Budget measures to assist individuals and SMEs affected by COVID-19

Following the Budget 2021 speech by the Minister of Finance, Bank Negara Malaysia (BNM) would like to provide additional details on the announced measures to households and businesses affected by COVID-19.

These measures are part of continuous efforts by the financial industry to support economic recovery, while also safeguarding the livelihoods of Malaysians.

BNM recognises that the environment remains challenging for some. In assisting individuals and businesses whose incomes have been affected by the pandemic, BNM will provide additional financing facilities; enhancements to the Targeted Repayment Assistance; and several other initiatives.

A) BNM’s Fund for SMEs

BNM will establish additional financing facilities to provide relief and support recovery for SMEs:

1. Establishment of RM2 billion Targeted Relief and Recovery Facility (TRRF)
   
   The RM2 billion facility is for eligible SMEs whose revenues have been affected by the recent enhanced and conditional movement control orders.
   
   In addition, SMEs in targeted vulnerable sectors, namely personal services, food and beverage services, human health and social work, arts, entertainment and recreation subsectors, will also be eligible for the TRRF.
   
   Offered at a concessionary rate of up to 3.5%, the TRRF will be available through participating financial institutions, with guarantee coverage by Syarikat Jaminan Pembiayaan Perniagaan (SJPP) and Credit Guarantee Corporation (CGC). The facility will be open for applications from 1 December 2020.
   
   Visit BNM Covid-19 for more information on TRRF.
   
    
2. Establishment of RM500 million High Tech Facility (HTF)
   
   The RM500 million facility is to support SMEs in high-tech sectors, for example fertilisers and synthetic rubber, basic chemicals, refined petroleum products, biotech pharmaceuticals, as well as air and spacecraft sub-sectors. As the high-tech sectors and innovation-driven firms are instrumental to realising new growth opportunities, the HTF aims to sustain Malaysia’s competitive positioning in global value chains and safeguard high-skilled jobs. Further details on the HTF will be announced on 1 December 2020.
   
    
3. RM110 million increase in allocation for the Micro Enterprises Facility (MEF)
   
   The facility will be increased from RM300 million to RM410 million, with an available balance of RM200 million to support microenterprises including gig workers on digital platforms and the self-employed. The facility is for working capital and capital expenditure.
   
   Visit BNM Covid-19 for more information on MEF.

B) Enhancements to the Targeted Repayment Assistance (TRA)

The banking industry has agreed to provide additional targeted repayment assistance for individuals and SME borrowers. These enhancements are an addition to those previously announced for those who have lost their jobs, and for individuals and SMEs whose incomes have been affected by the pandemic. Borrowers can also continue to approach their banks for tailored repayment assistance based on their specific financial circumstances as all banks continue to stand ready to provide support to borrowers that need assistance.

Additional assistance for B40 and microenterprise borrowers

Additional repayment assistance will be rolled out to borrowers in the following categories:

• B40 individuals who are recipients of Bantuan Sara Hidup (BSH)/Bantuan Prihatin Rakyat (BPR); and
• Microenterprises, as defined by SME Corp, for facilities with approved amounts of up to RM150,000.

Borrowers in these categories can request to either:

• Defer monthly instalments for 3 months; or
• Reduce monthly instalments by 50% for 6 months.

The assistance will be extended for facilities approved before 1 October 2020 which are not in arrears for more than 90 days at the time a borrower requests for repayment assistance. B40 and microenterprise borrowers who had previously received other forms of targeted repayment assistance and who wish to request for further assistance under the additional measures announced today can still do so by contacting their banks.

To request for this assistance, eligible borrowers will only need to confirm their repayment option with their bank. Additional documentation from borrowers is not required by banks to obtain repayment assistance.

However, for hire purchase loans and fixed rate Islamic financing, borrowers would need to sign new agreements in accordance with the Hire Purchase Act 1967 and Shariah requirements.

These additional repayment assistance will be available to eligible borrowers between 23 November 2020 and 30 June 2021. Borrowers may indicate the repayment assistance from 23 November 2020 through banks’ customer service hotlines, online banking, or by visiting bank branches. The banking industry will provide further details on these enhancements next week.

The repayment enhancement will be available for instalments due in December 2020 onwards, and will take effect at the next instalment following a borrower’s request and confirmation.

BNM has also been working with the banking industry to fine tune the delivery of targeted repayment assistance:

1. Simpler documentation for borrowers who are BPN M40 recipients

For M40 borrowers who are registered in the Bantuan Prihatin Nasional database, and whose household incomes have been reduced due to the pandemic, banks will accept requests from borrowers for a reduction in monthly instalments. This will be based on borrowers’ self-declaration of reduced income and/or their household to further expedite immediate relief. Banks will continue to engage with such borrowers subsequently to review their financial circumstances.

2. Dedicated Agensi Kaunseling dan Pengurusan Kredit (AKPK) Micro Enterprise Help Desk

In addition to contacting banks, an additional avenue will be made available for microenterprises to request for repayment assistance through AKPK’s dedicated micro business helpdesk starting 9 November 2020 at www.akpk.org.my/microhelpdesk. The virtual helpdesk provides free financial advice and facilitates applications for repayment assistance.

3. Assessment of a borrower’s overall household income

For individual borrowers requesting to reduce their instalments, practices across banks have been streamlined to take into account not only the borrower’s own income, but also how the income of his or her spouse has been affected by the pandemic. This is already practised by most banks and has now been adopted by all banks to allow for more holistic assessments of a borrower’s financial situation.

These new enhancements build on existing efforts adopted by banks to better accommodate the exceptional challenges faced by borrowers.

BNM would like to reassure borrowers facing financial difficulties due to the pandemic that repayment assistance remains available to individuals across all income groups and SMEs of all sizes that need assistance. For many borrowers, assistance that is tailored to their specific circumstances will be more helpful to support their current and future needs.

Despite ongoing measures to contain COVID-19, the resumption of economic activities has enabled many borrowers to resume paying down their debt. To date, around 85% of borrowers have started making their monthly instalments.

For borrowers who can afford to do so, this is in their best interest as reducing or deferring instalments will lead to higher overall debt, due to the continued accrual of interest which borrowers eventually have to bear in the future.

At the same time, borrowers who still face financial challenges will continue to be supported through targeted repayment assistance which allows them to make informed decisions based on their own financial management needs and goals.

BNM urges borrowers who face difficulties meeting their loan repayments to contact their banks, AKPK or BNMTELELINK to understand the options available to help them manage their debt. Targeted repayment assistance will continue to be available for affected borrowers throughout 2020 and 2021.

Borrowers facing difficulties with their banks can lodge a complaint with BNMTELELINK at bnm.my/RAsurvey. Borrowers may also visit www.bnm.gov.my/tra to obtain more information on targeted repayment assistance.

C) Other Initiatives

In addition, the Government, BNM and the financial industry are collaborating on several initiatives to further assist individuals and SMEs:

1. Expansion of iTEKAD programme
   
   The iTEKAD programme, which was launched in May 2020, combines social finance instruments such as zakat, sadaqah and waqf with the provision of microfinancing, structured training and mentorship. These instruments will empower micro-entrepreneurs from the B40 segment to generate sustainable income and achieve financial resilience.
   
   In tandem with the increase in allocation to MEF, the iTEKAD programme will be expanded with the participation of more Islamic banks. This will be done in collaboration with a wider network of states and implementation partners, which will be participating in the iTEKAD programme in 2021.
   
    
2. Perlindungan Tenang Protection for B40
   
   Financial assistance will be provided by the Government for the B40 segment in the form of vouchers to purchase insurance and takaful coverage under the Perlindungan Tenang scheme from licensed insurers and takaful operators. The financial assistance of RM50 voucher will be given to eligible B40 recipients to help them purchase Perlindungan Tenang products starting 1 April 2021.
   
   Perlindungan Tenang products are products approved by BNM to meet the needs of under-served market segments. The products must satisfy stringent criteria on affordability and customer value, with minimal exclusions to ease claims and ensure meaningful protections, particularly for lower income groups. The products include protection for life takaful and personal accident.
   
   For more information on Perlindungan Tenang products and to obtain a list of participating providers, the public can refer to https://www.mycoverage.my/web/mc/tenang.

Further details of all of these measures will be issued by the respective banking and insurance associations soon. Members of the public can contact BNMTELELINK at bnmtelelink@bnm.gov.my for further information.