Malaysian PM unveils RM250 billion aid stimulus package

The travel sector gets some relief in a new aid care package

SMEs in the travel sector still worry about cash flow and want direct assistance. Credit: Getty images

KUALA LUMPUR - The Malaysian travel sector was granted some relief with more electricity discounts in the latest aid stimulus package and together with other businesses was given subsidies for employee wages, access to various funds, moratoriums on income tax and corporate loans, adjustment of provident fund payments and exemptions from human resource levy.

The travel sector was given a 15% discount in electricity bills in a previous package and it is now 15% to 50% depending on the usage range up to a maximum of 600kW a month for a period of six months.

The new RM250 million (US$57.74 million) aid package was announced by Malaysian prime minister Tan Sri Muhyiddin Yassin on 27 March, of which RM100 million was allocated for businesses, with RM128 billion for individuals.

He said that the government will introduce a wage subsidy of RM600 a month for three months for employers with a 50% drop in business since 1 January, for workers with a salary of below RM4,000 based on certain criteria.

Other highlights include setting up an allocation of various funds including one specifically of RM4.5 billion for SMEs (small and medium entreprises) and micro entrepreneurs and two other funds that SMEs can access that total RM5 billion and RM5.8 billion respectively.

SMEs can also access a credit guarantee facility of RM5 billion that gives an 80% guarantee on loans. From 15 April, SMEs can defer, restructure or reschedule their employee provident fund payments to save cash flow estimated at RM10 billion with the possibility of saving eight million jobs.

There will be an exemption of payment of human resources levy from April for six months with an estimated savings of RM440 million. Another significant item was a RM50 billion loan scheme for business badly affected by the COVID‐19 pandemic with an 80% loan guarantee but for loans that start from RM20million. Applications are available from 1 May to 31 Dec, 2020.

A company that does event planning said that revenue has dried up while events have been postponed. Best Events Sdn Bhd managing partner, Ms Hanniz Lam, said: "We still need to pay our staff, while they are furloughed and we are not sure if the MCO (Movement Control Order) will only be for a month.

"In this time, we are not allowed to end our contracts to cut our losses. It is good that the government is helping the less unfortunate but businesses need more no strings attached incentives to ensure their survival and continue to provide jobs."

She added that SMEs like hers need direct assistance to pay at least 25% of their employee salaries and allowing them to furlough a maximum of 25% of staff meaning reduction of work hours and hence pay, but coming with a guarantee of job security at the end of the MCO.

Ms. Lam said: "We have to ensure government agencies pay their debts earlier to release cash as lifelines to SMEs which are their vendors, push crowdfunding even more aggressively to allow SMEs to have another source of funding, add appropriate government tax relief and grants matching to the above efforts if SMEs maximise employee payroll during the MCO.

"They also need to mandate reduction of all residential, commercial and industrial rent by 50%, suspend employee fund contributions (employers and employees) for six months."

She added that small businesses like hers with low overheads and capital would be hesitant to take on more debt. Her company's income statements, not showing consistent income flow, will not meet bank requirements.