BACHELOR IN HUMAN RESOURCE MANAGEMENT WITH HONOUR

JANUARY SEMESTER / 2021

BBEK 4203

PRINCIPLE OF MACROECONOMICS

MATRICULATION NO : 960311045096002
IDENTITY CARD NO. : 960311-04-5096
TELEPHONE NO. : 016-6741943
E-MAIL : [email protected]

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 : [email protected]
LEARNING CENTRE : MALACCA LEARNING CENTER

TABLE OF CONTENT

1.0 INTRODUCTION - MACROECONOMIC

2.0 INTRODUCTION - PRIHATIN RAKYAT ECONOMIC STIMULUS

PACKAGE IN MALAYSIA

3.0 THE EFFECTS OF THE STIMULUS PACKAGE IN MALAYSIA

4.0 INDUSTRY THAT WOULLD BENEFIT THE MOST FROM THE

STIMULUS PACKAGE

5.0 THE ECONOMIC STIMULUS PACKAGE IN MALAYSIA (GENERAL)

6.0 SUMMARY

7.0 REFERENCES & CITATIONS

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 1.0 INTRODUCTION - MACROECONOMICS

Macroeconomics is a part definition of economists as a field of

economic that studies the relationship between aggregate variables such as
the income, purchasing power, price and money. In other word, it also
examines the function of the economy as a whole system, looking at how
demand and supply of products, services and resources are determined and
factors that influence them. Macroeconomics is the branch of economics that
deals with the structure, performance, behaviour, and decision-making of the
whole, or aggregate, economy. The two main areas of macroeconomic
research are long-term economic growth and shorter-term business cycles.
Besides that, macroeconomics in its modern form is often defined as starting
with John Maynard Keynes and his theories about market behavior and
governmental policies in the 1930s; several schools of thoughts have
developed since.

2.0 INTRODUCTION- THE PRIHATIN RAKYAT ECONOMIC STIMULUS

PACKAGE IN MALAYSIA.

On 27th March 2020, at Putrajaya our prime minister of Malaysia had prefaced a
few Economic stimulus package in Malaysia. Due to the spread of the COVID-19
pandemic has a significant impact on world economic development. In Malaysia, the
outbreak has now entered the second wave, such as the Government implemented the
Movement Control Order from 18th March to 14th April 2020. To prevent more citizen
from getting infected and provide an opportunity for the Government to accelerate the
curbing effort as the objective. Nevertheless, the measure limits overall economic
activities and effects the income of various group of people. This situation is a concern to
all of us, especially among the low-income and vulnerable groups who are unable to

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continue their daily activities amid heightening uncertainty and challenging the
environment. Thus, the Government, through the Prihatin Rakyat Economic Stimulus
Package (PRIHATIN), it has reviewed and enhanced the previous package to protect
every segment of society. These include an additional allocation to the Ministry of Health
for medical equipment and personnel and providing assistance in term of cash and in-
kind to affected groups. Measures were also introduced to protect jobs as well as funds to
support businesses, especially SMEs. Urge all parties to cooperate with the Government
in the fight against COVID-19 and enable the nation to return to usual. This was greet by
our honored prime minister TAN SRI DATO’HAJI MUHYIDDIN BIN MOHD
YASSIN. In the PRIHATIN the package worth RM250 billion. In that RM128 billion
will be channel to rakyat’s welfare, RM100 billion to support businesses, which includes
SMEs and RM2 billion to strengthen the economy. Meantime, RM20 billion has been
approved in first stimulus. The benefit is equally order to all the citizens. The Ministry of
Health (MOH) announced an allocation of RM500 million. They also allocated an
additional RM1 billion to purchase equipment and services to contain COVID-19.
Besides that, the insurance industry had create a special fund of RM8 million to cover the
costs incurred for screening of up to RM300 per policy. Based on the sacrifices that done
by the frontliner, the Government will increase the special allowance to RM600 per
month effective 1st April 2020 until ends. Same goes for the military, police , customs,
civil defence to RM200 a month. To reduce more burden, the Government had occur the
Bantuan Prihatin Nasional a one-off cash assistance with an allocation of RM 10 billion
with the prior to M40 groups. To be fair, this BPN includes all sectors.

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The payments includes:

 First: RM1,600 to nearly 4 million households earning less than RM4,000 a month.
Payment of RM1,000 will be made in April 2020 and the remaining in May 2020.
 Second: RM1000 to nearly 1.1 million households earning between RM4,000 and
RM8,000 a month with RM500 paid in April 2020 while the balance in May 2020.
 Third: RM800 to 3 million single individuals aged 21 and above, earning less than
RM2,000 a month. Payment of RM500 will be made in April 2020 and the remaining
RM300 in May 2020.
 Fourth: RM500 to 400,00 single individuals aged 21 years and above, earning
between RM2,000 and RM4,000 per month. The payment of RM250 will be made in
April 2020 while the balance in May 2020.

Besides that, the remaining amount had transfer under the Bantuan Sara Hidup
(BSH) programme total of RM3.2 billion will be paid out in July 2020. For students the
paid of RM200 per person. For the vulnerable groups an amount of RM25 million spends
on the food, health and other essential way. Moreover, they also defer the PTPTN loan
repayment for all borrowers for 6 months, and also defer loan repayment of PTPK for the
same period with estimated RM149.2 million. Accordingly, the Government allows p
retirement withdrawals from account B up to RM1,500 per member without tax, April to
December 2020. The Government also announced a month rental exemption for the PPR
which is now extended to 6 months with a cost of RM3 million borne by them. Moreover
the RTO units were given a 6-month moratorium is provided effective April 2020,
totaling of RM5.7 million involving 4,649 RTO units.

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 Next, the Government allocated RM500 million to provide a 15% discount on
electricity bill in the tourism sectors in Peninsular Malaysia starts 1st April 2020. The
Government did increase the allocation to RM530 million to introduce a tiered- discount
with rates ranging between 15% and 50% according to TNB. The 50% for the 200
kilowatts consumption; 25% for between 210- 300 kilowatts; and 15% for 301-600
kilowatts. The telecommunications and multimedia industries had a few packages to be
offered in collaboration with the sector companies. For example, free internet to all
customer with the value of RM600 million starting 1st April 2020 until end of MCO.
Besides that an additional sum of RM400 million will be invested to widen the network
coverage. For the civil servants and contract workers were provided one-of-cash of
RM500 t more than 1.5 million. Apart from that, they provided RM100 million for the
development of infrastructure for food storage and distribution. The also introduce the
Wage Subsidy Programme to help employee in retaining their workers. The programme
provide salary of RM600 per month to every employee for 3 months. This programme is
mainly for the staffs that earn less than RM4,000 and have pay cuts.

For the e-hailing drivers gets a one of cash assistance of RM500 to 120,000 over
RM60 million and taxi drivers get RM600. To help SMEs, including micro-
entrepreneurs, the Government and Bank Negara Malaysia had provided additional funds
worth RM4.5 billion which covers 5 key initiative:
I. Increasing funds to the Special Relief Facility (SRF) for SMEs by RM3 billion
bringing the total to RM5 billion. In additional, the interest rate for the entire fund
will be reduced from 3.75% to 3.5%.
II. Increasing the size of the All Economic Sector Facility Fund by RM1 billion to
RM6.8 billion to enhance access to financing for SMEs.
III. Providing additional funds of RM500 million under the Micro Credit Scheme, to a
total of RM700 million for soft loans. The scheme will be administered by BSN at
2% interest rate with no collateral.

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IV. SMEs with business records of less than 4 years can also leverage the BizMula-I and
BizWanita-I schemes for financing up t RM300, 000 under the Credit Guarantee
Malaysia Berhad (CGC).
V. Syarikat Jaminan Pembiayaan Perniagaan (SJPP) will provide RM5 billion worth of
guarantee and increases the guarantee coverage from 70% to 80% for SMEs that
faces hard time obtaining loans.
To the owners of companies that facing cash flow constraints. To assist them, the
Government will implement the following measures:
I. The EPF will introduce the Employer Advisory Services (EAS) programme on 15 th
April 2020. It includes deferral of payments, restructuring and rescheduling of
employer contributions. This puts the expected to provide cash flow to employers
which is estimated at RM10 billion, benefits over 480,000 SMEs and affected
companies while securing more than 8 million jobs.
II. Exempt payment for Human Resources Development Fund (HRDF) levy for all
sectors for a period of six months beginning April 2020. This measure is expected to
assist the company’s cash flow with a total savings of RM440 million.
III. Empathizing problems faced by some 750,000 SMEs the Government also allows the
postponement of income tax instalment payments to all SMEs for a period of 3
months beginning 1st April 2020.
IV. Government also provide a RM50 billion guarantee scheme with a guarantee of up to
80% of the loan amount for the purpose of financing working capital requirements.
V. The Government also continue the implementation of all projects allocated in the
2020 Budget including ECRL, MRT2 and the National Fabrication and Connectivity
Plan. This is in line with the Government’s focus to ensure the sustainability of
economic growth.
VI. They also provide direct fiscal injection of RM25 billion to ease the burden of rakyat
and businesses in this difficult economic situation.
To show their concern and care for the plight of the people in facing this hard
situation, the Cabinet and Deputy Ministers have agreed to a 2-month salary deduction
and this will be channeled to the COVID19 Fund. Besides that, they also instructed all

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Ministries to review their budgets to look for savings so that it might used to meet the
medium- term measures to curb the outbreak.

3.0 THE EFFECTS OF THE STIMULUS PACKAGE IN MALAYSIA

The main positive effect on the stimulus package in Malaysia, were saving more
then 2.75 million jobs. This includes the micro and small and medium-sized enterprises
(SMEs). The Prime Minister Tan Sri Muhyiddin Yassin said that the measures introduced
under the PRIHATIN ESP, and PENJANA. They aims to address the impact from the
Covid-19 crisis, while simultaneously ensuring business continuity. Besides, 2.75 million
jobs been saved through the implementation of Wage Subsidy Programme as well as the
Employee Retention Programme. Moreover, a total of RM34 million has been disbursed
to 1.4 million e-hailing drivers, each received a one off RM500 cash allowance, while
another RM28.8 million has been distributed to 477,000 taxi drivers, tour guides and bus
drivers, who have received the one off RM 600 cash aid. They also less the burden for
the citizen by reducing 50% discount on their electricity bills (TNB) at the total cost
RM312.32 million. Not only that, they had also cooperate with the banking incharge on
having a benefit from the moratorium on loan repayments, totaling RM38.4 billion.
Another impact that the citizen is aware would be the GDP growth projection for
2021 might not be realized. This will effect negatively to employee, which will rise the
unemployment rate which was at 5.3% in the may 2020. The impact was dramatically
and the situation needed to be avoid.

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 Image 1: impact on service (SMEs)

Secondly, the government’s stimulus packages had softened the impact of the Covid-19
pandemic and paved the path towards economic recovery. We had to be fortunate to have
a very diversified economy that does not depend on the one or two sectors. Besides that,
it does help to restructuring and rescheduling of loans. They had asked financial
institutions to provide financial relief to borrowers by rescheduling or restructuring loans,
as well as the offering payment moratoriums. This exemption was given from 1 st
March,2020 until further notices. This method had relief most people from heaving
payment and had cover the payment to other good use.

Moreover, the Government also help on exemption and deferments of tax in

Malaysia. This was applied to the travel agencies, hotels, airlines, as well as all the
businesses in the tourism industry. Furthermore, to help the tourism line, the government
has occur discount voucher for tourism. The Government also did some extra funding for
skill training. They also did help by reducing the employee contribution towards the

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Employee Provident Fund (EPF). It is compulsory saving and retirement plan for private-
sector workers in Malaysia. This give them a huge benefit even if they had a pay cut
during MCO period.

The Government does help positively to the citizen all around Malaysia, so that
they doesn’t had to suffer the Covid-19 season. With that on line, they had help financial
assistance to low-income households. The households will receiving a monthly payment
of 200 ringgit scheduled for May to be paid in March. On the other hand, they also help
the kid that are home schooling during the pandemic does help their life from virus but
not having internet accommodation does trouble some of the parent who don’t effort it. In
line to that, the Government had hand in with the fiberization and connection program to
improve the broadband quality and the coverage and provided internet access all across
the country to help the society and children

Image 2 :Bank Negara Malaysia 2020.

On the other hand even the stimulus package helps the community but the increase of
pay-cut in most industry had effect badly. Some just getting RM600 per month couldn’t
keep the family on hold with their daily needs. Besides, the one that be in family having
much struggle especially the one with kids. For the workers, the forced to take unpaid

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leave, PERKESO’s newly announced Employment Retention Program (ERP) is a great
start.

4.0 INDUSTRY THAT WOULLD BENEFIT THE MOST FROM THE STIMULUS
PACKAGE

In m point of view, the tourism industry had the best economical stimulus
package. The Malaysian Association of Tour and Travel Agents (MATTA) were
delighted with the RM20 billion economic stimulus package which announced by the
interim Prime Minister Tun Dr Mahathir Mohamad. This had help mitigate the impact of
the Covid-19 outbreak. Since the most affected industry was the tourism. The package
does cover many sectors and includes requests made by MATTA and key stakeholders
for the tourism industry, for example, the discounts for electricity bills, lowering the
minimum contribution to the Employees Provident Funds; exemption from the HRDF
levy; banks to provide financial relief with payment moratoriums comprising
restructuring and rescheduling loans over the board; special loans for working capital;
property owners ti lower rental rates; matching grants for tourism personnel training;
subsidies to enhance digital skills and marketing; personal income tax relief of up to
RM1,000 on the expenditure relate to domestic tourism. The MATTA proposes that the

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eligibility will be limited to tour packages purchased from the companies licensed by the
Tourism, Arts and Culture Ministry and to resident the taxpayers and their spouses or
kids.
Moreover the MATTA was gratified by the compassion shown by the front liner
severely impacted by the Covid-19 outbreaks. The benefit on the Tourism industry, by
paying off RM600 to the taxi drivers, tourist bus drivers, tourist guides and registered
trishaw drivers. 2020 Economic Stimulus Package lives up to its term of “Bolstering
Confidence, Stimulating Growth and Protecting Jobs”. Previously the MATTA had
identified the exact three-pronged approach which is now incorporated in the package as
well. Mitigate of the cash flow crunches, assist those severely impacted, and stimulated
demand for travel and tourism. However, in regard to stimulate local travel and tourism,
The MATTA fair “Cuti- Cuti Malaysia”, to be held during the April 4 to 5, was greatly
organized to promote the domestic travel. They also happy that the deferment of monthly
income tax instalment payments for business in tourism sector, exemption of the 6%
service tax for hotels, and digital vouchers for domestic tourism of up to RM100 per
person for domestic flights, rail travel and hotel accommodation for the Malaysians. Even
MATTA had requested many other measures, such as granting free visas to Indian
tourists and double tax exemption for local companies for sending staff to meeting,
incentive tours, conferences and exhibitions (MICE) events to be included in the
economic stimulus package, now its the priority to start up working on recovery
measures. In my point of view it does help the most on the tourism industry eventually.

5.0 THE ECONOMIC STIMULUS PACKAGE IN MALAYSIA (GENERAL)

During the announcement a comprehensive economic stimulus package known as

PRIHATIN, valued more than RM250bil. The caring package, budgets for all Malaysian
aims to alleviate cash flows. The pandemic caused by Covid-19 had impacted the world
and Malaysia in huge way. Besides that, the Ringgit Malaysia has depreciated by 9%
while the Composite Index has taken about 20% hit. Moreover, this pandemic has also
threatened mental health of the front liners. They navigates the uncharted waters and

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PRIHATIN is a timely measure for extraordinary times. The package is designed based
on 3 main thrusts, which are:
1. Protecting for the welfare and well-being of the citizen.
2. Supporting the business
3. Strengthening the nation’s economy

They also did some ways that had reduce the burden. Which are:
a) Wage subsidy program
b) Employees Provident Fund contributors aged below 55, can withdraw RM500 for up
to 12 months.
c) Deferment of tax instalment payment for Small and Medium enterprises.
d) Deferment and waiver of rental expenses

a) Wage subsidy program

The wage subsidy program is to ensure jobs are preserved and remain
sustainable. In my point of view it is good that the government announced a wage
subsidy of RM600 per month to employers that having 50% drop or lost since 1 st January
2020 and this is for all the workers who earning a salary of below RM4,000 per month.
They prior the tourism industry due to them having a huge loss in business and staff
retraining.

b) Employees Provident Fund contributors aged below 55, can withdraw RM500 for up
to 12 months
In many way government has proven their loyal to the citizen, in this I think they
decision were negatively by stopping EPF contributions would never be a good move as
EPF is meant for retirement. By reducing nor cutting it down will effect the well-being of
Malaysians when they retired. Moreover, this PRIHATIN announced a programme
allowing employers to defer, restructure and reschedule employers in it. RM10bil cash

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flow was generated from saving and the proposal is certainly more palatable and is
welcomed as it alleviates cash flow in sustain.

c) Deferment of tax instalment payments for Small and Medium Enterprises

Next will be the deferment of tax installment payments for small nor medium
enterprises. The first package was announced in February 2020, and mainly given to the
tourism industry such as travel agencies, hoteliers and airlines were applied in the
deferment of their monthly tax instalment payments for 6 months. This action will take
place on 1st April 2020 till end of September 2020. Their cash flows did impact but not
significantly as affected businesses are not allowed to revise their estimates of tax
payable earlier. For example the 3rd month of instalment and facility, most businesses
would have revised their tax estimates downwards.

d) Deferment and waiver of rental expenses

Finally, the government did proposed a deferment of 6 months for rental of
properties under “ Rent to Own” scheme as well as a waiver of 6 months’ rental for the
properties under “People’s Housing Project” and Public Housing. This a positively
supported by my perspective especially for those in B40 and M40 groups. The proposal
to be waived for 6 months’ rental on properties owned by the Federal Government were
also a welcomed move but more can be done besides, a form of rebate to businesses
should be considered as rental costs is a significant part of operating. Overall, the
government had some positive and negative in their plate but they still proving
themselves to be at better in line.

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6.0 SUMMARY

To conclude the assignment, the government’s main aim was to lower the fiscal
deficit to 3.3% might look like impossible today, but facing an extraordinary challenge,
along with the world issues. Besides that, the World Bank had the revised Malaysia’s
GDP growth forecasting to -0.1%. it was a massive contraction from the past estimate of
4.5% on the back of the slower growth momentum and the impact of the Covid-19.
However, the net exports and investments are expected to experience a huge contraction
in 2020, when private consumption is expected to the growth at a much slower pace,
from 7.6% in 2019 to 1.6% in 2020. Its obliviously clear that the government expenditure
is expected ti increase on various measures, including the economic stimulus package and
other key expenditures and initiatives to mitigate the economic and health impact of the
outbreak, bu the bulk stimulus activities are expected to be off- budget in clear. In past,
the government has stepped in to inject capital into the market to control the impact of

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major crisis such as the 1997 financial crisis, the 2003 SARS pandemic and 2008
economic downturn where GDP contractions occurred. Now the government need to
continue their effort to combat Covid-19 to maximum of their personal capacity and
brace against it together as one.

7.0 REFERENCES & CITATIONS

GANESHWARAN KANA,The Star, Saturday, February 29, 2021.

https://www.thestar.com.my/business/business-news/2020/02/29/is-the-rm20bil-stimulus-
good-enough

Prime Minister Office,2021.

https://www.pmo.gov.my/prihatin-economic-stimulus-package/

Deloitte, April 2020.

https://www2.deloitte.com/my/en/pages/tax/articles/stimulus-caring-rakyat-package.html

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Global compliance news, 2020.
https://globalcompliancenews.com/prihatin-rakyat-economic-stimulus-package-
31032020/

Malaysian Rating Corporation Berhad, March 30,2020

https://www.marc.com.my/index.php/marc-news/1201-prihatin-rakyat-economic-
stimulus-package-wider-scope-broader-target-groups-20200330

By Focus M ; January 4, 2020.

https://focusmalaysia.my/mainstream/ripple-effect-of-stimulus-package-to-economy/

Shah, A. U. M., Safri, S. N. A., Thevadas, R., Noordin, N. K., Rahman, A. A., Sekawi,
Z., … Sultan, M. T. H. (2020). COVID-19 outbreak in Malaysia: Actions taken by the
Malaysian government. International Journal of Infectious Diseases, 97, 108–116.
https://doi.org/10.1016/j.ijid.2020.05.093

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