COVID-19 Response: Malaysia’s PERMAI Assistance Package

28 January 2021

On 18 January 2021, the Prime Minister of Malaysia announced Malaysia’s fifth economic stimulus package to-date - the Perlindungan Ekonomi dan Rakyat Malaysia (meaning “Protection of the Economy and People of Malaysia”) (“PERMAI”) assistance package - with the aim of combatting the Covid-19 outbreak, safeguarding the welfare of Malaysians and supporting business continuity following the re-implementation of the “Movement Control Order” (“MCO 2.0”) on 13 January 2021. The PERMAI assistance package is intended to improve on the existing initiatives implemented by the Government as well as “accelerate” the implementation of related initiatives. The PERMAI assistance package is worth RM15 billion, and covers a total of 22 initiatives.

This article sets out a brief summary of the 22 initiatives.

First objective: Combatting the Covid-19 outbreak

The Malaysian Government has provided an additional allocation of RM1 billion (out of which the bulk, i.e. RM800 million, will be allocated to the Ministry of Health, with the balance of the allocation to be distributed to the National Security Council and other relevant agencies). This allocation will focus on the supply of medical-related equipment such as reagents, screening kits, PPE equipment to healthcare frontliners.

  • Implementing the Covid-19 vaccination programme: The Malaysian Government has signed three agreements with vaccine producers and Malaysia is expected to receive the first batch of vaccines by the end of February 2021. A total of RM3 billion will be allocated for the implementation of the vaccination programme.

The vaccination programme will be implemented in phases over a period of 12 months, with the first batch of Malaysians to be vaccinated by early March 2021. Malaysia is expected to meet its target of vaccinating more than 80% of its population by the first quarter of 2022.

  • Strengthening the national healthcare sector: The Malaysian Government will also recruit an additional 3,500 healthcare personnel, comprising assistant medical officers, paramedics, laboratory technicians and nurses, with an additional allocation of RM150 million. The healthcare personnel are expected to start working by the end of January 2021.
  • Enhancing cooperation with private hospitals: Private hospitals will now receive Covid-19 patients to help alleviate the strain on the public healthcare system, and the Malaysian Government will allocate RM100 million for this purpose.
  • Stepping up testing of employees: To encourage more individuals to conduct Covid-19 screening tests privately, the Malaysian Government has extended the scope of tax relief relating to full health screening expenses to include expenses for Covid-19 screening.

Second objective: Safeguarding the welfare of Malaysians

  • Accelerating the Bantuan Prihatin Rakyat Assistance: The Malaysian Government will bring forward the final payment of the Bantuan Prihatin Rakyat assistance under the KITA PRIHATIN package introduced in 2020, to 21 January 2021 onwards. A total of 11.1 million recipients will benefit from a total payment of RM2.38 billion.
  • Strengthening welfare programmes: Amongst other initiatives, a RM25 million allocation will be made to the Disaster Relief Network Program to provide community assistance, including to the elderly, homeless, disabled and flood victims.
  • Continuing the moratorium and loan instalment reduction: The Prime Minister announced that the moratorium facility (including the extension of the moratorium and restructuring of loan repayments) will continue to be offered by banks as announced previously. In 2020, the Association of Banks in Malaysia (“ABM”) had announced, amongst other things, the extension of “targeted repayment assistance” to individual borrowers whose income had been affected by the pandemic. Examples of repayment assistance included payment of interest or profit only for selected products for a specified period, possible extension of the loan or financing tenure to enable lower monthly instalments and amending other terms and conditions of the loan where appropriate.
  • Enhancing the EPF i-Sinar Program: Several enhancements have been provided to the i-Sinar facility made available to Employees Provident Fund (“EPF”) members whose incomes have been affected by the Covid-19 pandemic, including the provision of an interim payment of up to RM1,000 in advance for EPF members who fall within “Category 2” (i.e. those whose total income has been reduced by at least 30% since March 2020). Further details will be announced by the EPF in the near future.
  • Extending the Special Tax Relief on the purchase of mobile phones, computers and tablets: The special tax relief of up to RM2,500 provided in respect of the purchase of mobile phones, computers and tablets, which had expired on 31 December 2020, will be extended for another year until the end of 2021.
  • Extending the provision of free internet access: The provision of free one gigabit of data by the telecommunications industry will be provided to the public until the end of April 2021. Special subscription packages will also be made available to students who are sitting for their Malaysian Certificate of Education or Sijil Pelajaran Malaysia (SPM) and Malaysian Higher School Certificate or Sijil Tinggi Persekolahan Malaysia (STPM) examinations.
  • Extending the sales tax exemption on passenger vehicles: The sales tax exemption for locally assembled and imported passenger vehicles, which had expired on 31 December 2020, will be extended until 30 June 2021.
  • Extending the moratorium period for PTPTN borrowers: National Higher Education Fund Corporation or Perbadanan Tabung Pendidikan Tinggi Nasional (“PTPTN”) borrowers affected by the Covid-19 pandemic may apply for a three month PTPTN loan repayment moratorium.

Third objective: Supporting business continuity

  • Improving the wage subsidy program: In order to support business continuity, the Wage Subsidy Programme 3.0 will be enhanced, whereby all employers operating in states placed under the MCO will be eligible to apply for the wage subsidy, irrespective of sector. Eligible employers will receive a wage subsidy of RM600 for each of their employees earning less than RM4,000. In addition, the wage subsidy limit of 200 employees for each employer will be increased to 500 employees.

This initiative involves an additional allocation of RM1 billion, which is targeted to benefit 250,000 businesses employing more than 2.6 million employees.

For Malaysians who have lost their jobs during the MCO period, the Malaysian Government has agreed to relax the eligibility conditions for the Employment Insurance System (“EIS”) programme (EIS is a financial scheme to assist Malaysians in coping with retrenchment and job loss by providing cash allowances as well as other unemployment benefits such as training and counselling).

  • Continuing the Prihatin Special Grant: The Malaysian Government is expanding the Prihatin Special Grant Plus assistance to cover 500,000 small and medium enterprises (“SMEs”) in the relevant states placed under the MCO with a payment of RM1,000 to each SME, while 300,000 SMEs in other states will receive RM500 each.
  • Providing one-off financial assistance to taxi and bus drivers: For taxi and bus drivers, a one-off financial assistance of RM500 to tourist guides, drivers of taxis, school buses, tour buses, rental cars and e-hailing vehicles will be provided.
  • Accelerating the implementation of microcredit schemes: To assist the cash flow of micro-enterprises and SMEs, the Malaysian Government will expedite the implementation of microcredit schemes announced previously including soft loans amounting to RM390 million by Bank Simpanan Nasional, RM350 million by Agrobank and RM295 million by TEKUN Nasional.
  • Supporting and boosting online businesses: The Malaysian Government will accelerate the implementation of the SME and Micro SME e-Commerce Campaign and Shop Malaysia Online campaign, with a total allocation of RM300 million. Through these programmes, micro-entrepreneurs will receive business coaching and on-boarding onto e-commerce platforms.
  • Enhancing the Danajamin PRIHATIN Guarantee Scheme: In order to support the growth of the private sector and also to boost Malaysia’s economy, the Malaysian Government will increase the threshold of the financing facility from RM500 million to RM1 billion under the Danajamin PRIHATIN guarantee scheme as well as expand the scope of financing to cover working capital with a guarantee period of up to ten years. Further, foreign-owned companies operating in Malaysia may also obtain the benefit of a guarantee provided that 75% of the workforce of such foreign-owned company consists of Malaysians.
  • Rescheduling and extending the moratorium period for Majlis Amanah Rakyat (“MARA”) loans and MARA premises rental: MARA borrowers may apply to reschedule the repayment of education loan facilities or for a business loan moratorium. MARA has also agreed to provide rental discounts for its premises.

A special tax deduction will also be provided to any company that provides reduction on rental on business premises to SMEs.

  • Continuing electricity bill discounts: A special discount of 10% on electricity bills will be provided to six business sectors, namely, hotel operators, theme parks, convention centres, shopping malls, local airline offices, as well as travel and tour agencies.

Electricity rebates will also be provided to all Tenaga Nasional Berhad users, domestic as well as non-domestic.

  • Introducing Bus and Taxi Hire Purchase Rehabilitation Scheme: Under this scheme, a 50% guarantee on financing from hire purchase and leasing companies will be provided for selected buses (e.g. sightseeing buses and taxis) through the Syarikat Jaminan Pembiayaan Perniagaan. The Malaysian Government has allocated RM1 billion for this scheme.
  • Extending the Temporary Measures for Reducing the Impact of
    Covid-19 Act 2020:     The Temporary Measures for Reducing the Impact of Coronavirus Disease Act 2020 (“Act”) was introduced in 2020 to assist individuals and businesses that were affected by the Covid-19 pandemic. The original effective period covering inability to perform contractual obligations under the Act expired on 31 December 2020. Following the imposition of MCO 2.0, the Malaysian Government has decided to extend the effective period of the Act in relation to the inability to perform contractual obligations, to 31 March 2021.