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The prihatin rakyat economic stimulus package for smes and businesses

In light of the covid-19 outbreak and the Movement Control Order (“MCO”) implemented by the Government effective from 18th March 2020 to 14th April 2020, the Government’s move in introducing stimulus packages is welcomed.

The Prime Minister Tan Sri Muhyidin Yassin announced the recent PRIHATIN Rakyat Economic Stimulus Package (“the Stimulus Package”) worth RM250 billion on 27th March 2020.

The following are the financial assistance for small and medium enterprises (“SMEs”)(including micro-entrepreneurs) announced by the Government:

i. Additional funds of RM3 billion under the Special Relief Facility provided by Bank Negara Malaysia, making the total to RM5 billion, for SMEs with the interest rate of 3.5%. The interest rate was previously set at 3.75%;

ii. Additional funds of RM1 billion under the All Economic Sector Facility, bringing the total to RM6.8 billion;

iii. Additional funds of RM500 million under the Micro Credit Scheme, which will be administered by Bank Simpanan Nasional, bringing the total to RM700 million with the interest rate of 2% with no collateral. The loan eligibility requirements have been relaxed where SMEs with a minimum of 6 months operation will now be able to apply for the facility compared to 1 year of operation; maximum of financing amount is increased from RM50,000 to RM75,000 per entrepreneur (previously was RM50,000).;

iv. SMEs with business records of less than 4 years can leverage on the BizMula-i and BizWanita-i schemes for financing up to RM300,000 from Syarikat Jaminan Kredit Malaysia Berhad (CGC); and

v. Provision of RM5 billion worth of guarantees and increase ofguarantee coverage from 70% to 80% for SMEs by Syarikat Jaminan Pembiayaan Perniagaan (SJPP).

In addition, the following measures are also introduced to address cashflow problems faced by the businesses:

i. Introduction of an employer consultation service programme by the EPF which will allow the employers to postpone, restructure or reschedule the employer’s EPF contribution, which will be launched on 15 April 2020;

ii. Exemption on the Human Resources Development Fund (HRDF) levies for all sectors for 6 months starting from April 2020; and

iii. Deferment of income tax payment for 3 months for all SMEs, starting 1 April 2020. For other affected sectors, they are allowed to defer the income tax imposed on the third, sixth and ninth month during the business period.

Further, the Government has also introduced a Wage Subsidy Programme where employers suffering a fall in income of more than 50% since 1 January 2020 can claim RM600 per worker for a period of 3 months from SOCSO. This is applicable for workers with monthly salaries of RM4,000 and below, who have registered and are contributing to Employment Insurance Scheme (EIS).

Additional steps have also been taken by Bank Negara Malaysia in announcing a six-month moratorium on loan repayments and the restructuring of outstanding credit card balances (“the Six-Month Moratorium”) involving about RM100 billion starting April 1. This measure is aimed to ease the burden of individuals and SMEs.

SMEs are hopeful for an announcement by the Government on further refinements to the stimulus package with provisions to assist them to get through this financially challenging period.