COVID-19 stimulus package: Rescue aid to ease private sector cashflow

A family watching Prime Minister Tan Sri Muhyiddin Yassin announcing the second stimulus package on television. (Photo by Mohd Suhaimi Mohamed Yusuf/The Edge)

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KUALA LUMPUR (March 27): Prime Minister Tan Sri Muhyiddin Yassin has announced measures that will lighten three employer commitments to address the cash flow constraint that is weighing on businesses that have been affected by the COVID-19 outbreak.

The first is the introduction of a programme that will allow employers to postpone, restructure, or reschedule their mandatory Employees Provident Fund contribution for employees. The EPF will introduce this programme on April 15.

This, Muhyiddin said, will provide an estimated RM10 billion in cash flow savings for employers, and benefit over 480,000 SMEs and other businesses. It is also expected to save over eight million jobs.

The Government is also going to exempt employers' contributions to the Human Resource Development Fund (HRDF) for six months from April 1 — for all sectors — that are estimated to provide a cash flow relief of RM440 million.

The income tax payment for all SMEs will also be postponed for three months starting April 1. This is an enhancement to a similar measure under the first stimulus package announcement, whereby the income tax payment will be deferred for six months for businesses in affected sectors like tourism.

“For other affected sectors, they are allowed to defer the income tax imposed on the third, sixth and ninth month during the business period,” said Muhyiddin.

In terms of safeguarding the welfare of employers and employees in Malaysia, the Government has introduced the Wage Subsidy Programme to help employers retain their staff and prevent the loss of jobs and livelihoods.

Under the programme, RM600 will be channelled to each employee earning less than RM4,000 per month for a period of three months, and whose employers experienced a 50 percent drop in income since Jan 1.

Muhyiddin said this is to ensure that employees are not laid off or forced to take unpaid leave for three months after the programme is implemented.

“Employers are also not allowed to deduct any amount from an employee’s existing salary. This initiative is expected to benefit some 3.3 million workers, with an allocation of RM5.9 billion,” he added.

The Government also launched an RM50 billion guarantee scheme to help companies seeking to raise funds for working capital. Managed by Danajamin Nasional Bhd, the scheme provides a Government guarantee of 80% on each loan.

“This facility is targeted at viable businesses in all sectors that face difficulties due to the COVID-19 outbreak,” Muhyiddin said.

He added that the minimum amount of financing is fixed at RM20 million for each business, with applications to open from May 1 till Dec 31, 2020, or until the fund runs out.

See also:
Muhyiddin's speech on Prihatin Rakyat Economic Stimulus Package
Highlights of Malaysia's Economic Stimulus Package