Bachelor of Management with Honours (BIM)

January 2021

BBEK4203

Principles of Macroeconomics

MATRICULATION NO : 950810145009001
IDENTITY CARD NO. : 950810145009
TELEPHONE NO. : 0163020389
E-MAIL : jasonpeter1995@oum.edu.my
LEARNING CENTRE : Petaling Jaya

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Table of Contents
1.0 INTRODUCTION...........................................................................................................2

2.0 OBJECTIVES.................................................................................................................3

3.0 INTRODUCTION OF THE PRIHATIN RAKYAT ECONOMIC STIMULUS

PACKAGE IN MALAYSIA.................................................................................................3

4.0 DISCUSSION OF THE EFFECTS OF THE STIMULUS PACKAGE IN MALAYSIA

...............................................................................................................................................6

5.0 VIEWS ON THE INDUSTRY THAT WOULD BENEFIT THE MOST FROM THE

STIMULUS PACKAGE.......................................................................................................8

6.0 VIEWS ON THE ECONOMIC STIMULUS PACKAGE IN MALAYSIA (IN

GENERAL).........................................................................................................................10

7.0 CONCLUSION.............................................................................................................11

8.0 REFERENCES..............................................................................................................12

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 1.0 INTRODUCTION

Recently, the transmission of COVID-19 disease outbreaks has a direct

influence on global economic growth. The COVID-19 unforeseen epidemic has an
immense effect on the economy. The overall economy is projected to decline by 5.2%
percent this year, as per World Bank estimates. In our nation Malaysia, there have in the
past been much financial crises. It will be the biggest financial crisis since World War 2.
The disease is currently in the second phase in Malaysia. As such, between 18 March and
14 April 2020, the government enforced the Movement Control Order in the region. The
purpose of this initiative is to avoid infection of further Malaysians and to give the
government an incentive to intensify curtailing measures. However, it reduces the total
financial intermediary of classes of society and influences the profits them. The
circumstance worries us all, particularly amongst these low-income and disadvantaged
communities who cannot conduct their regular lives in a more demanding market and the
face of increased uncertainty. The government has also reviewed and strengthened the
Economic Stimulus Package thus it becomes Prihatin Rakyat Economic Stimulus Package
(PRIHATIN). This provides extra medical supplies and workers payments to the
Department of Health and provides cash or funding to impacted communities. Actions
have also been intended to safeguard employment and finance industries, particularly
small and medium-sized enterprises.

2.0 OBJECTIVES

The main objectives of these study areas listed below:

(1) To enhance the knowledge and understanding of the macroeconomic

policies in a country.
(2) To discuss the effects of the Economic Stimulus Package on the
economy of Malaysia.
(3) To write the views on the industry that would benefit the most from the
stimulus package.
(4) To write the views on the Economic Stimulus Package in general.

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 3.0 INTRODUCTION OF THE PRIHATIN RAKYAT ECONOMIC STIMULUS
PACKAGE IN MALAYSIA

The stimulus program is a program of tax refunds and rewards to spur

economic growth and protect your country from an economic crash, used by the
government of different nations. A country’s economy in deflation is in a state of a
downturn over time. The decline of the Gross Domestic Product is normally noticeable. A
country and its banking system will combine their attempts to raise the Gross Domestic
Product in order to battle a contraction. An Economic Stimulus Package aims at
improving a country’s GDP by increasing the effect of its activities on the independent
units. Present government action to keep the people working and consumed is the
economic recovery plan. The government would have to take a considerable debt load to
take those steps. Large levels of society burden raise the country’s government’s
probability of failure. In principle, in decades of financial prosperity, the government can
offset the debt by raising tax rates and reducing spending. In reality, though, it is unusual
and leverage rates keep rising forever.

The COVID-19 epidemic, which the World Health Organisation (WHO)

has reported to be an epidemic, has threatened economic development, including
Malaysia. The government imposed the Movement Control Order (MCO) in relation to the
epidemic, in terms of preventing the transmission of disease and secure the Malaysians.
This initiative limited the everyday operations and thus impacted their profits of the
Malaysians and corporations. The government has unveiled an update to the Economic
Stimulus Package declared o the 27th of February 2020, to ease the effect of COVID-19
and the Movement Control Order (MCO). In this sense, the government has implemented
the Prihatin Rakyat Economic Stimulus Package. The package of RM 250 billion is
supposed to relieve the pressure on Malaysians and industries. Out of the sum total, nearly
RM 128 billion is reserved for Malaysian’s welfare security, RM 100 billion for
companies particularly small and medium-sized businesses, and RM 2 billion for
economic strengthening, and in the prior reward packages, the remainder RM 120 billion
has been announced. This PRIHATIN kit provides additional care in alleviating the
pressure of all parts of the Malaysians. This recovery plan identifies three goals which are
listed below:

(1) Protecting Rakyat (Malaysians)

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 (2) Supporting Businesses
(3) Strengthening Economy
The first goal of this PRIHATIN Rakyat Economic Stimulus Package is to
Protect the Rakyat. The propagation of COVID-19 influences the health of the population
as a whole. The result has influenced the Malaysian’s everyday practices at multiple
stages, include families, teachers, staff, and healthcare professionals in general. In this
connection, steps are intended to restrict the dissemination of the COVID-19 epidemic, to
support the families, persons and staff impacted, and to also protect them. Under the
Protect the Rakyat goal there are a few allocations and plans that have been created by the
government and some are listed below:-

(1) RM 500 million for the purchase of medical equipment such as

ventilators and ICU equipment.
(2) RM 1 billion for the acquisition of equipment and services obtaining
from medical expertise from private healthcare services.
(3) RM 8 million as a unique fund for carrying out extra COVID-19
checks for policyholders and insurers.
(4) Cash aid for the family category under B40 and M40 is worth RM 10
billion.
(5) RM 25 million for food, healthcare goods, and treatment for the elderly
and disabled in tents, individuals with disabilities in care centers.
(6) Delay repayment for six months to 175,400 lenders through Skills
Development Fund Corporation.
(7) MySalam’s gain is RM 50 each day (up to 14 days) to B40 people
quarantined as examined patients.
(8) RM 600 million for free internet in the MCO period for all consumers
(9) RM 500 one-off money funding for 56-year old officials and contract-
related workers.
(10)RM 1 billion for Dana Jaminan Makanan distribution

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 The second goal of this PRIHATIN Rakyat Economic Stimulus Package is
to Support Businesses and in particular Small and Medium-Sized Businesses through the
provision and strengthening of working capital resources by different steps for the
business. Under the Support Businesses and in particular Small and Medium-Sized
Businesses goal there are few allocations and plans that have been created by the
government and some are listed below:-

(1) Smaller companies with a lowered exchange rate ranking of RM 3

billion extra in the Special Relief Fund (SRF) from 3.75% to 3.5%.
(2) The cumulative financing of the Economic Sector Facility raises by
RM 1 billion to RM 6.8 billion.
(3) EMPLOYEES PROVIDENT FUND (EPF) Workplace Advisory
Services platform involves payroll deferral, reorganization, and
reprogramming of payment alternatives of employer contributions.
(4) Exclusion from the HRDF tax in all industries for a period of six
months, for all industries.
(5) Forbearance for a total of 3 months for all SME’s of a monthly salary
tax allowance.

The third goal of this PRIHATIN Rakyat Economic Stimulus Package is to

Strengthen the Economy and under these goals, there are few allocations and plans that
have been created by the government and some are listed below:-

(1) Define minor schemes like road maintenance, improvements to Sabah

and Sarawak decrepit schools, clean-ups, and police stations, and
improve tourism services to the advantage of developers which is
worth RM 2 billion.
(2) Direct tax injections in order to minimize the pressure of Malaysians
and corporations in these tough financial circumstances which is worth
RM 25 billion.
(3) Deduction and channeling for two months of the Prime Minister’s and
Cabinet Members’ salaries to the COVID-19 System would be granted.

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 4.0 DISCUSSION OF THE EFFECTS OF THE STIMULUS PACKAGE IN
MALAYSIA

The government has helped to rescue upwards of 2.75 million works and
even more than 800,000 firms, predominantly small and medium-sized companies by
introducing an Economic Stimulus Package worth RM 295 billion. Our Prime Minister
Tan Sri Muhyiddin Yassin claimed that this PRIHATIN Rakyat Economic Stimulus
Package is planned to respond to the effects of the COVID-19 epidemic thus maintaining
the continued survival of the industry, with the inclusion of PRIHATIN as well as the
Short-term Economic Recovery Plan (PENJANA). With the introduction of the Wage
Subsidy Programme and the Employee Retention Scheme, over 2.75 million jobs were
saved. In addition, over 800,000 enterprises including micro and medium-sized businesses
have been able to benefit from this package and a sum of RM 11.14 billion has been
obtained in money from 10.4 million Bantuan Prihatin Nasional receivers. A sum of RM
34 million was allocated to 1.4 million e-hailing carriers, everyone obtaining an exclusive
RM 500 cash allowance and RM 28.8 million was allocated to 477,00 cabbies, local
guides, and bus drivers, every one obtaining each RM 600 income support. In the
meantime, 7.7 million customers have earned from a 50% subsidy on their energy bills for
Tenaga Nasional Bhd (TNB) at RM 312.32 million in whole and an extra 1.4 million
consumers benefitted at RM 185.75 million from the TNB 15% discount. Respecting the
moratorium on debt repayments, nearly 65% of homeowners benefitted from a cumulative
RM 38.4 billion. As regards the assistance to enterprises, a specific contract from
PRIHATIN Rakyat package was given to 545,000 micro-company employees amounting
to RM 1.6 billion and a sum of RM 247 million was granted to 7,000 BSN micro-credit
claimants. Moreover, 23,000 beneficiaries obtained RM 177 million from the micro-credit
mechanism of the National Entrepreneur Community Economic Fund and the government
has provided 834,000 workers with RM 7.4 billion in pay subsidies channeled to 6.7
million workers throughout the country.

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 Reclusive, economic sectors could lead to a loss of about RM 2 billion a
day, due to a decrease of survival for millions of Malaysian workers and more than 3% of
Economic Stimulus Package have made a significant contribution to the national Gross
Domestic Product this year. If the Movement Control Order has to be reinforced, another
of the consequences is that it cannot realize the growth of the Gross Domestic Product
forecast in the year 2021. Company operations would once again be banned and the
jobless rate of 5.3% would rise dramatically.

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 5.0 VIEWS ON THE INDUSTRY THAT WOULD BENEFIT THE MOST FROM
THE STIMULUS PACKAGE

The tourism sector contributes more to our nation in wise of the economy
and the travel agent companies can be categorized as Small and Medium-Sized
Companies. Datuk Tan Kok Liang, the president of the Malaysian Association of Tour and
Travel Agents (MATTA) currently expressed appreciation on behalf of an organisation to
the government support given to reduce the financial effect of the COVID-19 epidemic so
far. This package includes several industries and included applications by MATTA and
core community members, including concessions on energy bills, reducing the Employee
Provident Fund guaranteed amount, exclusion from human resources growth fund levies,
cash assistance aid providers with the freeze on payments including consolidation and
postponement of lending, individual income tax exemption for tourism development
spending up to RM 1,000.00 would change and improve the local tourism sector. MATTA
recommends that qualification should be restricted to travel plans brought by firms
approved by the Ministry of Tourism, Arts and Culture and to citizens and their families.
MATTA appreciates the sympathy shown for the visitors who were seriously affected by
the epidemic of COVID-19 with each payout to cab drivers, tourist bus owners, local
guides, and rickshaws drivers. Their sympathy is a source of gratification. MATTA had
defined previously the very same three-fold strategy currently contained in the package.
They are to alleviate the currency crisis, fund those who are badly affected, and raise
travel industry demand. MATTA is also pleased with delaying the monthly taxation fees
due for companies in the tourism industry, the exclusion from 6% hotel import duty, and
wireless tourism-related coupons up to RM 100 every capita per local trip, rail, and
hospitality for all Malaysian citizens.

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 Besides, the healthcare sector also benefits the most from the stimulus
package. In the Prihatin Rakyat Economic Stimulus Plan, the government has stated an
extra RM 1 million budget for the Ministry of Health (MOH) to buy new anti-Covid 19
products and facilities and this involves receiving treatment from private health care
providers from health personnel. The insurance industry and takaful would set up a
separate fund of RM 8 million to facilitate the activities of the Ministry to carry out further
studies to combat this COVID -19. Enterprises and family firms shall suspend insurance
fees and payments to donors suffering from this fatal infection for three months. The
government has already agreed to offer special allowances for the specific treatment and
control of this virus by physicians, doctors, and other healthcare staff. From 1 April 2020
until this epidemic ends, the government will raise its RM 400 allowances to RM 600
monthly.

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 6.0 VIEWS ON THE ECONOMIC STIMULUS PACKAGE IN MALAYSIA (IN
GENERAL)

The stimulus packages from the Government and the shorter-term

turnaround initiative alleviated the effects of COVID-19 and opened the path for financial
recuperation. Malaysia has a highly competitive market that doesn’t rely on one or two
industries. Malaysia has a highly competitive market that doesn’t rely on one or two
industries. There was a lot of cooperation between the significant economic organisations
with respect to strategy. From the beginning, health was the focus and the government has
been really successful in avoiding the epidemic, and we are glad to see the economy being
developed and providing a healthy, always-strength development industry and utilities
while farming is emerging, exploration, and building are growing. With its two rounds of
the Prihatin Rakyat Economic Stimulus Package in February and March 2020 and the new
short-term economic growth initiative for Penjana, the Government has responded to the
economic impacts of this epidemic. The government has given several financial aids in the
amount of RM 3,000 funds to small and medium-sized companies to support them restart
their businesses. In the meantime, many Malaysians have little social security because the
epidemic has posed obstacles for many Malaysians, including the unofficial ones such as
fishermen, farmers, and smallholders. The largest issue is the 50% of Malaysians who do
not contribute to EPF, which means that a growing giant economy, the e-hailing industry,
and the food market are targeted at social security and the target is to expand the coverage
for Malaysians who contribute to a different programme like the Employee Provident
Fund (EPF). In the field of openly endorsed social security and attributable national
welfare, the World Bank has introduced several short, medium and longer-term policy
proposals to aid the COVID-19 rescue operations and the implementation of an improved
social safety mechanism and has also proposed increasing implementation of social
security plans through the creation of a more structured and widely applied targeted
framework and the Government must improve the sufficiency of coverage for old-age
earnings by steadily raising the minimum age of retirement for EPF account number one
to the age of 65 and converting contributions to EPF account 2 into savings and
investments, mandating a staggered EPF balance withdrawal and growing social support
for older people with limited and largely focused social pensions.

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 7.0 CONCLUSION

In conclusion, this PRIHATIN Rakyat package describes a range of steps

to reduce Malaysian radiation, particularly for households and firms, impacted by the
COVID-19 epidemic. Malaysia is a highly motivated nation and its attempts to develop
the communities are meaningless to decline their regular and financially secure lives. The
government is optimistic that perhaps the epidemic will be quelled and the well-being of
Malaysians preserved by introducing this plan. The acts are planned to provide earnings
protection for the Malaysians. Besides, corporations will also earn funding and working
capital support for maintaining their companies and for retaining their staff. The Finance
Ministry via the LAKSANA Unit will guarantee that the Malaysians will be reached
rapidly by the PRIHATIN plan which is worth RM 250 billion. The government will
ensure that the whole people without missing any particular group will be covered under
this plan. In short, not only has the COVID-19 epidemic ravaged the world’s healthcare
infrastructure and modified modern social expectations, but also the world economy.

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 8.0 REFERENCES

What is Stimulus Package? Definition of Stimulus Package, Stimulus Package Meaning -

The Economic Times. (2021). Retrieved 8 February 2021, from
https://economictimes.indiatimes.com/definition/stimulus-package

Economic Stimulus Package - Overview, How It Works, Risks. (2021). Retrieved 8

February 2021, from
https://corporatefinanceinstitute.com/resources/knowledge/economics/economic-
stimulus-package/

(2021). [Ebook]. Retrieved from https://mra.com.my/wp-content/uploads/2020/06/3.-

BOOKLET-PRIHATIN-ENGLISH-27-MAC-2020.pdf

Economic Stimulus Packages saved 2.75 million jobs - PM Muhyiddin - Prime Minister's
Office of Malaysia. (2021). Retrieved 8 February 2021, from
https://www.pmo.gov.my/2020/07/economic-stimulus-packages-saved-2-75-
million-jobs-pm-muhyiddin/

MATTA: Much more can be done to help Malaysia’s tourism industry. (2021). Retrieved
9 February 2021, from https://www.theedgemarkets.com/article/matta-much-more-
can-be-done-help-malaysias-tourism-industry

Chin, C. (2021). Economic Stimulus Package is a boost for Malaysian tourism amid
Covid-19 outbreak. Retrieved 9 February 2021, from
https://www.thestar.com.my/lifestyle/travel/2020/03/03/the-2020-economic-
stimulus-package-is-a-boost-for-malaysian-tourism

Good tourism benefits in stimulus package - MATTA. (2021). Retrieved 9 February 2021,
from https://matta.org.my/news/38543-good-tourism-benefits-in-stimulus-package

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Malaysia's stimulus packages have softened COVID-19 impact on economy - Mustapa.
(2021). Retrieved 16 February 2021, from
https://www.theedgemarkets.com/article/malaysias-stimulus-packages-have-
softened-covid19-impact-economy-mustapa

Health Ministry gets extra RM1bil allocation under stimulus package | New Straits Times.
(2021). Retrieved 19 February 2021, from
https://www.nst.com.my/news/nation/2020/03/578723/health-ministry-gets-extra-
rm1bil-allocation-under-stimulus-package

(2021). Retrieved 21 February 2021, from

https://www.nottingham.edu.my/Economics/documents/2020/consolation-3.pdf

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