KUALA LUMPUR: The swift action taken by the government to announce the third economic stimulus package worth RM10 billion, shows it takes heed of the recommendations made by Covid-19-affected businesses and ensures measures are put in place to protect businesses and jobs, said Deloitte Malaysia.
Country tax leader Sim Kwang Gek said the measures announced are timely and aimed at assisting businesses tide through challenging times and ensure business survival.
On the enhanced wage subsidy programme under the special package aimed at helping the small and medium-sized enterprises (SMEs), she said the increase in wage subsidy is welcomed.
Sim said the proposal to increase the wage subsidy from RM600 to RM800 and RM1,200 for businesses having less than 200 employees assumes that businesses with less employees need more cash assistance. “However, this may not be entirely the case,” she told Bernama in an interview here on Monday (April 6).
Another more targeted approach, she said, would be to direct the RM1,200 wage subsidy to businesses that are the hardest hit by the Covid-19 pandemic such as those in tourism, hotel, transportation, food and beverages and the like, irrespective of the number of employees.
She also said the programme should not be restricted to employees having income of RM4,000 or less, as SMEs also employ people above such income threshold.
“Perhaps, the wage subsidy could apply to the first RM4,000 paid to the employees instead of restricting the subsidy to employees earning a monthly salary of RM4,000 or less,” she said.
On rental waiver or discount for premises owned by government-linked companies, she said this is definitely a welcome proposal but it should have been made available to all categories of businesses and not restricted to SMEs.
“Rental costs form a significant part of operating expenditure of most businesses. Making such a facility available would greatly help in managing cash constraints during this period,” she said.
After all, Sim said, a tax deduction on the reduced rental from April 2020 to June 2020 is given to property owners that offer at least a 30% discount on the rental rate and hence, they should be incentivised to offer discounts to all businesses.
“Alternatively, for businesses that do not qualify for such a facility, a double tax deduction could be given to the tenants on the rental expense incurred as the cash savings can be channeled towards business continuity and staff retention,” she said.
On whether the government would endure a wider budget deficit, Sim said the latest package brings the total amount to address Covid-19 challenges to RM260 billion.
She noted that this represents more than 17% of the country’s gross domestic product (GDP) and is expected to widen the fiscal deficit.
“Our Finance Minister has mentioned recently that a fiscal deficit of four per cent of GDP is expected for 2020 with the Bantuan Prihatin Nasional package.
“Such measures are deemed necessary in these times to help businesses and the rakyat pull through a crisis that has taken the entire world by storm and hence, a wider budget deficit is within expectation as long as money is well spent and implementation of deserving projects are monitored effectively,” she said.
With the prediction that the economy may contract this year, Sim said, the measures put in place will need to help the country survive and avoid a possible recession.
“Whilst the measures are aimed to address immediate concerns, I look forward to seeing the government rolling out medium- to long-term strategies to ride the country out of this crisis and capture available opportunities.
“As the saying goes, there are opportunities in every crisis and therefore, we should act and adapt fast enough to be the front-runner to seize any opportunities, when this crisis is over and, it will,” she said.
Sim has more than 20 years of experience in providing tax and business consulting services for local and multinational corporations in the manufacturing, construction, engineering, property development, retail, information technology and services industry.
She has led various assignments such as restructuring of operations, mergers and acquisitions, incentive evaluation and applications, regulatory applications to various government agencies, establishment of businesses in Malaysia, cross-border investments as well as managing the tax compliance affairs of a portfolio of clients.
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