PM announces RM250 bln Prihatin Rakyat Package to combat COVID-19 effects

KUALA LUMPUR, March 27 -- Prime Minister Tan Sri Muhyiddin Yassin today unveiled the RM250 billion Prihatin Rakyat Economic Stimulus Package (PRIHATIN) with the objective of protecting the people, supporting businesses and strengthening the economy to weather the effects of the COVID-19 pandemic.

The amount includes a fiscal injection of RM22 billion, government guarantees totalling RM55 billion and other initiatives involving more than RM153 billion.

Of the total -- which includes the RM20 billion package announced previously -- the government will channel almost RM128 billion towards safeguarding the people’s welfare, RM100 billion to support businesses including the small and medium enterprises (SMEs) and RM2 billion to strengthen the national economy.

In his speech, the prime minister said the government’s priority at this time is to curb the spread of COVID-19.

The PRIHATIN package will provide immediate assistance to ease the burden of all Malaysians, he said.

To assist SMES and micro entrepreneurs, the government and Bank Negara Malaysia (BNM) will allocate a further RM4.5 billion for five key initiatives.

Firstly, Muhyiddin said, the amount of the Special Relief Facility in the form of working capital for SMEs will be increased by RM3 billion to a total of RM5 billion, while the interest rate for the facility will be lowered to 3.5 per cent from 3.75 per cent previously.

The size of the Fund for SMEs - All Economic Sectors will be expanded to RM6.8 billion from RM1 billion to enhance access to financing for SMEs.

An additional fund of RM500 million will be pumped into the Micro Credit Scheme provided by Bank Simpanan Nasional, raising the total to RM700 million. 

The initiative is open to micro entrepreneurs in all sectors, including child care centre operators, bus and taxi operators, the creative industry and online traders.

SMEs that have a track record of less than four years can also benefit from Credit Guarantee Corporation’s BizMula-i and BizWanita-i schemes that offer up to RM300,000 in financing.

Meanwhile, Syarikat Jaminan Pembiayaan Perniagaan (SJPP) will offer government guarantee schemes worth RM5 billion while the guarantee coverage has been raised to 80 per cent from 70 per cent for SME companies that have problems in obtaining loans.

 “Through the above initiatives, I believe that financial institutions will continue to provide solid support to viable SMEs, especially in facing challenges due to the current bleak economy,” the prime minister said.

Muhyiddin said the government is also cognisant of the cash flow problems affecting company owners.

To resolve this matter, the government will implement several measures, which include the Employees Provident Fund introducing an Employer Negotiation Service programme on April 15 that offers employers the option of postponing, restructuring or rescheduling the payment of their contributions.

The Human Resource Development Fund levy exemption, which was given to hotels and travel-related companies under the first stimulus package announced in February, will be widened to all sectors for six months starting April 2020.

The government will also allow all SMEs to defer monthly income tax instalment payments for three months beginning April 1, 2020.

“This is in addition to the measure announced previously to allow affected businesses in the tourism sector to defer such payments.

“For other affected sectors, they are permitted to amend the amount of income payable on the third, sixth and ninth instalments of the basis period of the year of assessment,” the prime minister said.  

Muhyiddin said the government thanks BNM and the banking industry for the flexibility in allowing the deferment of loan/ financing repayments, the conversion of credit card balances to term loans, and the restructuring of corporate loans.

The measures are important to ensure companies are able to retain jobs and continue their respective businesses, he noted.

 “To reciprocate, the government has agreed that the banks’ income from the interest or profit on loans or financing related to the repayment deferment will only be taxable after they have received the income following the moratorium period,”  he said. 

The moratorium measure will also be expanded to cover loans from TEKUN Nasional, MARA and cooperatives as well as any government agency that extends loans to SMEs from April 1, 2020.

In addition, the government will provide a guarantee scheme facility totalling RM50 billion with coverage of up to 80 per cent of the loan amounts for working capital requirements.

The scheme, to be managed and subject to the credit rating by Danajamin Nasional, is targeted at viable businesses in all sectors that are facing difficulties due to COVID-19.

-- BERNAMA