The government has proven that it is going all out in supporting the people, the vulnerable groups and small and medium enterprises (SMEs) by laying a strong foundation with absolute financial support and initiatives.

Under the short-term Economic Recovery Plan (PENJANA), Prime Minister Tan Sri Muhyiddin Yassin (picture) today announced 40 initiatives worth RM35 billion, whereby the bulk of the allocation were crafted towards job security including those in the gig economy, re-skilling and easing cash flow for businesses.

“The government has introduced a National Economic Recovery Plan or briefly ‘PENJANA’ with the theme ‘Building the Economy Together’.  

“Under this plan, the government has identified three core thrusts, namely empowering the people; propel businesses; and stimulate the economy,” he said in his speech during the unveiling of PENJANA today.

Among others, the government will facilitate policies to support the growth of the gig economy and welfare of the workers in this sector.

This will be done through a matching grant of up to RM50 million for gig economy platforms who contribute for their gig workers to the employment injury scheme under the Social Security Organisation (SOCSO) of up to RM162 and the Employees’ Provident Fund’s (EPF) i-Saraan contribution of up to RM250 yearly.

It will also provide Malaysia Digital Economy Corporation (MDEC) with RM25 million for the Global Online Workforce (GLOW) programme, which serves international clients while working online from home.

As an effort to encourage micro enterprises and SMEs to use digital services, the government together with the private sector will finance this effort through matching grants worth RM140 million.

“This allocation will be used for training sessions, subsidies for sellers and assistance for sales. This initiative will be driven by MDEC together with selected e-commerce platforms,” he said.

With the aim to encourage adoption of e-commerce by micro enterprises and SMEs in order to widen their market reach, the government, via its Micro and SMEs E-commerce campaign, will allocate RM70 million for eligible micro enterprises and SMEs onboard to shift towards business digitisation through a co-funded programme with MDEC and e-commerce platforms.

The government would also collaborate with the e-commerce platforms to co-fund digital discount vouchers to encourage online spending on products from local retailers.

Local micro enterprises and SMEs with e-commerce footprint and consumers will be the beneficiaries of the RM70 million allocation.

Meanwhile, as for the technical and digital adoption for SMEs and mid-tier companies (MTCs), the government will allocate RM700 million to assist as well as incentivise them, enabling the SMEs and MTCs to digitalise operations and trade channels.

Muhyiddin also noted that the government would provide guidance and facilitate the recovery for process for micro enterprises and SMEs.

With an allocation of RM5 million, an online one-stop business advisory platform for the micro enterprises and SMEs will be set up this month to enhance the outreach of the existing physical SME hub.

“In an effort to assist in the continuity of the SMEs involved in targeted key sectors, the banking sector will offer additional funding of RM2 billion through PENJANA SME Financing Scheme.

“This financing can be applied beginning from mid-June 2020 with a maximum of up to RM500,000 for each SME,” he said.

Meanwhile, to assist the tourism sector, PENJANA Tourism Financing Scheme worth RM1 billion will be offered to fund the transformation initiatives by SMEs in the tourism sector to enable them to compete in the new normal era. The details of this funding will be announced by Bank Negara Malaysia in July 2020.

For micro enterprises, the government will create a PENJANA Micro Funding scheme with the cooperation of Bank Simpanan Nasional and TEKUN Nasional for financing of RM400 million whereby RM50 million is set aside specifically for women entrepreneurs.

In efforts to empower the involvement of Bumiputeras and ensure continuity in businesses and entrepreneurship, funding of RM200 million is offered through Perbadanan Usahawan Nasional Bhd (PUNB).

Additionally, an allocation of RM300 million will be channelled to Majlis Amanah Rakyat (MARA) wherein the Bumputera entrepreneurs including affected skills institute can get financing for working capital.

“In addition, to assist the cash flow of SMEs, from early July, SME Bank via SME-GO Scheme will provide financing to 16,000 contractors in Grade G2 and G3 who are qualified and have received projects under PRIHATIN.

“To facilitate the contractors, no collateral or deposit is to be provided. To help over 900,000 SMEs and local entrepreneurs, several steps and tax incentives will be implemented.”

He said to encourage the establishment of new SME entities, the government had agreed to give income tax rebate of up to RM20,000 annually for the first three years of assessment, subject to set conditions.

The income tax rebate is given to new companies that are incorporated and operate between July 1, 2020 and Dec 31, 2021.

Besides that, to encourage SMEs to increase their competitiveness in doing business through mergers and acquisitions schemes, the government has agreed to provide exemption on stamp duty on instruments related to mergers or acquisitions for transactions completed from July 1, 2020 to June 30, 2021.

“To assist and encourage the unemployed to increase skills, training allowance of up to RM4,000 can be claimed from SOCSO by those who lost their jobs, even though they are not contributors under the Employment Insurance Scheme.  

“The government will also provide incentives for employers who offer apprentice opportunities to school leavers and graduates at RM600 a month to address unemployment issue among youths and increase the marketability of graduates,” he said, adding an allocation of RM2 billion had been set aside for upskilling programme for the unemployed and youths.

This will benefit more than 200,000 people.

PENJANA is the fourth of six phases in Malaysia’s recovery efforts, namely Resolve, Resilience, Restart, Recovery, Revitalise and Reform to address the health and economic issues arising from the COVID-19 pandemic.

The next phase, which is to Revitalise, is expected to fall under Budget 2021.