Let’s take a dive into these four stimulus packages launched by the government to revive the country’s pandemic-hit economy.
In a crisis, people and companies spend less—a lot less—so the government fills that gap with big spending measures of its own, and stimulus packages are one of the standard prescriptions for allocating funds to an economy in crisis.
The Malaysian government unveiled the first stimulus package- PRIHATIN, which was valued at RM 250 billion in March 2020 to support the COVID-19 pandemic-hit economy, but it hardly prevented the onset of economic recession. But as the pandemic dragged on and the lockdown is extended, the Malaysian government proceeded to introduce seven more stimulus measures – PRIHATIN PLUS (RM10 billion), PENJANA (RM35 billion), KITA PRIHATIN (RM10 billion), PERMAI (RM15 billion), PEMERKASA (RM20 billion), PEMERKASA+ (RM40 billion) and PEMULIH (RM150 billion). Together, these eight economic stimulus packages are worth RM530 billion.
This article will focus on illustrating the four packages unveiled this year, namely PERMAI, PEMERKASA, PEMERKASA+, PEMULIH. But first, let’s get a basic understanding of what is a stimulus package and examine how stimulus spending works.
What Is a Stimulus Package and How Does It Work?
A stimulus package is a combination of economic measures introduced by a government to revive a struggling economy. These measures including a packet of different subsidies, tax rebates, and supplemental unemployment benefits to target different economic elements. It aims at boost economic growth and lead the economy out of a recession or economic slowdown.
There are three types of stimulus package- monetary stimulus, fiscal stimulus, and quantitative easing. The first one involves cutting interest rates to stimulate the economy a task usually undertaken by central bank of a country. Meanwhile, a fiscal stimulus refers to government spending and taxation policies utilized to influence a country’s overall economic conditions. Quantitative easing involves the central bank of a country acquiring financial assets like bonds from other financial institutions, in order to expand excess reserves, encourage lending, lower interest rates and increase the supply of money in circulation.
The four economic stimulus packages introduced by Malaysian government this year involve the use of both monetary and fiscal stimulus.
1. Perlindungan Ekonomi & Rakyat Malaysia (PERMAI)
The PERMAI package valued at RM15 billion was launched by the government on January 18, which pertained to the improvement of incentives issued throughout 2020, such as the wage subsidy program as well as accelerating the implementation of related initiatives. PERMAI was released after the government reimposed the movement control order (MCO) on Jan 13 to curb the rising number of Covid-19 cases.
A total of 22 initiatives were implemented under Permai most notably the National Covid-19 Immunisation Programme (NIP) and relevant healthcare measures to combat the pandemic.
It also includes a variety of initiatives and incentives to help businesses in the country such as enhancement of wage subsidy programme 3.0 under Social Security Organisation (Socso), special grant for more than 500,000 SMEs which were under MCO with payment of RM1,000 each, tax exemptions, enhancements to the Employee Provident Fund’s (EPF) i-Sinar Program and retaining loan moratorium facilities nationwide.
2. Program Strategik Memperkasa Rakyat dan Ekonomi (PEMERKASA)
PEMERKASA package valued at RM20 billion of which RM11 billion constituted a direct fiscal injection was introduced two months after PERMAI on March 17. It focused on 20 strategic initiatives to boost economic growth, support businesses, and continue targeted assistance to the people and sectors as states began to transition into Conditional Movement Order (CMC0).
Under PEMERKASA, approximately one million eligible SMEs were allowed to apply for the one-off Special Prihatin Grant (GKP 3.0) worth RM1,000 each to facilitate the reopening of business. Furthermore, an additional financing fund of RM500 million for micro-credit financing facilities will be given through programmes under BSN, TEKUN, MARA and SME Corp.
PEMERKASA also provide various financial aids to people with disabilities, those who have lost jobs, youth and women.
3. Program Strategik Memperkasa Rakyat dan Ekonomi Tambahan (PEMERKASA+)
The government revealed RM40 billion PEMERKASA+ package on May 31 as a response to another total lockdown measures which were enforced from June 1. This package included RM 5 billion direct fiscal injection with three main objectives: to increase the capacity of the public healthcare system, to continue the Prihatin Rakyat Agenda, and to support business continuity.
Under this package, the government drew up several measures to assists affected businesses, and one of them was wage subsidy program extension. The government allocated RM1.5 billion to extend this program for a further one month to prevent massive layoffs.
Other than that, Bank Negara Malaysia (BNM) has also allocated RM 2 billion of additional funding to the Targeted Relief and Recovery Facility programs, designed to provide relief for SMEs impacted by the lockdown. Meanwhile, affected SMEs, micro businesses, retrenched workers were allowed to apply for loan moratoriums of either an automatic three-month extension or reduce repayment by half for up to six months.
The government also allocated RM 2.1 billion to Bantuan Prihatin Rakyat (BPR) initivative under PEMERKASA+ to support economically vulnerable groups which relied on daily wages to survive during the pandemic.
4. Pakej Perlindungan Rakyat & Pemulihan Ekonomi (PEMULIH)
This latest economic stimulus package announced on June 28, is the second largest package after PRIHATIN, valued at RM 150 billion and involves a fiscal injection of RM 10 billion. This package was unveiled in response to the indefinite extension of the national lockdown.
PEMULIH aims to provide support to businesses, sustain previous aid initiatives, expedite the vaccination rollout; as well as complement programmes to put the country back on track under the National Recovery Plan (NRP).
Some of the highlights of the initiatives under PEMULIH including special grants for MSMEs valued at RM 2 billion provided by BNM, RM 3.8 billion to extend the wage subsidy program for a period of 4 months, an extra RM 1,000 for businesses previously participated in the Prihatin Special Grant (PSG), and a six-month loan moratorium is available for qualifying MSMEs as well as individual borrowers.
The government also provide various assistance for individuals or households in the B40 category under PEMULIH. Single individuals will receive RM 200 in August this year, while the latter will receive RM 500 in at the same period. On the other hand, for Malaysians who have lost their jobs or who are unemployed can benefit from the RM 500 million in extra funding for the Employees’ Provident Fund (EPF).
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