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Government enhances relief for SMEs under Prihatin SME

On 27 March 2020, the Malaysian Government announced the Pakej Rangsangan Ekonomi Prihatin Rakyat (‘Prihatin’), a relief and economic stimulus package to assist individuals and businesses to weather the economic challenges brought about by the Covid-19 outbreak. The Prihatin package, valued at RM250 billion, is in addition to the stimulus packages announced by the Malaysian Government on 27 February 2020 and 23 March 2020. Our summary of Prihatin and the earlier measures are available here, here and here. Prihatin included initiatives valued at RM100 billion to support businesses, including Small and Medium Enterprises (‘SME’). After receiving feedback from stakeholders, the Government announced the Prihatin SME+ (‘Prihatin SME+’) package on 6 April 2020.   The Prihatin SME+ is not only a modification of certain reliefs under Prihatin but increases the financial assistance to SMEs by RM10 billion. The highlights of Prihatin SME+ are as follows :

1. Extension of Wage Subsidy Programme The RM5.9 billion allocated to the Wage Subsidy Programme (‘WSP’) under Prihatin has been increased by RM7.9 billion to RM13.8 billion. The relief under the WSP has been modified and expanded as follows –

  • For companies with more than 200 employees, the Government will provide a wage subsidy of RM600 per month for every employee, subject to a limit of 200 employees being eligible to claim such benefit;

  • For companies with 75 to 200 employees, the Government will provide a wage subsidy of RM800 per month for every employee;

  • For companies with less than 75 employees, the Government will provide a wage subsidy of RM1,200 per month for every employee.

As previously announced, the subsidy will be for a period of three months and will only apply to employees earning less than RM4,000 per month. To qualify for the assistance under the WSP, an employer must –

  1. be registered with the Companies Commission of Malaysia1 (‘CCM’) or local authorities before 1 January 2020;

  2. be registered with the Social Security Organisation (SOCSO); and

  3. retain its employees for at least six months, i.e. the three month duration of the WSP and another three months thereafter.

Prihatin, an employer must also show that it has suffered a decrease of more than 50% in its income since 1 January 2020. 2. RM3,000 Special Grant for micro enterprises

Announced as an additional measure under the PRIHATIN Tambahan additions for SMEs, the government will provide RM3,000 for each micro-enterprise under the PRIHATIN Special Grant, with a total allocation of RM2.1 billion. The micro-enterprises must be registered with LHDN to be eligible and the government will obtain the list of eligible micro-enterprises from the authorities. 3. 0% Interest For Micro Credit Facility This micro credit scheme by Bank Simpanan Nasional (BSN) is open to micro enterprises whose businesses are impacted by the Covid-19 outbreak. It offers a 0% interest rate of loan amounts up to RM75,000 for tenures between 1-5.5 years, including the first six months of moratorium.

Micro enterprises which are Malaysian-owned, registered with SSM, in operation for at least 6 months, and have been impacted by Covid-19 can apply online through BSN. The scheme has also been extended to TEKUN Nasional with a maximum loan limit of RM10,000 per micro enterprise.

The micro credit facility was introduced in the first Economic Stimulus Package 2020 at an interest rate of 4%. This rate was lowered during the PRIHATIN Economic Stimulus Package announcement to 2%, before being abolished altogether in the PRIHATIN Tambahan package for SMEs. 4. Waiver or discount on rent by retail SMEs by GLCs Certain Government-Linked Companies (GLCs), such as Petronas, MARA, PNB and UDA, and several State Governments have agreed to grant waivers or discounts to their tenants which are SMEs in the retail sector. 5. Tax relief for landlords granting waivers or discounts to SMEs Landlords of buildings or business premises who grant waivers or at least 30% discount on rent for three months (April to June 2020) to their tenants which are SMEs will be given a tax deduction equal to the amount of rent reduction or waived. 6. Reduction on foreign workers’ levy A 25% reduction of the levy payable for foreign workers will be granted to all companies with foreign workers’ permits expiring between 1 April to 31 December 2020. This waiver is not applicable to the domestic help sector. 7. Relaxation of CCM filing deadlines A 30-day moratorium will be granted on filing of documents with the CCM. The moratorium will commence when the Movement Control Order ends. Further, companies with financial years ended 30 September to 31 December 2019 will be granted a 3-month extension to lodge their financial statements. These companies are required to apply to the CCM for this extension with no fees being imposed.

Presumably, the employer can be a company, limited liability partnership or a business registered with the CCM. This raises a question whether professional services firms, like law firms, which are registered under the legislation that governs their profession, will be eligible for the WSP. The announcement on Prihatin SME+ did not specify the qualifying criteria for micro enterprises.

8. RM600 monthly allowance for employees on forced unpaid leave

Under the Employment Retention Programme (ERP) by SOCSO, RM600 per month (up to a maximum of 6 months) will be provided to employees who have been issued with no-pay leave due to the Covid-19 pandemic. Only employees who are registered and contributing to the the Employment Insurance System (EIS) and receive a notice of no-pay leave of a minimum of 30 days are eligible. The assistance is only available to those earning RM4,000 and below a month.

The application for this allowance must be made by employers on behalf of their employees. You can find out more about it on the SOCSO website here.

9. Employment Insurance System (EIS) for loss of employment

mployees who have been recently retrenched are encouraged to make claims from the Employment Insurance System (EIS), which provides financial assistance to those who have experienced loss of employment due to retrenchment, company downsizing, and so on. Under this scheme, recently let go employees can seek a job search allowance (JSA), which varies depending on wages and contribution qualifying conditions.

Employees who are registered and contributing to the EIS for a minimum of 12 months qualify for the benefit payment. However, the EIS has a temporary financial incentive called SIP Plus 60 worth RM600 a month for a maximum of 3 months for those who have suffered loss of employment and are registered with EIS but do not meet these contribution qualifying conditions.

You can find out more about the benefits under EIS on the SOCSO website.

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