Many governments have announced their COVID-19 stimulus packages to help the economic growth which has been badly affected by COVID-19. This includes Hong Kong’s stimulus: Hong Kong’s budget to combat COVID-19 and our close neighbour Singapore’s measures: Singapore’s budget to combat COVID-19 I think both have their own advantages and both gave out cash to the people.
When the people spend this cash, they will help the consumption for goods and services and it should help in economic growth due to the multiplier effects from the spending. So, what would be Malaysia’s stimulus for COVID-19? Do we also have cash for the people to spend? Well, yes but not to all Malaysians. Then again there are measures which will help to put more money back into the people’s pockets. Take a look at it here.
Article in thestar.com.my Our interim Prime Minister Tun Dr Mahathir Mohamad has unveiled the RM20bil stimulus package to offset the fallout from the Covid-19 coronavirus. The stimulus package has three strategies: counter Covid-19 impact, boost people-based growth, encourage quality investments. Some selected ones as follows:
- Bank Simpanan Nasional (BSN) provides RM200 million micro credit at 4% interest rate
- Postponement of income tax monthly installments for income tax allowed for tourism-related companies
- Bank Negara Malaysia provides RM2 billion guaranteed financial aid for SMEs at 3.75% interest rate
- Temporary six months discount of as much as 15% for electricity bills for hotels, tourism agencies, airlines, and shopping centres
- Securities Commission Malaysia and Bursa Malaysia will waive listing fees for one year, for companies seeking listing on Leading Entrepreneur Accelerator Platform (LEAP) or Access, Certainty, Efficiency (ACE) markets, as well as companies with market capitalisation of less than RM500 million seeking listing on the Main Market
For / from the people:
- Minimum EPF contribution by employees to be reduced by 4% from 11% to 7%, with effect from Apr 1 to Dec 31, 2020. This will potentially unlock up to RM10 billion worth of private consumption. Malaysian workers have the option to opt out from the scheme and maintain their contribution rate.
- A payment of RM200 to all Bantuan Sara Hidup (BSH) recipients scheduled for May 2020 will be brought forward to March 2020. An additional RM100 will be paid into the bank accounts of all BSH recipients in May 2020. Subsequently, an additional RM50 will be channelled in the form of e-tunai.
The full list could be viewed here at Article in thestar.com.my
If we look at the effects, one measure which could help tremendously would be the reduction in EPF contribution. Then again, I think many may choose to maintain their contributions instead because taking the money out means they will not get the interest on these contributions next year when EPF announces the dividend again. Here’s that earlier announcement on EPF dividend.
For many of the other measures, it will have to also depend on the sentiment in the market. If we own a business and there are some uncertainties in the market, we may choose not to expand yet and wait till the situation is better first. An interesting one is definitely the waiver of listing fees. Let’s see how many companies will take advantage of this and quickly try their best to get listed this year. We have to also note that some companies may prefer to list when the market is more bullish yeah. I just hope that the COVID-19 will soon be under control in all other countries because the virus seems to be under control in China already.
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