Page 8 - Malaysia Convention & Exhibition Directory 2020-2021
P. 8

As the Conditional Movement Control Order (CMCO) approached its scheduled end date of June 9, 2020, two announcements were made by the government in a move to regenerate the economy and increase consumer and investor confidence. The first is a financial aid package worth RM35 billion and the second is the replacement of the CMCO with the Recovery Movement Control Order (RMCO), which is scheduled to run from June 10 to December 31, 2020.
Dubbed the National Economic Recovery Plan or Penjana, the financial aid package is a short-term economic recovery plan with 40 initiatives to empower people, propel businesses and stimulate the national economy. Of the RM35 billion, RM10 billion will be in the form of direct fiscal injection. Analysts say these additional measures can help reduce the magnitude of GDP contraction for 2020. Bank Negara Malaysia had estimated a GDP of between -2.0% and 0.5% for this year but will announce a revised forecast in the second half of the year.
Penjana is the fourth economic stimulus package announced by the government thus far. The first one unveiled in February 2020 was worth RM20 billion and aimed at boosting private consumption while assisting sectors that have been directly affected by COVID-19.
The second stimulus package called the Prihatin Rakyat Economic Stimulus Package followed a month later in March 2020, adding another RM230 billion to the RM20 billion for a total RM250 billion. The bulk of this aid addresses income loss as a result of the MCO, which lasted almost two months from March 18 to May 12 and was followed by the CMCO.
The third stimulus package worth RM10 billion was announced in April 2020, this one specifically targeting Small and Medium-sized Enterprises (SMEs), which make up two-thirds of the nation’s workforce and contribute about 40% to the economy.
Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said that Penjana “represents an opportunity for us to take advantage
of new opportunities arising from the COVID-19 crisis for the sake of the nation’s future development.” He added that Malaysia has sufficient liquidity to fund the massive Prihatin and the Penjana packages without having to resort to external loans or issuing bonds in foreign currency.
“Given the liquidity today, we see no reason why we should tap into foreign borrowing, so instead we borrowed from the local currency,” he said. “We estimate that we need to borrow approximately RM45 billion for the packages – RM35 billion for Prihatin and RM10 billion for Penjana, respectively. Since we have enough to borrow in the market, we are able to tap into it, as borrowing is now cheaper,” he added.
One of the major areas of focus of the Penjana package is reducing unemployment. As of April 2020, the country’s unemployment rate had increased to 5%, which represents about 778,800 workers. This is a jump from the unemployment rate in March, which was 3.9%, representing about 610,000 workers.
To tackle the issue, the government has set aside RM9 billion on a number of initiatives that include allocations for hiring incentives, apprenticeships and upskilling programmes. These are expected to benefit about three million workers who have lost their jobs during the COVID-19 pandemic lockdown.
Another area of interest is the hard-hit tourism sector. Numerous tax incentives have been introduced under the Penjana package to support this important sector, including income tax exemptions of up to RM1,000 for domestic travel expenses until December 31, 2021.
The second announcement by the government, which is the easing of movement restrictions with the RMCO, ties in with the exit strategies of the Penjana package with regard to tourism. With COVID-19 cases on a declining trend, interstate travel has been permitted after a three-month ban, bringing much joy to Malaysians and the local tourism industry.

   6   7   8   9   10