BNM Added Its Special Relief Facility (SRF) by RM5bn to RM10bn

In this status report for the sixth update of the Prihatin Rakyat Economic Stimulus Package implementation, Ministry of Finance (MOF) highlighted further support targeted at small and medium sized enterprises (SMEs), mostly affected by the COVID-19 outbreak. According to MOF, the allocation for Special Relief Facility (SRF) by Bank Negara Malaysia (BNM) was raised from RM5bn to RM10bn, as the initial allocation of RM5bn was fully utilised. There were 20,000 applications totalling about RM10bn approved by financial institutions offering these SRFs. As a result, BNM added another RM5bn to meet the approved applications. Out of this approved amount, a total of RM5.75bn was to 13,908 SMEs, while RM4.25bn of the remaining applications are pending in the post-approval process including the application for guarantee and acceptance by the applicant.

Other measures such as BNM's soft loan funds for SMEs, banks have approved loans worth RM5.8bn for over 14,075 SMEs, an increase of RM1.1bn from 11,975 SMEs in previous week. As for the Micro Credit Scheme, as of 17th May, of the RM700m micro-credit offered at 0% interest by BSN and TEKUN Nasional, about RM246m was approved from 15.6k applications combined. On the wage subsidies program, as of 17th May, the applications approved have increased by another 268k employers representing 2m workers, where RM2.24bn had been approved (from RM2.1bn in previous week). According to MOF, this wage subsidy will likely help companies to retain employees, but also guided that the reopening of most sectors in the economy under Conditional MCO (CMCO) will also enable these companies to increase efforts in gaining higher revenue. Please refer to the Appendix I for other status update.

In terms of cash assistance from Bantuan Prihatin Nasional (BPN), under Phase 2, a total of RM3.41bn has been paid out to 7.61m recipients. This represents 93% of the Phase Two allocation that has been disbursed. MOF mentioned that due to technical difficulties, the remaining payments which was scheduled to end last week has been extended to May 22. For the Phase 1 payout, as at 17 May, a total of 7.84m recipients received payment of RM5.54bn which translates to 96% of its allocation. In addition, to date, 830,000 new applications and appeals have received BPN payments amounting to RM620mn from 2.3 million eligible recipients. In summary, as announced last week, under Phase 1 and 2, the BPN program has a total allocation of RM11bn, where close to 87% has been disbursed so far. While the CMCO (commencing from 4th May) provided some cushion to support business activity and economic growth, we believe most businesses are still impacted by the Covid-19 crisis, especially in the travel and tourism related industries. As previously guided by the Finance Minister, Malaysia is currently in the third stage of its six-phase plan (6R – Resolve, Resilience, Restart, Recovery, Revitalise and Reform) to improve on economic recovery. As the country moves into the fourth stage, the government will announce the six-month short-term recovery plan by the end of this month. We believe the focus of the recovery plan will likely to be on strategy to retain and create jobs, human capital development, facilitating digitalisation, as well as boosting consumer confidence, and also supporting SMEs.

Source: Affin Hwang Research - 22 May 2020