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Prihatin Economic Stimulus Package

Detailed breakdown and thoughts on the Prihatin RM250 billion economic stimulus package.

Prime Minister Tan Sri Muhyiddin Yassin has on Friday (March 27) unveiled an economic stimulus package known as package Prihatin or caring package valued at RM250bil that will benefit all Malaysians.

Some of the highlights of the economic stimulus package are as follows:

Business Assistance

Infrastructure / Development

  • RM400 million invested into telecommunication infrastructures.

  • Infrastructure projects will be continued, with additional provisions up to RM2 billion.

  • RM 1 Billion to Kementerian Kesihatan Malaysia (KKM) to combat Covid-19 pandemic.

  • RM 100,000 to RM 200,000 special fund to develop short term "agrofood" that can produce within 3 to 6 months for Pertubuhan Peladang Kawasan / Pertubuhan Nelayan Kawasan

Loans / Financing

  • RM3 billion worth of financial assistance for SME as working capital at 3.5% from the previous 3.75%.

  • Funds for SME increased to RM6.8 billion to provide access to liquidity.

  • Bank Simpanan Nasional to allocate RM 500 mil in micro credit facility at a rate of 2%.

  • Up to RM300,000 funding given to SME below 4 years history under BizMula-I and BizWanita-I.

  • RM5 billion total funding provided to SMEs that failed to obtain loans through CGC with a guarantee amount up to 80% of the total financing.

  • Moratorium extended for loans under TEKUN, MARA, and all government agencies to SMEs.

  • Sectors affected by COVID-19 may obtain 80% working capital loans up to RM20 million with government guarantees managed by Danajamin.

  • Start up capital for Micro Entrepreneurs (B40) by Islamic Banking Instutitions, State Majlis Agama

Regulatory Deductions / Subsidies

  • Tax deferment to all SME for 3 months - need to apply through amendment of either CP500 or CP204 forms with LHDN.

  • Amendment in income tax payable for other sectors affected by Covid-19 in month 3, 6 and 9 of their financial year - need to apply through amendment of either CP500 or CP204 forms with LHDN.

  • HRDF Levy exemption given to all 63 subsectors under Manufacturing, Services and Mining & Quarrying sectors for 6 months from April to Sept 2020. Will recommence payment of levy for Sept 2020 before 15 Oct 2020. Employers can still apply for the training grants during this period utilising the available levy in their account.

  • Restructuring of EPF deductions on 15 April 2020. Employers will have the option of delay the payment to EPF, restructuring and rescheduling of the EPF employer’s contribution.

  • Subsidy of RM 600 per month for 3 months for all employees earning below RM 4,000 for employers who have loss more than 50% of their revenue since 1 Jan 2020. Employers can't ask their employees to take unpaid leave /retrench the employees / reduce their salaries once the programme commences. This is an extension of the Employment Retention Programme (ERP) under SOCSO. Employers will have to apply on behalf of their employees at

  • Extension of services contract with government / government agencies for all affected contractors for 1 month (once-off).

  • Payment of salaries for all employees of contractors servicing government / government agencies affected by Covid-19 / MCO.

While it’s good that some assistance has been provided to help the businesses especially SMEs that are being affected by Covid-19 Pandemic and subsequent extension of MCO, the general view that this is not sufficient.

The main assistance provided to SMEs are government guarantees for financing that SMEs that need to apply for. SMEs makes up 98.5% of total registered businesses in Malaysia. If all the SMEs that have been affected by Covid will be applying for the same funds, the question at hand is, will each SME get enough to keep their respective business afloat during this trying times? And how fast will the financial institutions go through the applications to ensure that the funds from the financing will get to the SMEs to extend their business lifelines.

SMEs’ contribution to Malaysia’s GDP in 2019 increased to RM521.7 billion, accounting for 38.3% last year compared to RM491.2 billion or 37.8% the year before. If the situation persists, the SMEs contribution to the GDP will be affected negatively in the long run.

This in turn will have an impact of the employment of millions of Malaysians who are currently employed with all these SMEs.

Individual Assistance

On the individual assistance provided through the Economic Stimulus Package, the details are as follows:

Cash Handouts

  • Households with monthly salary of RM4,000 and below will receive RM1,000 and RM600 in April and May respectively.

  • Households with monthly salary between RM4,000 and RM8,000 will receive RM500 in both April and May.

  • Individuals that are single, aged 21 and above, with monthly salary of RM2,000 will be given RM500 in April and RM300 in May.

  • Individuals that are single, aged 21 and above, with monthly salary between RM2,000 and RM4,000 will be given RM250 in both April and May.

  • Balance of BSH will be distributed in July.

  • RM200 will be given to university and institute of higher learning students in May.

  • RM500 given to e-hailing drivers and RM600 to taxi drivers.


  • 15% - 50% discount in electricity bills depending on usage to households for 6 months.

  • Free internet for telecommunications services customers until the end of MCO. Free 1 GB data by most major telco providers, with additional value added services included (differs from one provider to another)

Special allowances

  • Increase of RM 200 in allowance from RM400 to RM600 given to healthcare personnel until the end of COVID-19.

  • RM500 once off given to civil servants & pensioners.

  • RM200 once off given to public officials & volunteers that assisted in the MCO.


  • 6 months for PTPK debtors, similar to provided to PTPTN borrowers, with automatic enrolment.

  • 6 months for PPR Residents under rental and rent to own scheme including rental scheme under DBKL.

Personal Finance

  • RM50 a day for a maximum of 14 days given to COVID-19 patients in B40 group through MySalam for both hospitalization / quarantine cases.

  • RM 300 / person for Insurance / Takaful Policy Holders asked to to go Private Hospitals / Laboratories for Covid-19 Screening by KKM.

  • 3 months payment holiday for those affected by Covid-19 for insurance / Takaful Life / Family Policy Holders. Policies will continue to be enforced. Policy holders need to apply with their respective providers. Need to show proof that you are affected by Covid-19 (e.g. loss of income, contracted Covid-19). Any deferment of payment, will have to be paid back after the deferment period is over.

  • Withdrawal from PRS Account B up to RM 1,500 without any penalty between April - December 2020 for all PRS Account Holders.


  • RM25 million grant given to charity organizations to assist those in need.

The main beneficiary of this secondary fiscal package will be the B40 segment of the economy. The one-off cash payments and waivers of monthly commitments directed to this segment of the group will likely provide the much-needed financial assistance, particularly to those “on-the-ground” businesses and retirees.

This additional assistance provided in this secondary fiscal package is a welcomed boost. Allowing policy holders to apply for a 3 months deferment for their respective insurance and takaful policies will provide some relief, even though this is just limited to those that can proof that their lives have really been affected by the current situation. Additionally, the withdrawal from the PRS Account B, will have similar effect as above to alleviate the cash flow situation of some households affected.

However, we feel that the earlier stimulus package which included the automatic loan moratorium, which so far in our opinion is the biggest game changer that will help most households especially the M40 to cope with the effects of Covid-19 and the extended MCO.

As at end-June 2019, Malaysia's household debt reached 82.2% of GDP compared with its peak of 86.9% in 2015. It is among the highest in Asia and has exceeded those of several high-income nations including the United States (75.0%) and Japan (58.2%). The automatic loan moratorium will help to improve the cash flow situation and potentially making more Malaysians being able to put money aside for their emergency savings which will become critical if the MCO is extended further. It also presents an opportunity to pay down higher interest debts like personal loans and credit card debts.

All in all, we view the fiscal package positively as it is targeted to support consumption, which is the major driver of the domestic economy. The availability of funding and fiscal ammo released to the financial system could lend significant support to companies and businesses.

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