“Kita Prihatin” alongside PRIHATIN and PENJANA to ensure business continuity

In an effort to weather the impact of Covid-19 for the SMEs, the Malaysian government has introduced yet another economic stimulus known as Prihatin Supplementary Initiative Package (Kita Prihatin).

What is “Kita Prihatin”?

The Prihatin Supplementary Initiative Package (“Kita Prihatin”) worth a total of RM10 billion is made up of the three components shown above. It was officially launched on 23 September 2020, in addition to the previously introduced Prihatin Rakyat Economic Stimulus Package (Prihatin: RM250 billion, 27 March 2020) and National Economic Recovery Plan (Penjana: RM35 billion, 5 June 2020) economic stimulus plans.

Objectives of “Kita Prihatin”

• To ease rakyat’s financial burden
• To help SMEs sustain their businesses
• To help employees stay employed

Who can benefit from “Kita Prihatin”?

• Micro-SMEs (Target: 200,000 recipients)
• Employers of all sizes (Small, Medium, Big; Target: 1.3 million recipients)
• B40 and M40 groups (Singles & Households; Target: 10.6 million recipients)

How can “Kita Prihatin” help sustain businesses?

• It helps ease cash flow issues for the SMEs pertaining to fixed and variable operating costs, including payroll through the RM600 million Prihatin Special Grant (application: 1 – 31 October 2020, with payments starting from November 2020), and the RM2.4 billion Wage Subsidy Programme 2.0 (application open from 1 October to 31 December 2020); 
• It helps sustain economic consumption through consumer spending with the RM7 billion Bantuan Prihatin Nasional 2.0 direct fiscal injection ie. one-off cash payments to the B40 and M40 groups (singles and households), starting October 2020 (Phase 1) and January 2021 (Phase 2).

Key Takeaway

The RM600 million Prihatin Special Grant (GKP)

The Prihatin Special Grant (GKP) is expected to benefit 200,000 micro-businesses, micro-traders or micro entrepreneurs belonging to the micro-SME category registered with the Companies Commission of Malaysia (SSM), Inland Revenue Board Of Malaysia (LHDN) or local authorities (PBT) before 31 August 2020. The scheme comes with a one-off RM3,000 payment for each recipient. The first round of the GKP introduced in May benefited 545,000 eligible recipients nationwide with a financial aid totalling RM1.63 bilion. For the second round, payments are to begin from 25 November 2020 onwards.

The RM2.4 billion Wage Subsidy Programme 2.0

The Wage Subsidy Programme 2.0 is expected to benefit 1.3 million employees between 1 October and 31 December 2020. The subsidy will be given to affected employers who suffer at least a 30% loss following the 10 June 2020 Recovery Movement Control Order enforcement, compared to last year. Wage subsidy in the form of RM600 per month for each employee (maximum 200 employees), up to 3 months, will be given to eligible employers, with application open from 1 October to 31 December 2020.

The RM7 billion Bantuan Prihatin Nasional 2.0 (BPN 2.0)

The Bantuan Prihatin Nasional 2.0 cash payments will benefit Malaysians of the B40 (Bottom 40%) and M40 (Middle 40%) groups, targeting the following beneficiaries:

3.8 million B40 individuals (RM500 each)

3.7 million B40 households (RM1,000 each)

1.4 million M40 households (RM600 each)

1.7 million M40 individuals (RM300 each)

BPN 2.0 fosters economic demand through consumer spending, the key driving force behind every economy, more so in the middle of the Covid-19 pandemic where businesses are severely affected. In 2019, consumption expenditure on goods and services made up nearly 60% of the Gross Domestic Product (GDP) of Malaysia.

Sabah and Sarawak

For East Malaysia, as of 20 September 2020, according to Minister of Finance Senator Tengku Datuk Seri Zafrul Tengku Abdul Aziz, both Prihatin and Penjana have benefited 1.93 million Sabahans and Sarawakians through different schemes totaling RM2.1 billion. And nearly 100,000 businesses in both states have received financial aids worth RM1.4 billion through Wage Subsidy, Special Prihatin Grant, and micro loans from Tekun and BSN.

A caring government

Given the fact millions of businesses and people are impacted by the prolonged Covid-19 pandemic, Kita Prihatin, the extension of Prihatin and Penjana, definitely serves as a timely relief for them to get through such challenging times. The video chat between Prime Minister Tan Sri Muhyiddin Yassin and some of the beneficiaries earlier aptly sums up the importance of such economic stimulus plans.