have been formulated are to ensure the nation’s economy remains on strong foundations.
He acknowledged and thanked doctors, nurses, health workers, immigration and other front-liners who have been protecting and serving the nation during the COVID-19 outbreak. While well-contained, the outbreak’s significant impact on the global economy and Malaysia is not to be underestimated.
One of the first and hardest hit by the novel coronavirus is the travel and tourism industry. Unsurprisingly, the stimulus package is laser-focused in helping tourism-related businesses, affected individuals as well as to boost demand for travel and tourism. Considering this year is the Visit Malaysia Year, it is a sensible move.
Specifically for the rakyat, the government will be giving a one-off payment of MYR600 each to taxi drivers, tourist bus drivers, tourist guides and registered trishaw drivers. On the flip side, it’s surprising that e-hailing drivers and riders have been excluded from this list.
In appreciation to those on the front line protecting the nation from the COVID-19 outbreak, medical doctors and medical personnel will receive a monthly critical allowance of MYR400, while immigration and related frontline personnel will receive MYR200 per month. This commences from February 2020 until the end of the pandemic.
In efforts to further invest in raising the productivity of human capital during the expected economic slowdown, the government is providing MYR100 million on a matching grant basis to HRDF to fund an additional 40,000 employees from the tourism and other affected sectors.
Another MYR50 will be provided to subsidise short courses in digital skills and highly skilled courses. This will benefit 100,000 Malaysians.
Retrenched Malaysian workers can rely on the Employment Insurance System (EIS) which has a current fund size of MYR1.1 billion. EIS will increase the claimable training cost from MYR4,000 to MYR6,000 for the affected sectors. Furthermore, daily training allowance of MYR30 per day will be provided to EIS trainees.
The government is looking to promote and stimulate domestic tourism and is offering personal income tax relief of up to MYR1,000 on expenditure related to domestic tourism.
All Malaysians will also be eligible to digital vouchers for domestic tourism of up to MYR100 per person for domestic flights, rails and hotel accommodations. That aside, the government is providing matching grants for tourism promotion, with an allocation of MYR500 for vouchers and tourism promotion.
To boost local consumption and cushion the economy from negative external factors, the government will introduce new incentives to boost the rakyat’s income as well as reduce the cost of living. Firstly, the government is reducing the minimum Employees Provident Fund (EPF) contribution by employees from 11 percent to 7 percent with effect from 1 April 2020 to 31 December 2020. This move has the potential to unlock up to MYR10 billion worth of private consumption. Nonetheless, Malaysians have the option to opt-out of this new rate and maintain the current contribution rate.
All B40 category Bantuan Sara Hidup (BSH) recipients will be receiving their MYR200 incentives earlier than scheduled—from May 2020 to March 2020. Moreover, an additional MYR100 will be credited into BSH recipients’ bank accounts in May 2020. That’s not all, an additional MYR will be channelled in the form of e-tunai.
To help reduce food prices and lower the cost of living, BNM has a MYR1 billion agrofood fund to promote food production activities; the government is also allocating MYR10 million to FAMA to provide food storage facilities to help reduce food prices.
Dr Mahathir said Malaysia’s GDP growth in 2020 is estimated to be in the range of 3.2-4.2 percent. He believes the economic stimulus package will help Malaysia achieve the highest point in the range.
Read Dr Mahathir Mohamad’s full speech here.
What do you think of the 2020 Economy Stimulus Package?