Loan moratorium aid 243,000 businesses and 7.7 million individuals

In the fifteenth update of the PRIHATIN and PENJANA stimulus packages this week, Ministry of Finance (MOF) made significant progress on the loan moratorium and wage subsidy programme. As at 24 July, the Moratorium on Loan Repayment increased to RM62.8bn compared with RM55.2bn in previous week. A total of RM21.9bn was utilised by business sector (from RM19.3bn) and RM40.8bn utilised by the public (from RM35.9bn). Finance Minister (FM) guided that the moratorium on loan repayments, which end on 30 September 2020, have helped more than 243,000 businesses and 7.7 million individual borrowers.

On 29 July, Prime Minister (PM) announced an extension on the moratorium on loan repayments for 3 months, but targeted to group who lost their job in 2020 and those whose salary were reduced (i.e. eligible for reduced instalment payment in tandem with their pay cuts). The announced 3-months extension will not be a blanket sixmonth moratorium granted by banks as before. We believe the reason for the targeted approach in loan repayments, rather than blanket moratorium, has partly attributed to improvement in some economic indicators, due to the opening of economy (business activity) from easing of movement controls (MCO), where majority of borrowers will likely resume loan repayments from October onwards.

As for the update on the Wage Subsidy Programme, the applications approved increased to 2.58mn workers as at 24 July (2.55mn workers previously), where RM8.97bn had been approved (RM7.82bn in the previous week). This was equivalent to about 65% of the total RM13.8bn in WSP.

Recently, Minister from Entrepreneur Development and Cooperatives was quoted as saying that Companies Commission of Malaysia (SSM) reported 82,555 new businesses were registered, as compared to 4,542 companies that ceased its operations during April 1- July 19, 2020 period. The key initiatives introduced by PENJANA has assisted in spurring SME growth whilst cushioning the adverse impact of Covid-19 pandemic. SME Corporation Malaysia CEO mentioned that out of 40 initiatives of PENJANA, 24 of initiatives (worth RM14.5bn) are able to aide SMEs activities impacted by the coronavirus pandemic. Based on a recent survey conducted by the SME Corp, 69% of the respondents (mostly in textile, wholesale and retail sectors) trust their business can recover within 3 to 12 months. The F&B sectors expects recovery will take place in 3-month period. However, tourism and related sectors expect recovery will take more than a year.

Another update was on the measures to protect the people, where a total of 4.13 million recipients have received BSH payments amounting to RM2.7bn as at 31 July 2020. The cash aid will benefit about 4.28 million recipients with a total allocation of RM3bn. Further, on the Social Assistance Support to Vulnerable Groups, a one-off assistance of RM300 has been paid to 185,713 OKUs and 1,815 home assistance services workers.

Source: Affin Hwang Research - 5 Aug 2020