Friday 29 Mar 2024
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On July 29, Finance Minister Tengku Datuk Seri Utama Zafrul Aziz told Parliament that the Ministry of Finance had allocated RM3.9 billion for vaccine purchase, and so far, 79.9 million doses of vaccine have been procured through a contract. 

The entire supply can vaccinate more than Malaysia’s 32.7 million population (taking into account booster shots required), as the government ramps up its National Covid-19 Immunisation Programme to one million jabs every two days. The goal, according to Prime Minister Tan Sri Muhyiddin Yassin, is to vaccinate all adults (over 18, complete doses) by October, representing over 70% of the population.

What follows is the easing of restrictions for vaccinated individuals in the near future, which offers hope that there is light at the end of the tunnel, with the possibility of social and economic activities resuming in the next few months, or within weeks for states that can already move to Phase 3 of the National Recovery Plan.

Supporting capacity and cash flow before economy’s reopening

The government has come up with the Pemulih stimulus package for this ­period, when we can expect more states to enter Phase 2 of the National Recovery Plan, from eight currently. On Aug 2,  the prime minister announced that Perlis, Sarawak and the Federal Territory of Labuan were ready to transition to Phase 3. Information on the NRP and Malaysia’s Covid-19 situation is available in a single platform at pelanpemulihannegara.gov.my.

The ability to maintain operating capacity will be crucial in the months leading to the lifting of the lockdown, when pent-up demand returns to the market.

It is a reality for sectors such as ­aviation, which has been crippled by the interstate and international travel bans since early 2020. A reopening of the economy, however, will not help companies that have downsized, or worse, shuttered their operations.

One of the upcoming aid ­packages is the RM3.8 billion wage subsidy programme (WSP), which is available to all employers for up to four months from August. This is on top of RM3 billion outstanding from past WSPs, for a total of RM6.8 billion to benefit some 242,000 employers nationwide in just six months from June to December.

The Pemulih package allows businesses to maintain operating capacity to capture pent-up demand when the lockdown is lifted under the National Recovery Plan

“The WSP helped companies affected by the pandemic to continue operating and keep their employees,” said Rise Aero Sdn Bhd, which is involved in the business of airline cabin maintenance and reconfiguration.

Like hundreds of thousands of other companies, Rise Aero is eligible for the WSP, which subsidises salaries at a rate of RM600 per employee for a period of at least six months.

Concurrently, the second round of loan moratorium further provides a crucial lifeline, as cash flow can be reallocated to better prepare for the pickup in activities.

It should also be noted that soft loans to small and medium enterprises (SMEs), such as those under Bank Negara Malaysia, are still available. Under Pemulih, the central bank had increased its loan capacity twice, to RM27.1 billion from RM9.1 billion, with RM8.6 billion still available as at end-June.

For SMEs, the government has increased the ceiling for the government financing guarantee scheme (Skim Jaminan Pembiayaan Perniagaan) by RM20 billion via Pemulih, bringing the guarantee amount to RM23.1 billion, available from June to December 2021.

In 2H2021, it is estimated that an SME operator can obtain up to RM11,700 in cash aid and another RM31,000 in cash flow relief through moratoriums and discounts — for a total of more than RM40,000 in assistance.

For medium enterprises, the assistance could go even higher, to an estimated RM157,000, as there is no limit to aid such as wage subsidy and loan repayment assistance. All these do not include new loans, which are readily available from banks and other business support institutions.

Aid to continue beyond reaching of vaccination targets

Businesses aside, individuals, particularly the B40 and M40 groups, will also receive cash assistance, comprising Bantuan Prihatin Rakyat (BPR) Tambahan (from June 30 through July and August), Covid-19 Special Aid (August), BPR Phase 3 (September) and Loss of Income Aid (October).

To further ensure additional cash is available in this crisis, the government also made the difficult decision of allowing monthly withdrawal from the Employees Provident Fund via the i-Citra facility, in addition to a second loan moratorium for any individual in the country and SMEs for another six months. All these measures would certainly inject some liquidity into the market to provide an uplift to the GDP.

In total, the government has formulated eight packages totalling RM530 billion throughout the pandemic. Including Pemulih, it will roll out another RM150 billion worth of programmes — or 17.6% of the GDP — in the second half of the year. This does not include the 2021 National Budget, which was also a stimulus budget, with monthly aid to the vulnerable groups expanded, in some cases, by over 50%, to ensure that no one is left out. Individuals and business owners alike can visit belanjawan2021.treasury.gov.my/manfaat to learn about the benefits and measures provided by the government through the numerous stimulus packages and Budget 2021.

Notably, Malaysia’s improved vaccination rate will mean that 80% of adults are fully vaccinated one or two months before the Pemulih package wraps up in December 2021.

The latest updates provide more clarity on the available options for businesses and investors to plan their resources and business trajectory.

The government is also considering allowing companies to operate at full capacity if their employees are fully vaccinated, Muhyiddin said, and is likely to adjust the SOPs for the fully vaccinated, such as allowing cross-district travel or other socio-economic activities like retail shopping.

Malaysia’s fiscal deficit is likely to reach 6.5% to 7% of GDP this year, but the government is ready to expand fiscal space to ensure a balanced and meaningful recovery for all segments of society as the country heads towards Phases 3 and 4 of the National Recovery Plan.

The pandemic is still unfolding and while the number of cases has remained high due to mass testing, around 98% of these cases are asymptomatic or with mild symptoms. As vaccination is ramped up, the hospitalisation rate is expected to decrease, which will improve our public healthcare’s capacity to respond.

With new outbreaks in critical locations such as vaccination centres and among nurses and doctors in hospitals, it is our responsibility to not contribute to the number of new cases, and to play our part in reducing the burden on the country’s healthcare system.

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