Stimulus package welcomed move for tourism sector, affected businesses – Deloitte

Consulting firm Deloitte views the much-awaited stimulus package that was unveiled by interim Prime Minister Tun Dr Mahathir Mohamad yesterday as being a welcomed move for the tourism sector as well as for affected businesses and individuals.

Malaysia's stimulus package is anchored on three strategies namely mitigating impact of Covid-19, spurring rakyat centric economic growth and promoting quality investments.

In a commentary Feb 27 following the unveiling of the RM20 billion stimulus package, Deloitte said the most immediate economic impact of COVID-19 has been the sharp decline in tourist arrivals throughout the region.

It said hotels, airlines, travel companies and more broadly the tourism-dependent retail industry have been badly affected.

On the measures for the tourism sector, Deloitte said the postponement of monthly tax instalment payments for businesses in the tourism sector is a welcomed move as this relieves cash flow constraints faced by these companies.

However, it said this flexibility should be extended to businesses in other sectors such as retail, transportation and entertainment, as they are equally affected by the COVID-19 outbreak.

“We expect the authorities to provide details on the postponement of monthly tax instalment payments.

“It is unclear now whether the revision of tax estimates refers to the tax estimate for the financial year 2020 or tax estimate for the period April to September 2020,” it said.

Meanwhile, Deloitte said lowering the Employees Provident Fund (EPF) rate will have an immediate increase in disposable income, which translates to a positive impact on domestic spending as the rate cut is expected to unlock RM10 billion worth of private consumption.

“It is heartening to note that this is not made mandatory and Malaysian workers can still choose to opt out from the scheme.

“The limited time frame allowed for the EPF cut is a good measure to preserve retirement savings,” it said.

Deloitte added that the Special Relief Fund of RM2 billion by Bank Negara Malaysia (BNM) and RM200 million in microcredit facility by Bank Simpanan Nasional will help to ensure that affected companies can stay afloat and ride through the current challenging environment.