The Government’s RM20bil Stimulus Package — How It Applies To You

If you haven’t already felt it, 2020 has been some kind of a ride. There has been news of some sort that has been quite shocking and surprising, and to top it all off, it seems like the world is facing some sort of pandemic that originated in Wuhan, China. Yes, this is Coronavirus (COVID-19) which has affected travel, performances, trade, the economy, and everything, really.

Public mobility has been hindered more than ever — show are being cancelled, flights have been grounded, hotels are emptied out, everybody has been advised to reduce travel, and if you’re a business owner that had items coming in from or produced in China, we’re sure that there are delays in production and procurement of your materials.

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The virus has impacted all of us in more ways than health, which is why the government had to take action. Tun Dr Mahathir Mohamad on Thursday unveiled a RM20bil stimulus package to offset the effects and fallout from COVID-19. 

So since the virus is affecting the world, it’s going to be affecting the youth of Malaysia too. Here are the main ways on how the stimulus package will affect the youth and you.

You Will Take Home More Money A Month

Okay, that might be misleading because you’re not getting a raise, but the amount of your take-home salary will increase for a bit because your EPF contribution will be reduced.

Right now, if your salary is being deducted to contribute to your EPF at a rate of 11% (the minimum rate), the minimum contribution will be reduced another 4% to 7%, starting from April 1 up to December 31, 2020. This is with the aim to unlock up to RM10 billion worth of private consumption. This is under Measure 19 of the stimulus package.

That’s not to say you should blow your money on a bag once April’s salary hits. Of course, it’s for you to be able to be freer to spend your money rather than have it locked up in EPF.

However it’s not compulsory and you can opt out of the scheme if you want to keep your EPF fat and happy. It’s your choice.

And if you or someone you know is eligible for BSH (Bantuan Sara Hidup), the government will be bringing forward BSH payments of RM200 from May 2020 to March 2020, and another one-off cash payment of RM100 will be given to BSH recipients in May 2020. Another RM50 will be given to those BSH-eligible people via e-tunai.

loan repayments will be less stringent in these times

If the economy has slowed down or you’ve lost your source of income being in the hospitality or tourism industry, you know that there are consequences if you have loans or commitments. All of us one way or another have some sort of payment to the bank in the form of a mortgage or even via our business.

For those who are borrowers in tourism or other affected businesses, under Measure 1, financial institutions (aka all banks) will have to provide financial relief by restructuring or rescheduling loans, with a possibility of payment moratoriums (moratorium means you shouldn’t  have to do it for that period of time).

It’s also applicable to individuals who have mortgages whose employment incomes have been affected.

If you or someone you know owns an SME, Bank Negara Malaysia will be establishing a RM2 billion Special Relief Facility through commercial banks for working capital at an interest rate of 3.75% for borrowers.

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If You Work In Hospitality, You Will Receive Special Benefits

Of course, hospitality and those in the tourism industry has been the most greatly hit. There are special benefits carved out for those who work in hospitality and tourism in Measure 3 and 7, which include:

  • A RM200 million micro-credit scheme by BSN (Bank Simpanan Nasional) for companies in tourism and affected sectors at an interest rate of 4%, with repayments
  • Companies in the tourism industry including hotel operators are encouraged to send employees for training courses that are approved by the Ministry of Tourism, Arts and Culture

This means that even in trying times, you can still have a chance to upskill yourself and be prepared for when the economy upturns. Which brings us to the next point…

If you are affected and lose your job you Have the chance to upskill

In the event that there are job losses and you are one of those who lose your job, the Employment Insurance System (EIS) can assist retrenched workers from their fund of RM1.1 billion under Measure 14. 

To get the benefits of EIS you have to fulfill some minimum requirements (as of course predicted) in order to be eligible. For one, you must meet their Contributions Qualifying Conditions (CQC) (i.e. must have paid contributions to SOCSO and EIS for a minimum number of months within a specified period) but under this stimulus package,  EIS will relax the eligibility criteria for retrenched workers from affected sectors (so they will waive the requirement of the 3-month contribution, since you may have been retrenched in less than three months). You’ll still be able to apply and be eligible even if you’re caught unaware.

EIS also provides vocational training for successful applicants that apply to them. So successful applicants may receive up to 6 months of training at a maximum cost of RM4,000. Under the stimulus package, the EIS will be raising the training fee ceiling to RM6,000 which means you will be able to get access to better quality training and upskill yourself.

Under the stimulus package (Measure 15), the government will provide HRDF a matching grant of RM100mil (so RM200mil in total) to benefit 40,000 workers in the tourism industry to prioritise training for sectors affected by COVID-19 — hotels, tourism and retail.

The government will also be providing a subsidy towards financing short courses in digital skills like coding, digital marketing and data science.

You Will Be Able To Get Up To RM100 Off Domestic Travels 

Rejoice! Go on holiday courtesy of the government!

We’re joking. Well, half. To stimulate travel activity within inner Malaysia, the government is encouraging us to Jalan-Jalan Malaysia by providing special reliefs under Measures 11 and 12. 

For one, they are collaborating with air travel, hotel and resort accommodation booking sites to offer you RM100 per person, to stimulate domestic tourists. This will start March 2020.

If you do travel within 1 March and 31 August 2020, you will get a special income tax relief of up to RM1,000. But you must stay at accommodations registered with the Ministry of Tourism, Arts and Culture, and it applies also to entrance fees to tourist attractions.

Hotels Will potentially Be Cheaper 

As it is, we heard that due to the Coronovirus, hotels are slashing their prices in order to attract people to start booking their stays.

As there will be tax exemptions and reliefs provided to hotels by Measures 4, 5 and 9, you can ~~~probably~~~ expect hotels to be cheaper and more affordable for you to stay at.

Service tax on accommodation providers are exempted for the period between 1 March until 31 August 2020. Certain categories of businesses will be exempted from HRDF (Human Resources Development Fund) levies for a period of six months between 1 April and 30 September 2020. These businesses will also get a 15% discount on monthly electricity bills for the period of 1 April to 30 September 2020.

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As this covers most of what affects you as an individual and as a millennial in Malaysia, there are more Measures in the stimulus package which may or may not apply to you. Find out more here.