PM unveils short-term economic recovery plan

Putrajaya has announced a comprehensive economic recovery plan which will involve wage subsidies, upskilling, tax holidays for investors, grants, and other incentives.

In a televised address today, Prime Minister Muhyiddin Yassin said these measures were contained in the Plan Jana Semula Ekonomi Negara or "Penjana" for short, which will involve RM10 billion in direct fiscal injection. 

He said the measures were necessary as Malaysia and the global economy were experiencing unprecedented economic contraction and furthermore, domestic unemployment was projected to reach 5.5 percent by the end of 2020.

Muhyiddin did not announce whether the conditional movement control order (MCO) would end on June 9 as scheduled.

The conditional MCO is enforced by means of a gazette that barred certain economic, social, and educational activities from taking place.

Below are the salient points:

Reliefs for individuals

• Tax exemption of up to RM1,000 for individuals for domestic tourism until Dec 31, 2021.

• Tax relief for childcare providers booked online and up to RM3,000 personal income tax relief for childcare centre or kindergarden bills.

• 100 percent tax relief for locally assembled passenger vehicles, 50 percent for imported vehicles from June 15 until Dec 31, 2020.

Reliefs for companies

• Tax holiday lasting 10 to 15 years for foreign investors who move their manufacturing operations to Malaysia and invest RM300 million or more.

• Tax holiday lasting five years for Malaysian firms who relocate their manufacturing facilities to Malaysia.

• Tax payment deferment for tourism-related industries - agents, hotels, and airlines, etc - extended until year-end.

• "Tourism tax" exemption from July 1 until June 30, 2021.

• Service tax exemption for lodging services until June 30, 2021.

• Full export duty exemption for palm oil until Dec 31, 2020.

• Tax relief of up to RM5,000 per staff for companies to buy equipment that would allow staff to work from home.

• Tax relief for companies that need to purchase personal protective equipment and pay for Covid-19 testing for staff.

• Duration of tax relief for landlords of commercial properties extended to encourage rent reduction.

• Tax rebates up to RM20,000 per annum for three years for new companies to set up between July 1 and Dec 31, 2021.

• Stamp duty exemption for merger and acquisitions up to June 30, 2021.

Handouts

• RM500 for individual urban farmers and RM50,000 for each commune.

• New public transport unlimited travel pass which costs RM30 a month.

• RM300 for single mothers and persons with disabilities.

• RM50 will be transferred into e-wallets to encourage contactless transactions.

Training, upskilling, and re-employment

• RM5 billion allocated for wage subsidy scheme which will cover six months in total. The new cap is RM600 per worker, up to 200 workers per company. Furloughed staff may qualify.

• Companies which take in an unemployed person aged 40 and below would be subsidised RM800 for six months.

• Companies which take in an unemployed person aged 40 and above or a person with disabilities would be subsidised RM1000 for six months.

• Unemployed individuals can claim RM4,000 for training expenses from Socso, including those who do not contribute to the scheme.

• Companies who take on school leavers and graduates as interns or apprentices will be subsidised RM600 a month per person, up from RM500 currently.

• RM2 billion allocation for upskilling 200,000 unemployed people and youths.

Grants and financial services

• RM225 million for creative industries.

• Matching grant of RM70 million to encourage Malaysians to shop online.

• RM700 million to be spent to help firms adopt digitalisation. Companies adopting automation can apply for a maximum RM1 million grant.

• Skim Pembiayaan PKS Penjana - a new loan of up to RM500,000 for SMEs.

• Skim Pembiayaan Pelancongan - a new tourism loan to transform the industry. Details will be announced by Bank Negara in July.

• Pembiayaan Micro Penjana - a new micro-credit scheme which will be handled by Bank Simpanan Nasional and Tekun Nasional.

• SME Bank will offer a new scheme for Grade 2 and Grade 3 contractors. No deposit needed.

• Social enterprises will be able to access a new financing scheme from Malaysian Global Innovation and Creativity Centre (MaGIC).

New tech and innovation

• A new RM1.2 billion VC fund will be set up and called Dana Penjana Nasional. Potential funders are SK Group, Hanwha Asset Management, KB Investment Co Ltd, Provident Growth, 500 Startups, and The Hive.

• RM100 million will be spent on a National Technology and Innovation Sandbox which will test new technology, such as self-driving vehicles and home deliveries by means of aerial drones.

• Postal stamps to be phased out.

• Scholarship interviews will take place online.

Real estate

• Stamp duty exemption of up to RM1 million per unit as part of a homeownership scheme. This will only apply if the developer grants a 10 percent discount.

• Real property gains tax exemption until Dec 31, 2021. Only applies to a maximum of three properties per individual.

• Removed 70 percent financing cap onwards of the third property.