EAC to Prepare Long Term Economic Recovery Plan in October

In the latest thirteenth update of the PRIHATIN and PENJANA stimulus packages, Ministry of Finance (MOF) guided that a total of RM11.06bn BPN cash aid has been disbursed to 10.4 million recipients as at 13 July 2020, compared with 10.24 million recipients or RM10.92bn disbursement from previous week. Another 141k appellants have received their payout with additional disbursement of RM121mn (140k appellants of RM120mn in previous week). To recap, the total allocation of BPN cash assistance was raised to an amount of RM11.5bn, from original RM10bn allocation.

As for measures to support businesses such as the Wage Subsidy Programme (WSP), the applications approved have increased to 313.6k employers representing 2.53 million workers as at 13 July (2.48 million workers previously), where RM7.79bn had been approved (RM7.15bn in the previous week). This was equivalent to about 56.4% of the total RM13.8bn in WSP, which we believe will assist employers affected by Covid-19 and prevent their employees to be dismissed and lose sources of income. The country’s unemployment rate rose by 0.3 percentage points from 5.0% in April to 5.3% in May, but the magnitude of the rise in unemployment rate has moderated as compared to the 1.1ppt increase in April. With the gradual reopening of the economy from Movement Control Order (MCO) to the Conditional MCO (CMCO) and Recovery MCO (RMCO), the incentives disbursed to protect businesses and employees will stabilise the labour market condition. At the same time, Government also implemented measures to upskill workers and generate jobs through WSP under PRIHATIN, PRIHATIN PKS and PENJANA, by providing incentives for hiring and training assistance under PENJANA and incentives to improve skills for the unemployed and youths to maintain employability when the job market becomes more vibrant.

Under BNM's SME Soft Loans Funds, banks have approved loans worth RM9.1bn for over 20,545 SMEs, an increase of RM0.3bn from 20,104 SMEs in previous week. For Prihatin Special Grant, to date, the amount disbursed has increased to RM1.64bn benefitting 545,000 SMEs. As at 13 July, the Moratorium on Loan Repayment increased to RM55.2bn (from RM51.4bn previous week), where RM19.3bn was utilised by business sector and RM35.9bn utilised by the public. The moratorium on loan repayments provided relief to the public and businesses for 6 months, where the programme will end on 30 September 2020.

Prime Minister (PM) guided recently that the Economic Action Council (EAC) is currently preparing a long-term economic recovery plan, which will be tabled in October 2020. This plan will focus on improvement in the labour market, and reforms of public institutions and governance framework, while also including the implementation of digitisation and the Fourth Industrial Revolution (IR4.0). In addition, Prime Minister highlighted that the Government is also drafting policies and strategies specifically to restructure and strengthen the economy in addressing socio-economic development imbalances under the 12th Malaysia Plan. We believe that long-term measures and policies to restructure the economy will be vital for the country’s sustained and inclusive economic growth recovery especially in terms of the labour market conditions.

Source: Affin Hwang Research - 15 Jul 2020