Yesterday, PM Tan Sri Muhyiddin Yassin announced the RM10bn KITA PRIHATIN measure. The measures are focused on labour market, microenterprise and B40, M40 households. From our understanding, fiscal deficit is projected to remain unchanged at -5.8 to -6.0% of GDP as the additional RM10bn will be redirected from existing underutilised funds.

NEWSBREAK

Yesterday, PM Tan Sri Muhyiddin Yassin announced new policy measures amounting to RM10bn. This plan includes 3 measures: (i) wage subsidy benefitting employees, (ii) Geran Khas PRIHATIN to assist micro businesses and (iii) Bantuan Prihatin National (BPN) cash handouts to B40 and M40 recipients.

HLIB’s VIEW

Policy measures amount to RM10bn (0.7% of GDP). The policy measures are a targeted approach to help the labour market, micro enterprise and B40 and M40 households. On wage subsidy, it is directed to companies who are experiencing -30% YoY in sales. Each employee will receive RM600/month for 3 months (Oct-Dec 20) for a maximum of 200 employees. On Geran Khas PRIHATIN, each applicant will receive RM3k with disbursement expected to begin from 25th Nov 20. Lastly, the BPN will be extended to B40 and M40 recipients, but at a lower amount compared to previous allocation. The payout will be disbursed at end-Oct 20 and Jan 21.

Fiscal deficit at -5.8 to -6.0% of GDP. From our understanding, these additional RM10bn will be redirected from existing underutilised funds (Table 2). If this is accurate, fiscal deficit remains within target of -5.8 to -6.0% of GDP.

GDP impact. The measures of the KITA PRIHATIN plan focuses largely on supporting the labour market, microenterprise and B40, M40 households. The cash handouts and grants aim to ease firms and household’s cash flow for the next 3-4 months. As automatic loan moratorium ends on 30th September 2020, these policy extensions seem timely to offset some of the negative impact from lower disposable income.

Source: Hong Leong Investment Bank Research - 24 Sept 2020