HIGHLIGHT OF 2ND ECONOMIC STIMULUS PACKAGE

Highlight below the strategy that affect the general worker/businessman

1. Tax

• Double deduction of remuneration
• Increase tax exempted income of retrenchment benefits
• Accelerated Capital Allowance - plant and machinery and renovation
• Carry back of losses
• Levy on foreign worker
• Housing interest deduction

 

2. Cash flow

• Government saving bond
• Exemption/reduction in HDRF contribution

 

3. Finance

• Working capital guarantee scheme
• Industry restructuring loan guarantee scheme

Economic Stimulus Package

(Speech of Second Economics Stimulus Package dated 10th March 2009)

 

Summary of RM60 B (implemented over two year - 2009 and 2010) package are as follow:

This package account for almost 9% of GDP and will result in increased in the Budget deficit from 4.8% to 7.6%.

The Package have four thrust together with the relevant allocation as shown below:

Thrust	RM B
1. Reducing Unemployment and Increasing Employment Opportunities	2
2. Easing the Burden of the Rakyat, in particular, the Vulnerable Groups	10
3. Assisting the Private Sector in Facing the Crisis	29
4. Building Capacity for the Future	19

The package will be implemented over two year in the following form

	Total RM B
Fiscal injection	15
Guarantee funds	25
Equity investments	10
Private finance initiative and off-budget projects	7
Tax incentives	3

fiscal injection

RM10 billion is allocated for 2009 and RM5 billion for 2010.

The RM10 billion for 2009 consists of RM5 billion for operating expenditure and RM5 billion for development expenditure.

 

Summary of various action under the relevant thrust: 

FIRST THRUST: REDUCING UNEMPLOYMENT AND INCREASING EMPLOYMENT OPPORTUNITIES

• Unemployment rate expected to increase to 4.5% (3.7% 2008)
• Since Oct 2008,
  • 25,000 worker retrenched
  • 30,900 temporary laid-off
  • 23900 tpaycuts
  • 100,000 no overtime work

Strategy

1. Providing Training and Creating Employment Opportunities

2. Welfare of Retrenched Workers

3. Creating Job Opportunities in the Public Sector

4. Opportunities for Post-Graduate Education

5. PROSPER Graduate Programme

6. Efforts to Reduce Foreign Workers

 

SECOND THRUST: EASING THE BURDEN OF THE RAKYAT, IN PARTICULAR THE VULNERABLE GROUPS

• Eliminate hardcore poverty by 2010
• assist oil palm and rubber smallholders affected by declining commodity prices
  • through re-planting, integrated farming and livestock breeding schemes
  • in the events income of smallholders falling below poverty line income, assistance under the Social Safety Net Scheme will be extended to them
• ensure prices of necessities and transport cost do not burden the rakyat
  • RM674 M for necessities price subsidies (sugar, bread, wheat flour)
  • RM480 M to curb increase in toll rates
• total subsidies in 2009 RM27.9 M

Strategy

7. Increasing Home Ownership

8. Improving Public Infrastructure

9. Government Savings Bonds

10. Improving School Facilities

11. Basic Amenities in Rural Areas

12. Programmes in Sabah and Sarawak

13. Microcredit Programmes

14. Assisting the Less Fortunate

15. Ensuring Welfare of Retrenched Workers

16. Incentives for Banks to Defer Repayments of Housing Loans

 

THIRD THRUST: ASSISTING THE PRIVATE SECTOR IN FACING THE CRISIS

17. Working Capital Guarantee Scheme

18. Industry Restructuring Loan Guarantee Scheme

19. Facilitating Access to Capital Market

20. Attracting High-Net-Worth and Skilled Individuals

21. Reducing Cost of Doing Business

22. Promoting the Automotive Sector

23. Aviation Industry

24. Accelerated Capital Allowance

25. Carry Back Losses

26. Profit Levy on Oil Palm

27. Promoting Tourism

 

FOURTH THRUST: BUILDING CAPACITY FOR THE FUTURE

28. Investments by Khazanah Nasional Berhad

29. Off-Budget Projects

30. Private Finance Initiative (PFI)

31. Liberalisation of Services Sector

32. Role of Foreign Investment Committee (FIC)

33. Development of Creative Arts Industry

34. Effective Management of Government Financial Resources

Further reading

Appendix 10

Appendix b

Summary of Economics Stimulus Package dated 4th November 2008 (valued at RM7 B)

ESP29. Off-Budget Projects

• worth RM5B project
• RM2B LCCT at KLIA
• RM250M expansion of Pulau Pinang Airport
• RM2.4B by Malaysia Communication and Multimedia Commission (MCMC) to improve telecommunication structure including
• broadband libraries
• broadband community centres
• basic telephony services in 89 districts in rural areas
• RM100M to construct sky bridge and covered walkways between buildings, especially in the Golden Triangle, Kuala Lumpur

ESP28. Investments by Khazanah Nasional Berhad

• investment fund increased by RM10B
• invested over 2 year
• priority given to domestic investments with high multiplier effects and create job opportunities sector
• telecommunication, technology, tourism, agriculture, life science and Iskandar Malaysia
• 2009
• invest RM3B in telecommunication sector
• facilitate its subsidiary to improve broadband infrastructure
• invest RM1.7B to intensify development of Iskandar Malaysia
• for building of infrastructure, hotels,theme parks and universities
• Agricultural projects include
• 1,000 hectare prawn aquaculture project in Setiu, Terengganu
• 200 hectare modern vegetable-farming project in Cameron Highlands
• By 2011 expected to create 70,000 job opportunity

ESP27. Promoting Tourism

• allocate RM200M to
• upgrade infrastructure in tourist spots
• diversify tourism products
• organise more international conferences and exhibitions in Malaysia
• Strengthen the Malaysia My Second Hone Programme
• Consider issuing work permits to skilled spouses of the programme participants

ESP25. Carry Back Losses

• to improve business cash flow
• current year losses of up to RM100,000
• carried back to immediate preceding year
• applicable to all businesses including sole proprietors and partnerships
• effective for year of assessment 2009 and 2010

ESP24. Accelerated Capital Allowance

• Expenses on plant and machinery incurred between 10.3.2009 to 31.12.2010 be given Accelerated Capital Allowance - claim within 2 years
• Expenditure on renovation and refurbishment incurred between 10.3.2009 to 31.12.2010 qualified for Accelerated Capital Allowance  claim within 2 years (currently not allowed).
• The allowance is capped at RM100,000 for 8 years of assessment per tax payer.
• the qualifying expenses are
• general electrical installation
• lighting
• gas system
• water system
• litchen fittings
• sanitary fittings
• door, gate, window, grill and roller shutter
• fixed partitions
• flooring
• wall covering
• false ceiling and cornices
• ornamental features or decorations excluding fine art
• canopy or awning
• fitting room or changing room
• children play area
• recreation room for employee
• effective  Year of assessment 2009

ESP23. Aviation Industry

• rebate of 50% on landing charges given for 2 years effective 1.4.2009 to all airlines operate from Malaysia
• This is to encourage more airlines to operate from Malaysia to attract more tourists.

ESP22. Promoting the Automotive Sector

• additional allocation of RM200M to Automotive Development Fund
• establish the Automotive Institute of Malaysia
• assist in auto-scrapping scheme for PROTON and PERODUA
• discount of RM5,000 to car owner trade in their 10 years old (at least) car for new Proton or Perodua
• Government will finance part of the discount

ESP21. Reducing Cost of Doing Business

• exempt levy payments to the Human Resource Development Fund
• for 6 months with effect from 1.2.2009
• for textile, electrical and electronics industries
• reduce levy rate to 0.5% (currently 1%)
• for 2 years effective 1.4.2009
• for all employers

ESP20. Attracting High-Net-Worth and Skilled Individuals

• New programme to offer permanent resident status for
• high-net-worth individual bringing more than USD2M for investments or savings in Malaysia
• highly skilled foreign professionals may also be considered

ESP18. Industry Restructuring Loan Guarantee Scheme

• Objective
• assist viable medium and large enterprises to secure financing to
• mordenise and upgrade business operation ie
• greater automation
• increased productivity
• energy efficiency
• green technology
• Fund size: RM5B
• Guarantee ratio:
• Mid sized company: Government 80: Financial Institution 20
• Large enterprises: Government 50: Financial institution 50
• Guarantee fee: 0.5% on outstanding amount
• Interest rate: determined by Financial institution
• Eligibility: Malaysian owned companies
• Maximum loan tenure: 10 years
• Maximum financing: RM50M per company
• Fund availability: until 31.12.2010 or upon full utilisation
• Participating financial institution
• all commercial banks
• all islamic banks
• Bank Pembangunan Malaysia Berhad
• SME Bank
• Bank Simpanan Naional

ESP17. Working Capital Guarantee Scheme

• SMEs comprise
• 99% of registered business in Malaysia
• 56% of employement
• 32% of GDP
• Currently CGC under Bank Negara provides Skim Jaminan Usahawan Kecil to fund working capital of SMEs with shareholder equity of less than RM3M
• Establish a Working Capital Guarantee Scheme for medium sized (shareholder fund less than RM20M) Companies to gain access to working capital financing
• Fund size - RM5B
• Guarantee Ratio: Government 80: Financial Institution 20
• Guarantee fee: 0.5% on outstanding amount
• Interest rate: determine by financial institution
• Eligibility:mid sized Malaysian owned company (not subsidiary of company with shareholder fund more than RM20M)
• Maximum loan tenure: 5 years
• Availability: Until 31.12.2010 or upon full utilisation
• Participating bank
• all commercial bank
• all islamic bank
• Bank Pembangunan Malaysia Bhd
• SME Bank
• Exim Bank
• Bank Simpanan Nasional

Esp15. Ensuring Welfare of Retrenched Workers

Increase tax exemption to RM10,000 for each completed year of service (existing RM6,000) on retrenchment benefits

ESP14. Assisting the Less Fortunate

• RM20M to
• improve facilities of daycare centres for elderly
• strengthen management of women shelter homes
• increase facilities for childcare centres

ESP13 Microcredit Programmes

• additional RM300M under AgroBank for farmers and agro-based business in rural areas
• RM50M forTEKUN
• Establish Fishermen's Welfare Fund managed by Lembaga Kemajuan Ikan Malaysia (LKIM) of RM2M

ESP11. Basic Amenities in Rural Areas

• RM230M to increase coverage of electricity and water supply in rural areas, particularly Sabah and Sarawak
• RM350M for construction of rural road - increase economic activities of small contractors and local workers in rural areas
• RM500M for PIA and PIAS project (emphasis in Sabah and Sarawak)

ESP10. Improving School Facilities

• RM1.95B to build and improve facilities in 752 schools (particularly rural area and Sabah and Sarawak)
  • RM300M for government-aided religious schools, national-type Chinese and Tamil schools and mission schools

ESP9. Government Savings Bonds

• issue syariah-compliant Savings Bond of Rm5B this year to increase income of rakyat
• maturity of 3 years with annual return of 5% paid quarterly
• available to all citizens aged 21 and above
• minimum investment RM1,000, maximum RM50,000

ESP8. Improving Public Infrastructure

Promote greater activities in the construction sector and stimulate domestic demand.

Strategy

• Accelerate implementation of projcts under 9th Malaysia plan (high local content and multiplier effect, people centric)
  • Project amount RM8.4B
  • Additional RM1.6B to promote investments
• Additional allocation RM200M to repair and maintain drains and road and improving surrounding of public flats (painting, repairing lifts, improve waste disposal facilities)
• RM150M for renovation, maintenance and repair of welfare homes, fire and rescue stations and quarters, public toilets in mosque, surau and tourist spots