Affin Hwang Capital Research Highlights

Author: kltrader   |   Latest post: Wed, 28 Oct 2020, 4:54 PM


Economic Update - Malaysia Stimulus Package – 22nd Update: Proactive Stimulus Measures Supported Growth

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  • Hiring Incentive Programme and Training Assistance has benefited 33,688 employees compared to 28,577 in the previous week
  • Under the Moratorium on Loan Repayment, the value of the moratorium increased by RM3.8bn to RM89.6bn as at 11 September 2020
  • BNM's SME Soft Loans Funds, banks have approved loans worth RM10.5bn for over 22,822 SMEs, an increase of RM0.1bn from 22,688 SMEs in the previous week

Economic indicators showing improvement from the economic fallout

Ministry of Finance (MOF) guided in the twenty second update of the PRIHATIN and PENJANA stimulus packages that applications approved in the Wage Subsidy Programme (WSP) increased to 2.626mn workers as at 11 September, as compared to 2.622mn workers in previous week, where RM10.44bn was approved (RM10.41bn in the previous week). This was equivalent to about 75.7% of the total RM13.8bn allocation. Apart from the extended WSP, there are other measures such as Hiring Incentive Programme and Training Assistance, which benefited 33,688 employees as at 11 September (compared to 28,577 in the previous week). Both programmes are part of the efforts made by the Government to maintain employment due to the impact of Covid-19 pandemic.

Measures to help SMEs increase funds in order to support their capability and drive business activities include BNM's SME Soft Loans Funds where, as of 11 September, banks have approved loans worth RM10.5bn for 22,822 SMEs, an increase of RM0.1bn from 22,688 SMEs in the previous week. Further measures to assist the local businesses is through PENJANA SME financing where, as of 11 September 2020, a total of 2,566 applications have been approved (from 2,131 in the previous week), worth RM639.6mn (RM562.3mn in the previous week). This was equivalent to 32% from the RM2bn allocation.

In addition, through the TEKUN Business Recovery Scheme which aims to support cash flow of micro SMEs, as of 11 September, a total of RM71.2mn has been disbursed (RM62.7mn in the previous week) and has benefitted 10,649 micro SMEs (9,313 micro SMEs in the previous week). Moreover, as at 11 September, Moratorium on Loan Repayment increased by RM3.8bn to RM89.6bn, compared with RM85.8bn in previous week, where a total of RM31.4bn was utilised by business sector (from RM30bn in previous week) and RM58.2bn utilised by the public (from RM55.8bn). Details on the progress and achievement of other initiatives can be found in the Appendix I and II.

This week, Finance Minister (FM) Tengku Zafrul guided that stimulus packages announced earlier to support business and economic recovery would be enhanced, where feedback from industries will be incorporated and presented in the 2021 Budget in early November. We believe the strategies and efforts will be in line with the 2021 Budget themes of sustaining life, driving economic growth, caring for the welfare of the people and improving the public service delivery. FM further added that the investment in the bond market recorded RM23.1bn up to August 2020, coming from foreign investors, shows market confidence in Malaysia’s economic fundamental remaining strong. FM also highlighted possible various infrastructure projects, such Bandar Malaysia, with a gross development value of RM140bn, which will have potential positive multiplier effect on the country’s economy going forward. FM added the initiatives by the Northern Corridor Implementation Authority (NCIA), targeting to increase the economy of the Northern Corridor Economic Region (NCER) by RM300bn, as outlined in the newly launched NCER Strategic Development Plan (SDP) 2021-2025. We believe 2021 Budget to be an expansionary budget to stimulate domestic demand amid global economic uncertainty, where the focus will likely be on infrastructure spending revival, with possible increase in the budgetary allocation for development expenditure (DE) as well.

Source: Affin Hwang Research - 23 Sept 2020

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