• Applications approved in the Wage Subsidy Programme (WSP) increased to 2.638mn workers as at 9 October, as compared to 2.636mn workers in previous week, where RM11.996bn was approved (RM11.967bn in the previous week).
• PENJANA SME financing, as of 9 October 2020, a total of 3,964 applications have been approved (from 3,617 in the previous week), worth RM899.6mn (RM833.6mn in the previous week)
• BNM's SME Soft Loans Funds, as of 9 October, that banks have approved loans worth RM10.77bn for 23,196 SMEs, an increase of RM0.04bn from 23,078 SMEs in the previous week.

Almost RM12bn under wage subsidy programme was approved

In the latest 26th update of the PRIHATIN and PENJANA stimulus packages, Ministry of Finance (MOF) highlighted further status of PENJANA and its implementation rate. In particular, applications approved in the Wage Subsidy Programme (WSP) increased to 2.638mn workers as at 9 October, as compared to 2.636mn workers in previous week, where RM11.996bn was approved (RM11.967bn in the previous week). Recently, WSP was extended under KITA PRIHATIN package to a period of 3 to 6 months, from September to December 2020. Measures to help SMEs through BNM's SME Soft Loans Funds as of 9 October, banks approved loans worth RM10.77bn for 23,196 SMEs, an increase of RM0.04bn from 23,078 SMEs in the previous week.

The measures implemented by the Government to upskill workers and generate jobs through Hiring Incentive Programme and Training Assistance were a total of 52,851 employees (an increase from 48,617 employees), successful in securing jobs since the commencement of the registration since 15 June 2020. The country’s Human Resource Minister recently said that the government projects that unemployment rate may improve to 4.5% in December with the assistance of Penjana HRDF to produce productive and competitive human capital. Malaysia’s unemployment rate was unchanged at 4.7% in August, the same rate of increase compared to previous month, following two consecutive months of improvement (a high of 5.3% in May). Another update on the stimulus package was on the effort to combat the Covid-19 pandemic, where a total of RM1.7bn has been disbursed to the Ministry of Health (MOH). 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. Details on progress and achievement of other initiatives can be found in the Appendix I and II.

The 2021 Malaysian Budget will be presented on 6 November 2020, where we believe the tone of the budget proposals will continue to aim at countering the negative effects of Covid-19 on the country’s economy as well as introducing new strategy and measures to assist certain sectors and industries affected, especially the SMEs. Together with the PRIHATIN and PENJANA stimulus packages, further measures in 2021 Budget will assist to stimulate domestic demand, especially following concerns of recent announcement of enforcement of Conditional MCO (CMCO) for Selangor, KL and Sabah, from 14 to 27 October 2020. There are some concerns of possible deterioration in business activity and slight uptrend in unemployment, which may pose some downside risk for the economy.

In Budget 2021, we also anticipate more measures to support the labour market. For instance, there may be a further extension of the current wage subsidy programme (i.e. Targeted Wage Subsidy Programme 2.0) where the eligibility may be widened especially for those that are still negatively impacted by the pandemic.

Source: Affin Hwang Research - 22 Oct 2020