This package is expected to help keep two-thirds of the workforce employed and includes initiatives such as an increased wage subsidy, a Special Prihatin Grant for eligible micro-enterprises, and more.
Malaysia’s Prime Minister Tan Sri Muhyiddin Yassin announced yesterday that an additional RM10bn will be allocated to SMES under the Prihatin Package, in hopes to ease their financial burdens and ensure that two-thirds of the workforce remains employed.
This package, named Prihatin Plus, will include the following additional measures:
First, the wage subsidy programme announced on 27 March will be expanded from RM5.9bn to RM13.8bn, an increase of RM7.9bn. Under this additional initiative, all companies with local employees earning a monthly salary each of RM4,000 and below will receive wage subsidies according to the size of their workforce.
- Companies with a workforce of more than 200 people will receive a wage subsidy of RM600 per month for every retained worker; the maximum number of workers that a company is eligible to claim for will also be increased from 100 to 200.
- Companies with between 75 to 200 employees will receive a wage subsidy of RM800 per month for every employee.
- Finally, companies with less than 75 employees will receive a wage subsidy of RM1,200 per month per employee. Through this enhancement, companies will receive more benefits and assistance.
This assistance will be for three months, and is specifically for employers registered with the Companies Commission of Malaysia (SSM) or local authorities before 1 January 2020, and are registered with the Social Security Organisation. It is estimated that 4.8mn employees will benefit from this initiative.
Employers opting to accept this assistance are required to retain their employees a minimum period of six months, i.e. three months during the period of assistance and three months thereafter.
Second, a Special Prihatin Grant amounting to RM2.1bn will be established for eligible micro-enterprises, with RM3,000 allocated to each company. This will benefit almost 700,000 micro-enterprises, and these firms will have to register with LHDN to receive this assistance.
Third, PM Muhyiddin urged registered money lenders who offer credit facilities under the Money Lenders Act 1951, to provide moratoriums to SMEs on loan repayments for six months starting April 2020, similar to what banks are providing. He added: “hope that these money lending organisations are equally sympathetic to the hardship faced by their clients and together helping to ease their financial burden.”
The government has also undertaken a series of initiatives for SMES to fully benefit from the assistance measures announced. These include:
- First, the abolishment of the 2% interest rate under the Micro Credit Scheme amounting to RM500mn under Bank Simpanan Nasional. The soft loan scheme for micro-enterprises is also extended to TEKUN Nasional with a maximum loan limit of RM10,000 at 0% for each enterprise. A total of RM200mn will be allocated in funds for this purpose. Applicants are given an option to choose either scheme to ensure more beneficiaries of this facility.
- Second, waiving or providing discounts for rentals to SMEs in the retail sector, which are operating on premises owned by Government-Linked Companies (GLCs). “I would like to thank GLCs such as MARA, PETRONAS, PNB, PLUS and UDA as well as several State Governments who have agreed to give either discounts or rental waivers on their premises to SME tenants,” PM Muhyiddin shared. He also urged owners of private premises to provide similar assistance to their tenants, in reducing their rental rates.
- Third, reducing foreign worker levies by 25%, to all companies with work permits expiring between 1 April to 31 December 2020. This reduction will not apply to the domestic help sector.
Moving on, PM Muhyiddin noted that employers would currently be facing difficulties retaining employees. “In this regard, the Government encourages employers to actively engage with their employees on employment terms including the options of pay cuts and unpaid leave during the MCO period.
“Employers and employees may refer to the Department of Labour to seek advice on solutions for issues raised. Any negotiations should be subjected to employment laws currently being enforced. What is important is that the rights and welfare of both sides are taken care of.”
Apart from the above, companies will be given a three-month extension for the lodgement of financial statements, for firms whose financial year ended between 30 September to 31 December 2019. These companies are required to apply for the extension with SSM, with no fees imposed.
Lastly, to ensure all Prihatin and Prihatin Plus initiatives are implemented promptly and smoothly, a unit, LAKSANA, has been established under the Ministry of Finance to monitor and report the progress of implementation of all initiatives to both the Finance Minister and the PM.
PM Muhyiddin also added that a portal managed by Credit Guarantee Corporation in collaboration with BNM, has been established to support the execution of the Prihatin initiatives, and is ready to accept applications from SMEs on all the initiatives announced.
“So, other than applying for loans directly from the banking institution, all SMEs have an option to apply for loans through the IMSME portal. This portal provides myKNP services, that is financing advisory services for SMEs.”