KUALA LUMPUR: Malaysia has announced an economic package worth RM35 billion (US$8.2 billion) on Friday (Jun 5) to regenerate the national economy as it recovers from the impact of COVID-19.
Prime Minister Muhyiddin Yassin said in a televised address that the package, dubbed the National Economic Revitalisation Plan (Penjana), encompasses 40 initiatives to speed up the development of the national economy. Of the total, RM10 billion is a direct fiscal injection from the government.
The initiatives aim to reduce the impact of unemployment, boost investors' confidence and support the tourism industry, said Mr Muhyiddin.
Friday's announcement is the latest in a series of measures taken by the government to mitigate the economic impacts of the pandemic.
On Mar 27, Mr Muhyiddin announced an economic stimulus package worth RM250 billion, comprising special allowances for healthcare providers, one-off cash aid and microcredit scheme for small- and medium-size enterprises (SMEs), among others.
Subsequently, on Apr 6, he announced an additional stimulus package worth RM10 billion to help struggling SMEs affected by the outbreak.
In his latest address, Mr Muhyiddin said: "I want to be honest with you ladies and gentlemen about the economic position of our country. Like other countries, Malaysia is also facing a tough challenge."
He highlighted that in March 2020, Malaysia's unemployment rate stood at 3.9 per cent, or around 610,000 workers. However, according to national projections, this figure is expected to rise to 5.5 per cent, or more than 860,000 unemployed workers for the year 2020.
"Keeping in mind this difficult situation, the Malaysian economy is expected to contract in the second quarter of this year following the ongoing containment of the COVID-19 outbreak globally and locally," said the prime minister.
Malaysia's economy is expected to contract in the second quarter of 2020 following the ongoing containment of the COVID-19 outbreak. (File photo: AFP)
RM9 BILLION TO BENEFIT 3 MILLION WORKERS
To help tackle rising unemployment, Mr Muhyiddin said that the government will allocate RM9 billion on various initiatives expected to benefit 3 million workers.
"I know many among you are worried about the risk of losing your jobs and income as many economic sectors and activities were impacted during the movement control order (MCO) period," said Mr Muhyiddin.
"I understand that the economy will take some time to recover and some groups in our community still require aid as the economy recovers," he added.
He announced that the wage subsidy programme will be extended for another three months. Mr Muhyiddin noted that the programme, which was introduced in earlier economic packages, had saved more than 2.2 million jobs.
Hence, to continue helping companies as the economy gradually opens up, the programme has been extended. The wage subsidy has been set at RM600 per month for each worker, with a maximum of 200 workers for each firm, said Mr Muhyiddin.
Moreover, the Malaysian government announced an employment incentive programme worth RM1.5 billion to encourage employers to give jobs to unemployed individuals and youths.
INITIATIVES TO BOOST INVESTMENT
Besides unemployment, Mr Muhyiddin added that the initiatives will also be focused on boosting investors' confidence.
"To ensure that our country continues to be a major investment destination, is important for us to tell the world that our economy is competitive and open for business," said Mr Muhyiddin.
He explained that this will be done by establishing the national Penjana fund worth RM1.2 billion, of which RM600 million is injected by the government while the other RM600 million will come from domestic or international investors.
"The fund will be used to boost innovation and expand domestic venture capital," said the prime minister.
A police officer gives warning to Muslims praying outside the closed National Mosque, during Hari Raya, the Muslim festival marking the end the holy fasting month of Ramadan, amid the coronavirus disease (COVID-19) outbreak in Kuala Lumpur, Malaysia May 24, 2020. (Photo: Reuters/Lim Huey Teng)
Additionally, to boost digitisation, he added that the government will allocate RM100 milion to establish a national technology and innovation sandbox.
The initiative, which will be led by the Ministry of Science, Technology and Innovation, will provide flexibility to some regulations to test new technologies. This includes doing deliveries by drone and using self-driving cars.
TAX INCENTIVES FOR HOUSING MARKET
Meanwhile, to revitalise the housing market, Mr Muhyiddin said that some tax incentives will be introduced.
For instance, as part of a homeownership campaign, stamp duty exemption will be given for the instruments of transfer and loan agreement for the purchase of homes valued between RM300,000 and RM2.5 million.
The exemption on the instrument of transfer is limited to the first RM1 million of the home price, while full stamp duty exemption is given on loan agreement effective for sales and purchase agreements signed between Jun 1, 2020 to May 31, 2021.
Malaysia property
Workers paint a residential apartment as high-rise buildings are seen in the background in Kuala Lumpur on Apr 11, 2017. (Photo: AFP/MANAN VATSYAYANA)
The government also announced real property gains tax (RPGT) exemption for Malaysians for disposal of up to three properties between Jun 1, 2020 and Dec 31, 2021.
Additionally, to help the tourism sector which has been badly impacted, Mr Muhyiddin said that various tax incentives will be introduced.
For instance, the deferment of tax instalment payment for tourism industry players, such as tour agencies, hotels and airlines, for the period from Apr 1 to Sep 30, has been extended for another three months from Oct 1 to Dec 31.
Tourism tax for the period of Jul 1 until Jun 30 next year have been exempted, and individual income tax relief of up to RM1,000 is offered for expenses in domestic tourism until Dec 31, 2021.
To help the commodities sector, the government agreed to exempt 100 per cent of export duty for crude palm oil, crude palm kernel oil and palm kernel oil processed from Jul 1 to Dec 31.
