• Ministry of Finance guided that PRIHATIN and PENJANA packages are expected to contribute over 3% to 2020 GDP growth
• Under the Wage Subsidy Programme (WSP), the applications approved increased to more than 2.6mn workers (2.6mn workers previously) where RM9bn was approved (RM8.99bn in the previous week)
•  As for BNM's SME Soft Loans Funds, banks have approved loans worth RM9.86bn for over 21,759 SMEs, an increase of RM0.23bn from 21,759 SMEs in previous week

Initiatives Under PRIHATIN and PENJANA Showing Positive Development

In the seventeenth update of the PRIHATIN and PENJANA stimulus packages announced this week, Ministry of Finance (MOF) guided that under the Wage Subsidy Programme (WSP), the applications approved increased to more than 2.6mn workers as at 7th August (2.6mn workers in previous week), where RM9bn was approved (RM8.99bn in the previous week). This was equivalent to about 65% of the total RM13.8bn allocation. Meanwhile, as for the update on My30 program provided (which can be used for MRT, LRT, monorail, BRT, RapidKL Bus and MRT Feeder Bus), a total of 240.1k passes were sold amounting to RM40.8mn, as compared with RM34.7mn previously.

As for the Moratorium on Loan Repayment, the value of the moratorium has increased to RM70.5bn as at 7th August, compared with RM66.6bn in previous week. Of this total, RM24.7bn was utilised by business sector (from RM23.3bn in previous week) and RM45.8bn utilised by the public (from RM43.3bn). Separately, under BNM's SME Soft Loans Funds, banks have approved loans worth RM9.86bn for over 21,759 SMEs, an increase of RM0.23bn from 21,759 SMEs in previous week. It was noted that more than half of the recipients of the loans are in wholesale and retail trade activities where 70% of these recipients are SMEs.

Besides that, another update was on the effort to combat the Covid-19 pandemic, where a total of RM512.5mn has been disbursed to the Ministry of Health (MOH) as at 7th August out of the total allocation of RM1bn. This was to finance the purchase of medical equipment like ventilators and intensive care unit (ICU) equipment, personal protective equipment (PPE) for public and medical service personnel and laboratory equipment for Covid-19 screening. In addition, RM222.4mn has been disbursed to 694,447 frontliners as part of the Frontline Special Allowance.

We believe the government’s effort to implement stimulus measures will continue to support economic growth in 2H20. The country is in preparation for the Revitalise phase of the government’s 6R strategy, where further initiatives will be announced in the upcoming Budget 2021 in early November 2020. As we believe Budget 2021 measures will be expansionary and supportive of economic growth, Malaysia’s real GDP growth will likely recover strongly next year alongside accommodative monetary policy. BNM expects the country’s real GDP growth to turn around in the range of between 5.5% to 8.0% projected for 2021, after estimating a sharp decline of between -3.5% to -5.5% in 2020 (a revision from between –2.0% to +0.5% for 2020).

MOF recently commented that despite the sharp decline in real GDP growth by 17.1% yoy in 2Q20, there was an improvement in growth from April (-28.6%) to June (-3.2%). The economy recovered following the re-opening and implementation of the Recovery Movement Control Order (RMCO). This was assisted by the Government’s quick action in mitigating the impact through recovery packages and economic stimulus launched in March, April and June, which has supported 800,000 businesses and SMEs to remain in operations. MOF believes the measures will enable workers and businesses to focus in recovery and help in easing cashflow challenges. Furthermore, the recent improvement in Malaysia’s unemployment in June was partially contributed by the PRIHATIN and PENJANA measures.

Source: Affin Hwang Research - 21 Aug 2020