What Is In The Malaysian PENJANA Economic Recovery Plan?
On June 5, 2020, Prime Minister Muhyiddin Yassin unveiled a new short-term economic recovery plan entitled “Pelan Jana Semula Ekonomi Negara” or “PENJANA”. The plan – worth RM 35 billion – will include a direct tax injection of RM 10 billion into the Malaysian economy.
Here are the main highlights of the 40 initiatives planned in this new plan.
Some RM 9 billion will be directly used to combat rising unemployment and benefit more than three million workers nationwide.
First, the wage subsidy program that was introduced into the PRIHATIN economic stimulus program will be continued for another three months. It will grant a wage subsidy at the rate of 600 RM per employee for each eligible company.
Businesses that were not authorized to operate during the conditional movement control order (MCO) and who have put employees on leave without pay may also apply for the grant provided that the funds are paid directly to the employees themselves .
In addition, financial incentives will be put in place to encourage companies to recruit the unemployed as follows:
|Employers||RM800 per month for the employment of unemployed people under 40|
|RM1000 per month for the employment of unemployed over 40 or OKU.|
|RM600 per month to offer internships to new graduates and graduates.|
|Unemployed||Claim a training allowance of RM 4,000 under the employee insurance plan; even if they never contributed to it.|
|Gig economy||RM 50 million in matching grants for companies to make SOCSO and EPF contributions to their employees.|
These incentives are expected to last six months.
The fight against unemployment by alternative means such as the provision of flexible working arrangements (FWA) will also receive government assistance in the form of new tax deductions for employers who implement FWAs.
During this time, employees who receive a computer, tablet or smartphone from their employer will be allowed to claim an income tax exemption of up to RM 5,000 each.
Childcare, Transportation, Internet
Subsidies are also provided to daycare operators to comply with the new mandatory standard operating procedures (SOPs) established by the National Security Council.
Parents who book child care and child care online will be eligible for RM800 electronic vouchers to subsidize their child care costs. The income tax relief for fees paid to kindergartens and daycare centers will also be increased to RM 3,000 compared to RM 2,000 currently.
For those who take public transport, a new unlimited My30 pass will be available from June 15 until the end of 2020. This pass allows unlimited journeys on public transport operated by Prasana in the Klang valley for only RM30 per month .
At the same time, local telecommunications operators have jointly announced that they will provide 1 GB of free mobile data to all Malaysians every day. It is available between 8 a.m. and 6 p.m. and is intended to be used for educational purposes and for labor productivity.
In addition, mobile data connections to government websites and COVID-19 applications will be zero-rated.
Encourage domestic spending
Government allocates RM 70 million as part of its Shop Malaysia Online campaign to be used for e-commerce promotional codes and coupons. This amount will be matched by ecommerce sites with their own promotions.
To encourage Malaysians to use contactless payments, the government is again allocating funds to distribute in the form of electronic wallet credit. Each Malaysian citizen earning less than 100,000 RM per year will have the right to claim 50 RM when applications are opened in July 2020.
A special individual tax break of up to RM 2,500 will also come into force on June 1 for the purchase of mobile phones, computers and tablets.
The home ownership campaign (HOC) will be launched. The exemption from stamp duties on the transfer of property and the loan agreement for the purchase of housing between RM 300,000 and 2.5 million between June 1, 2020 and May 31, 2021 will be implemented. An exemption from real estate gains tax (RPGT) is also implemented for Malaysians with up to three properties from June 1, 2020 to December 31, 2021
Finally, locally assembled cars will benefit from a 100% sales tax exemption from June to December 31, 2020. Imported cars will benefit from a 50% discount on sales tax during this same period.
Support for SMEs
More assistance is given to SMEs to ensure their ability to continue operating, with many funds being distributed through several channels.
|Financing of PENJANA SMEs||RM 2 billion; RM 50,000 threshold per SME|
|PENJANA Microfinance||RM 400 million in microcredit; RM 50 million allocated to women entrepreneurs|
|PENJANA tourism fund||RM 1 billion for the tourism industry|
|Bumiputera Relief Financing||RM 500 million for companies belonging to Bumiputera|
This is not a complete list of government efforts, but only an overview of those that we believe are most relevant to our readers. Many other funds are also set up for more targeted purposes, notably those intended to encourage social enterprises.
These efforts build on the latest economic stimulus package that was announced on March 27, 2020. Many of the plans described in this plan were designed to help individuals cope with what was to be a prolonged closure of the economy.
This PENJANA package is rather designed to boost local spending by encouraging people to go out and start spending again; and provide financial support to businesses trying to get back on their feet.
Our sincere thanks to