PM Muhyiddin unveils RM35 billion package to regenerate Malaysia's economy
06 June, 2020
Malaysia has announced an monetary package worth RM35 billion (US$8.2 billion) on Friday (Jun 5) to regenerate the national economy since 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 increase the development of the national economy. Of the full total, RM10 billion is a primary fiscal injection from the federal government.
The initiatives aim to decrease the impact of unemployment, boost investors' confidence and support the tourism industry, said Mr Muhyiddin.
Friday's announcement may be the latest in a series of measures taken by the government to mitigate the economical impacts of the pandemic.
On Mar 27, Mr Muhyiddin announced an financial 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), amongst others.
Subsequently, on Apr 6, he announced an additional stimulus package worth RM10 billion to help struggling SMEs damaged by the outbreak.
In his latest address, Mr Muhyiddin said: "I wish to be honest with you females and gentlemen about the economic position of our country. Like other countries, Malaysia is also facing a hardcore challenge."
He highlighted that in March 2020, Malaysia's unemployment rate stood at 3.9 %, or about 610,000 workers. However, according to national projections, this figure is likely to rise to 5.5 per cent, or even more than 860,000 unemployed workers for the entire year 2020.
"Remember this difficult situation, the Malaysian economy is likely to contract in the next quarter of this year following the ongoing containment of the COVID-19 outbreak globally and locally," said the prime minister.
RM9 BILLION TO BENEFIT 3 MILLION WORKERS
To help tackle rising unemployment, Mr Muhyiddin said that the federal government will allocate RM9 billion on various initiatives likely to benefit 3 million workers.
"I know many among you are worried about the chance of losing your jobs and income as many economic sectors and activities were impacted through the movement control order (MCO) period," said Mr Muhyiddin.
"I am aware that the economy will need 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, that was introduced in earlier monetary packages, had saved more than 2.2 million jobs.
Hence, to continue helping companies as the economy steadily opens up, the programme has been extended. The wage subsidy has been set at RM600 monthly for each and every worker, with no more than 200 workers for each and every firm, said Mr Muhyiddin.
Moreover, the Malaysian government announced a jobs incentive programme worth RM1.5 billion to motivate employers to give jobs to unemployed individuals and youths.
INITIATIVES TO IMPROVE INVESTMENT
Besides unemployment, Mr Muhyiddin added that the initiatives may also be focused on boosting investors' confidence.
"To make certain that our country is still a major investment destination, is very important to us to tell the world that our economy is competitive and open for business," said Mr Muhyiddin.
He explained that will be achieved by establishing the national Penjana fund worth RM1.2 billion, which RM600 million is injected by the federal government as the other RM600 million will come from domestic or international investors.
"The fund will be utilized to boost innovation and expand domestic capital raising," said the prime minister.
Additionally, to improve digitisation, he added that the federal government will allocate RM100 milion to determine a national technology and innovation sandbox.
The initiative, which will be led by the Ministry of Science, Technology and Innovation, will provide flexibility for some regulations to check new technologies. This consists of doing deliveries by drone and using self-driving cars.
TAX INCENTIVES FOR HOUSING MARKET
Meanwhile, to revitalise the housing marketplace, Mr Muhyiddin said that some tax incentives will be introduced.
For instance, within a homeownership campaign, stamp duty exemption will get 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 bound to the first RM1 million of the home price, while full stamp duty exemption is given on loan agreement effective for sales and buy agreements signed between Jun 1, 2020 to May 31, 2021.
The government also announced real property gains tax (RPGT) exemption for Malaysians for disposal as high as three properties between Jun 1, 2020 and Dec 31, 2021.
Additionally, to help the tourism sector which includes been badly impacted, Mr Muhyiddin said that various tax incentives will be introduced.
For example, the deferment of tax instalment payment for tourism industry players, such as for example tour agencies, hotels and airlines, for the period from Apr 1 to Sep 30, has been extended for another 90 days from Oct 1 to Dec 31.
Tourism tax for the time of Jul 1 until Jun 30 next year have already been exempted, and individual tax relief as high as RM1,000 emerges for expenses in domestic tourism until Dec 31, 2021.
To help the commodities sector, the government decided to exempt 100 % of export duty for crude palm oil, crude palm kernel oil and palm kernel oil processed from Jul 1 to Dec 31.
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