The Prime Minister of Malaysia, Tan Sri Muhyiddin Yassin,
launched the Strategic Programme to Empower the People and
Economy ('Pemerkasa') on
17 March 2021. Pemerkasa is valued at RM20.0 billion, with a fresh
fiscal injection of RM11.0 billion.
The Government has identified the following five focus areas to
restore and empower the economy throughout 2021:
- Control the spread of Covid-19;
- Accelerate economic recovery;
- Strengthen the country's competitiveness;
- Implement the regional and community inclusion agenda; and
- Transform the economy.
Pemerkasa comprises twenty strategic initiatives, most of which
focus on the provision of financial assistance to individuals and
businesses.
This article highlights the initiatives that may be of particular
interest to businesses.
Safe@Work initiative
To protect the workforce, the Ministry of International Trade and
Industry ('MITI') will introduce
the Safe@Work initiative whereby employers
assume responsibility to prepare workplaces and accommodations
which are conducive to employees.
Employers that sign up for
the Safe@Work programme with MITI will be
allowed to operate in a situation where workers who are close
contacts of individuals with Covid-19 will be isolated from the
local community and other workers and placed in a "safe
work bubble" until all of them are confirmed to be safe
from Covid-19.
To encourage employers to participate in this programme, the
Government will grant an additional tax deduction of up to RM50,000
on the expenses incurred in renting of premises and hostels to
every manufacturing company and manufacturing-related services
company registered with MITI that passes
the Safe@Work compliance audit. Registration
commences from 1 April 2021.
Separately, employers who carry out Covid-19 testing for their
employees will be granted a further tax deduction on the expenses
incurred in carrying out these tests until 31 December 2021.
Increase in allocation for small scale projects
The Government's allocation for small scale projects for 2021
will be increased from RM2.5 billion to RM5.0 billion. Among the
projects that will be allocated exclusively to classes G1 to G4
contractors are repairs of public infrastructure and facilities
that are damaged by floods, social amenity programmes, repair of
stratified housing including lifts replacement in public housing as
well as construction of stalls in municipalities.
The Government has pledged to simplify the procurement procedures
to expedite the implementation of these projects.
Increased allocation for microcredit financing
The RM1.0 billion microcredit financing facility approved under
the Malaysian Budget 2021 will be increased by RM500 million
through programmes under Bank Simpanan Nasional
('BSN'), National Entrepreneur Group
Economic Fund ('TEKUN'), Majlis Amanah
Rakyat ('MARA') and Small and Medium
Enterprises Corporation ('SME
Corp').
A fund of RM300 million, with a financing limit of RM50,000, will
be made available through BSN at a reduced interest rate of 3.0%
from 3.5%. The tenure of the loan will be five years and repayment
instalments will commence after the sixth month.
For entrepreneurs in the informal sector, TEKUN will make
available an additional RM60 million under its Informal Financing
Scheme, with a financing limit of RM5,000 for small businesses
operating from home and for night market and wet market
operators.
In addition, the TEKUN Mobilepreneur programme will be expanded to
provide financing for the repair or purchase of new motorcycles
with a limit of RM10,000. To complement this initiative, locally
assembled motorcycles with an engine capacity of 150 c.c. and below
will be granted a 100% exemption from excise duty from 1 April 2021
to 31 December 2021.
TEKUN will also introduce the TEKUN POS-preneur programme where
eligible applicants can generate income by delivering goods. A
financial assistance of up to RM20,000 will be given to eligible
applicants for vehicle repairs, with a maximum of RM50,000 for
purchase of vans and lorries.
A sum of RM50 million, with a financing limit of RM50,000 and an
interest rate as low as 3%, will be made available through
MARA's Prihatin Micro Business Financing Scheme, with priority
being given to assist 1,000 bumiputera micro SMEs to continue their
business.
SME Corp will set aside RM50 million to assist local SMEs to
obtain financing of up to RM250,000 at an interest rate as low as
3%.
Extension of Wage Subsidy Programme
The Government will allocate RM700 million to extend the Wage
Subsidy Programme 3.0 for a further three months which is targeted
at the tourism, wholesale and retail sectors, as well as businesses
that were compelled to close during the movement control order,
such as gymnasiums and spas.
The PenjanaKerjaya apprenticeship programme
The existing PenjanaKerjaya apprenticeship programme will be
enhanced by extending the apprenticeship period from three months
to six months and trainees under the programme will receive an
incentive of RM800 per month for the six-month period.
Reviving the tourism and retail sectors
The following measures have been announced to assist the tourism
sector:
- Extend the tourism tax and service tax exemptions on accommodations provided by hotel operators until 31 December 2021;
- Extend the tax incentives to tour operators until year of assessment 2022;
- Allow deferment of monthly instalment payments of income tax from 1 April 2021 to 31 December 2021 for companies in the tourism industry and selected industries such as cinemas and spas;
- Grant entertainment duty exemption on entrance fees for places of entertainment such as theme parks, stage performances, sports events and competitions, as well as cinemas in the Federal Territories;
- Extend the scope of personal income tax relief of up to RM1,000 to cover expenses incurred in purchasing tour packages through tour agents registered with the Ministry of Tourism, Arts and Culture ('MOTAC'); and
- Exempt all affected companies in the tourism and retail sectors from paying the Human Resources Development Fund levy until June 2021.
In addition, the Government has agreed to channel a one-off
grant of RM3,000 under the Special Assistance Grant to more than
5,000 tour agencies registered with MOTAC as well as a one-off cash
assistance of RM600 to 4,000 homestay operators registered with
MOTAC.
The 10% special discount granted on electricity bills for
operators of hotels, theme parks, convention centres, shopping
centres, offices of local airline operators and tour and travel
agencies will be extended for three months until 30 June 2021 to
assist the cash flow and reduce the operating costs of these
operators.
Reducing the burden on companies
To ensure that alternative financing thrives, the Securities
Commission Malaysia will increase the fundraising limits on equity
crowdfunding platforms from RM10 million to RM20 million. Unlisted
public companies will also be allowed to raise funds through these
platforms.
To encourage companies to raise funds on the stock market, a
12-month exemption will be granted on listing-related fees for
companies that apply for listing on the Main, ACE or LEAP markets
of Bursa Malaysia. In addition, a rebate on listing-related fees
for 2021 will be granted to listed companies that report losses
based on their quarterly reports. Further details of these measures
are available in the joint media release issued by the Securities
Commission Malaysia and Bursa Malaysia on 19 March
2021.
To reduce the burden on companies that are facing financial
difficulties which may result in their winding up, the Companies
Commission of Malaysia (SSM) has agreed to increase the threshold
of 'inability to pay debts' under section
466(1)(a) of the Companies Act 2016 for commencement of winding up
proceedings from RM10,000 to RM50,000. This initiative is not new
and is an extension of the present debt threshold level prescribed
under the Prescription of Amount of Indebtedness of Company under
Paragraph 466(1)(a) dated 23 December 2020 (Gazette No. 21841 dated
30 December 2020) which is due to expire on 31 March 2021. The
Prime Minister did not provide any indication as to whether this
debt threshold will be permanent or for a fixed duration.
Assistance for co-operatives
To assist co-operatives that are affected by the Covid-19
pandemic, the Malaysia Co-operative Societies Commission will set
aside RM50 million from the Malaysia Co-operative Societies
Commission Revolving Capital Fund to provide unsecured financing
incentives of up to RM100,000 per co-operative society, with
repayment commencing six months after the approval of the
financing.
Matching grants for oil palm industry
The Government has approved a matching grant of RM30 million to
encourage investment in the mechanisation and automation of the oil
palm industry.
The Government will also increase the matching grant allocated for
the purpose of purchasing machinery for the Sustainable Oil Palm
Growers Cooperative by RM20 million.
SMEs
To assist Small and Medium Enterprises (SMEs) to obtain financing,
Bank Negara Malaysia has increased the allocation under the
Targeted Relief and Recovery Facility by RM2.0 billion to RM5.0
billion, and the SME Automation and Digitalisation Facility
('ADF') by RM700 million to RM1.0 billion.
Further details of the ADF are available here.
Automation and Digitalisation
Malaysian Industrial Development Finance Berhad has set aside
RM200 million for a financing scheme to promote the development of
automation, digitalisation and adoption of green technology and has
agreed to reduce the interest rate from 5% to 3% for 12 months
commencing 1 April 2021.
At the same time, an additional allocation of RM50 million for the
Smart Automation Grant under the Malaysian Investment Development
Authority will be provided to enable more SMEs and mid-tier
companies to enhance operational and manufacturing efficiencies
through advanced technology. An allocation of RM50 million will be
made available for the Industry4WRD programme under MITI to support
the Industrial Revolution 4.0 (IR4.0).
To encourage SMEs to increase the use of automation in order to
reduce their dependency on foreign workers, SME Bank will make
available a fund of RM200 million for financing the purchase of
machinery with an incentive grant of up to 20% of the value of the
machinery.
5G and existing telco infrastructure
In his speech, the Prime Minister also confirmed that 5G services
will be rolled out in Malaysia in stages beginning end-2021. The
Prime Minster also confirmed that RM3.2 billion will be set aside
by the Malaysian Communications and Multimedia Corporation in 2021
to improve the quality of broadband services by upgrading existing
transmission stations and provide fibre optics access to various
premises.
Promoting investments and exports
Foreign investment and international trade are to be given special
focus as an important enabler for the national recovery programme.
For this purpose, MITI will explore new potential exports and
encourage the adoption of automation and mechanisation among
industry players. Among the measures to be implemented will be the
eBizLink initiative, a virtual and hybrid digital marketing
platform, and the Globeprenuer initiative which seeks to enable
more SMEs to enter the international market.
The Government will also increase the ceiling for the Market
Development Grant (MDG) from RM300,000 to RM500,000 for each
company that participates in international exhibition
platforms.
A RM50 million matching grant will be made available to develop
the aerospace and medical devices industries.
Encouraging sustainable financing
The Pemerkasa programme will also support Malaysia's
sustainability agenda, in particular to achieve the United Nations
Sustainable Development Goals ('SDG') by
2030. The Government and the United Nations in Malaysia will
establish the MySDG Trust Fund as a platform to enable financing
from various sources to finance projects that fulfil the SDG
criteria. This initiative appears to have been announced during the
Malaysia Budget 2021 where the Finance Minister stated at paragraph
219 of the Budget Speech that a fund to be known as the
Malaysia-SDG Trust Fund or MySDG Trust Fund will be established
with an initial allocation of RM20.0
million.
To support the country's goal to become a sustainable
financial hub, the Government will launch a Sustainable Sukuk of
not less than USD1.0 billion to finance programmes and projects
with sustainable elements and address the socio-economic effects
resulting from the Covid-19 pandemic.
Empowering women entrepreneurs
To empower women entrepreneurs, the Government will allocate RM30
million for the SME and Micro SME e-Commerce Campaign as well as
the Shop Malaysia Online Programme to assist such entrepreneurs to
switch to online marketing. In addition, BSN will make available
RM50 million for the PEMERKASA-NITA Micro Financing Scheme to
encourage women entrepreneurs to venture into business.
A sum of RM10 million will be set aside in the form of a 70%
matching grant for women entrepreneurs and self-employed women
under the SOCSO Self-Employed Social Security Scheme.
Empowering youths
Among the measures to empower the youths, BSN will offer a
PEMERKASA-BELIA Micro Financing Scheme with an interest rate from
as low as 3% and a maximum financing amount of RM50,000 to enable
youths to venture into business.
Comments
Pemerkasa is the sixth assistance package introduced by the
Malaysian Government since the first quarter of 2020 to mitigate
the economic downturn caused by the onset of the Covid-19 pandemic
and to revive the Malaysian economy.
Many of the initiatives comprised in this programme seek to assist
Malaysians and Malaysian businesses to recover from the economic
downturn caused by the Covid-19 pandemic. While the Prime Minister
has stated that greater emphasis will be given to foreign
investment and international trade to assist in the economic
recovery process, there does not appear to be sufficient
initiatives in these areas to suggest that they will contribute
significantly to the recovery process.
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