11 March 2020
MALAYSIA: Government Looks to Tackle Slowing Economy and Coronavirus Onset
A government-backed stimulus package will come into effect as of 1 April this year in a move designed to mitigate the worst effects of the coronavirus, while helping reboot the country’s ailing economy. In many ways, the virus outbreak has already triggered a decline in exports to China, the country’s biggest trading partner. Last year, Malaysia’s GDP growth rate fell to 4.3%, the lowest level for 10 years and now, with the required inputs for its manufacturing sector (most of which are imported from China) difficult to secure, the situation is set to deteriorate further.
As a consequence, the government has adopted the following five pro-business measures:
1) Soft Loans and Micro-Credit Facilities
In a bid to support companies adversely affected by the outbreak, Bank Negara Malaysia, the country’s central bank, is to offer SMEs up to RM2 billion (US$480.7 million) in soft loans (at a preferential interest rate of 3.75%). Similarly, the state-owned Bank Simpanan Nasional will offer RM200 million (US$48.06 million) worth of micro-credit (at an interest rate of 4%) to any adversely affected business. In addition, all banks in the country have been advised to show willing when it comes to rescheduling or restructuring loans, including postponing payments.
2) Waiver of Stock Market Listing Fee
Fees for listing on the Main Market of Bursa Malaysia, the country’s stock exchange, will be waived for one year in the cases of companies with a market capitalisation of less than RM500 million (US$120.17 million). Fees will also be waived for companies seeking a listing on the bourse’s Leading Entrepreneur Accelerator Platform (LEAP) or Access, Certainty, Efficiency (ACE) markets.
3) Tax Exemptions for Tourism Businesses and Port Operators
In a bid to mitigate the impact of the coronavirus-driven decline in visitor numbers, tourism-related businesses are to be permitted to delay their monthly income tax payments for up to six months. In addition, a 15% discount on electricity costs for the same period is on offer to hotels, travel agencies, local airlines offices, shopping malls, convention centres and theme parks. Hotels are also to be exempt from levying the 6% service tax for six months as of March this year.
In addition, machinery and equipment for use in port operations are to be exempt from import duty and sales tax for a period of three years.
4) Investment Promotion
In a bid to promote higher value-added private sector investment, a RM500 million co-investment fund is to be established. With a private investor co-investment ratio of one to three, the fund is expected to raise up to RM2 billion in order to fund early-stage domestic start-ups and growth-stage businesses.
5) Online Support for Local Entrepreneurs
Finally, local entrepreneurs will be eligible for government grants of up to RM10,000 (US$2,403) in order to promote the online sale of their products.