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CORONAVIRUS – The situation in Malaysia

1. General situation

The daily new COVID-19 cases have been reducing in the last few weeks from around 10k to 3k-6k new cases per day. As of 19th December 2021, Malaysia recorded 2,718,955 total COVID-19 cases: 53,482 active cases, 2,634,381 recovered and 31,092 deaths. Of the 3,108 new Covid-19 cases on 19th December, only 3,051 cases or 98.2% of them were mild and asymptomatic infections in Categories 1 and 2, while the remaining 57 cases were those in Categories 3, 4 and 5. With the effort of the government on ramping up the vaccination rate, Malaysia reached 78.2% of fully vaccinated individuals in the total population, 79.4% of individuals have been partially vaccinated while 14.0% of individuals have been boosted, administering more than 110,000 doses given per day. With more than 95% of Malaysia’s adult population are fully vaccinated, Malaysia expects to treat COVID-19 as 'endemic' at the end of 2021, by achieving less than 1,200 cases daily and fewer than 10 deaths a day for 7 consecutive days. However, Malaysia has decided to delay the transition into endemic phase as there is too much uncertainty regarding the recent spread of the Covid-19 Omicron variant.

The government is currently implementing the National COVID-19 Immunisation Programme (PICK). Initially, all Malaysian citizens and non-citizens aged 12 years old can apply to take the vaccine. Now, the government start to procure vaccine for kids from 5-12 year olds. As of 19th December 2021, the total population with fully vaccinated is 78.2% and 79.4% for partially vaccinated while 14.0% have been boosted. Meanwhile, a total of 97.5% of the adult population in the country have completed their vaccination as of 19th December 2021 while 98.8% of individuals of the adult population have received at least one dose of the vaccine and 19.5% of individuals have been boosted. The government has achieved its goal for the vaccination rate of at least 80% of Malaysian adults to receive vaccines, and now the focus turns to teens and booster vaccine shots. The government has accelerated the vaccine booster programme due to the recent spike in coronavirus cases nationwide, and prioritising front-liners and high-risk groups. Sinovac and AstraZeneca vaccines get conditional approval as boosters for people aged 18 years and above in Malaysia. Now, Malaysia allows walk-in registrations for booster shots at private vaccination centre (PPV) and only the Pfizer-BioNTech vaccines will be dispensed at these centres. For the recipients of Pfizer-BioNTech vaccine, they are recommended to take the same type of vaccine as booster shot. The total booster shots had reached 4.57 million and bringing the total number of doses administered under the National COVID-19 Immunisation Programme to 55.88 million. The success of the National Covid-19 Immunisation Programme has allowed the full reopening of the economy and lower the unemployment rate to 4.3% in October 2021, compared with the highest rate at 5.3% in May 2020.

Malaysia is gradually reopening its borders and remains open for business. The government will remain committed to the 6-Phase Economic Recovery Plan (6Rs) in place since last year for economic recovery. The government has established the One Stop Centre (OSC) dedicated to supporting Malaysia’s economic recovery and growth while balancing public health and livelihoods and strengthening its position as a competitive and preferred investment destination in Asia. Safe Travel is an initiative by the government to ease the business travellers’ movement into Malaysia while ensuring their safety and health.

2. Preventive measures

The Malaysian government review the implemented measures based on the current country’s pandemic situation from time to time. Every state is under different phases in 4-Phase National Recovery Plan (NRP), based on the state’s COVID-19 situation.

  • Phase 1 – MCO 1.0 from 18th March 2020 till 3rd May 2020
  • Phase 2 - Conditional MCO from 4th May 2020 till 9th June 2020
  • Phase 3 - Recovery MCO from 10th June till 31st December 2020
  • Phase 4 – CMCO in the areas with high COVID-19 cases from 14th December 2020 till 31st  December 2020
  • Phase 5 – Recovery MCO from 1st January 2021 till 31st March 2021
  • Phase 6 – MCO 2.0 from 13th January 2021 till 4th March 2021
  • Phase 7 – MCO 3.0 from 1st June 2021 to 28th June 2021
  • Current Measure – Phase Three (Kelantan and Sarawak); Phase Four (Perlis, Kedah, Penang, Perak, Sabah, Pahang, Terengganu, Selangor, Melaka, Negeri Sembilan, Johor, Federal Territory of Kuala Lumpur, Federal Territory of Putrajaya and Federal Territory of Labuan). Several areas or localities with high cases are under the Enhanced MCO for a certain period.

The transition from one phase to the next phase will be based on three threshold indicators: the state of COVID-19 transmission in the community based on the number of daily cases of infection; the capacity of the public health system based on the rate of ICU wards occupancy; and the percentage of the population covered with two doses of vaccine injection.

    SOPs For Phase Three under NRP (Updated on 7th November 2021):

    1. Cross-districts within the same state and cross-state (based on district boundaries set by the State Government) are allowed for fully vaccinated individuals by showing vaccination card/ digital certificate and identity card/ passport as a proof.
    2. Not fully vaccinated individuals are allowed to travel in 3 passengers per car only to buy necessities, getting health and medical treatment, vaccination, carrying out official Government affairs, safety or emergency.
    3. Fully vaccinated individuals are allowed:
      • to perform prayer activities in houses of worships;
      • to perform all sports and recreational activities individually;
      • to dine-in at restaurants;
    4. Seminars, workshops, courses, trainings, talks, meetings, incentives, conventions and exhibitions are allowed for fully vaccinated individuals, and only involves 50% capacity of the premises.
    5. For the manufacturing, construction, quarrying and mining sector that achieves complete vaccination rates for employees allowed to operate as follows:
      • Less than 80%: Allowed to operate with a capacity of 80% of employees.
      • 80% to 100%: Allowed to operate with 100% employee capacity.
    6. Agriculture, fisheries, livestock, farming, commodities and logging, as well as its supply chain are allowed to operate. In addition, all manufacturing, construction and its chains are allowed to operate.
    7. Businesses and services such as restaurants are allowed to operate from 6 a.m. to 12 a.m. while health services centres such as hospital and clinic are allowed to operate 24 hours.
    8. All the schools and educational institutions are allowed to operate face to face with 50% rotation of class capacity.
    9. Social events such as ceremonies, weddings, receptions, celebrations, reunions, retreats and other social gatherings are prohibited.
    10. Any tourism activities that involving border-crossing are prohibited (subject to relevant authorities’ approval).

    SOPs For Phase Four under NRP (Updated on 7th November 2021):

    1. Cross-state is allowed for fully vaccinated individuals by showing vaccination card/ digital certificate and identity card/ passport as a proof.
    2. Fully vaccinated individuals are allowed:
      • to perform prayer activities in houses of worships;
      • to perform all sports and recreational activities individually;
      • to dine-in at restaurants; and
    3. Seminars, workshops, courses, training, and talks are allowed with 50% space capacity and physical distance. Individuals that are not vaccinated need to undergo a per-event test using self-test kit before attending the event.
    4. For the manufacturing, construction, quarrying and mining sector that achieves complete vaccination rates for employees allowed to operate as follows:
      • Less than 80%: Allowed to operate with a capacity of 80% of employees.
      • 80% to 100%: Allowed to operate with 100% employee capacity
    5. All the business activities such as tourism, agriculture, fisheries, livestock, farming, commodities and logging, as well as its supply chain are allowed to operate.
    6. All the schools, educational institutions and private educational institutions are reopened with the gradual admission of students in 3 stages.
    7. Social events such as ceremonies, weddings, receptions, celebrations, reunions, retreats and other social gatherings are allowed with 50% space capacity and physical distancing.
    8. Sectors and activities that are not allowed:
      • entertainment activities (nightclubs or pubs);
      • cross-border tourism activities (subject to relevant authorities’ approval).

    SOP For Enhanced Movement Control Order (EMCO):

    1. EMCO areas will be closed and controlled by the police.
    2. All residents are NOT ALLOWED TO LEAVE their residences.
    3. Only one (1) representative from each home is allowed to buy necessities at grocery stores within the EMCO area that is allowed by the police.
    4. Movement in/ in-and-out of the EMCO area to obtain healthcare services, medication, vaccination and emergency is allowed after getting permission from the police.
    5. Economic and industrial activities that are not included as essential services such as tourism, childcare, social events, cultural activities, education, prayer activities, sports and recreational activities are prohibited.

    For more information: https://www.miti.gov.my

    • Penalties

    According to the Emergency (Prevention and Control of Infectious Diseases) (Amendment) Ordinance 2021, effective from 11th March 2021, any individuals who violate SOPs stipulated for the prevention and control of the COVID-19 pandemic can be fined up to RM10,000. Companies or corporations that violate the SOPs can be fined up to RM50,000.

    • Foreign Travel Restrictions  

    International travel is still not permitted as Malaysian borders remain closed. All foreign travellers to Malaysia are subject to relevant authorities’ approval.

    Category of Passengers Allowed Entry:

    1. Malaysian
    2. Foreigners with Permanent Resident status
    3. Diplomat and Dependant of Foreign Mission in Malaysia
    4. Expatriates and their dependents, including foreign maids to expatriates holding a valid long-term pass and/or obtaining pass approval to enter Malaysia. The application made through MYEntry system in ESD https://esd.imi.gov.my/portal/
    5. The passes category are as follows:
      • Residence Pass-Talent (RP-T) and their dependent/s
      • Employment Pass (Category EP I, II and III)
      • Professional Visit Pass (PVP)
      • Dependant Pass to expatriate for all categories
      • Long Term Social Visit Pass (LT-SVP) to expatriate for all categories
      • Foreign Maid to expatriate for all categories
    6. Malaysia My Second Home (MM2H) Pass Holders
    7. Student Pass Holders
    8. Medical Tourism – Malaysia Healthcare Travel Council (MHTC)
    9. Other Long-Term Social Visit Pass (LTSVP) (Resident Pass / Temporary Employment Visit Pass (PLKS) / Professional Visit Pass (PVP/PLIK) / Dependant Pass to the LTVP Holders
    10. Oil and Gas workers and Seafarers

    Above entry restrictions do not apply to passengers/nationals of Argentina, Bangladesh, Brazil, Chile, Colombia, France, Germany, India, Indonesia, Iran, Iraq, Italy, Mexico, Pakistan, Peru, Philippines, Russia, South Africa, Saudi Arabia, Spain, Turkey, United Kingdom, United States. This entry restriction applies to all categories of Long-Term Visit Pass holders (including student pass), Business travellers, and Social Visit Pass However, passengers from the aforementioned nations are allowed to transit in KLIA within 24 hours, except Bangladesh, Nepal, Pakistan, Sri Lanka and India.

    Malaysia and Singapore’s borders had reopened for travellers under Periodic Commuting Arrangement (PCA) (work or business travel for a minimum 90-day period) and Reciprocal Green Lane (RGL) (short-term essential business and official travel) schemes. RGL is currently suspended until further notice. With Singapore’s higher vaccination rate, the border restrictions for fully vaccinated travellers, work pass holders, and their dependents will be relaxed. On 29th November, Singapore and Malaysia opened the Vaccinated Travel Lanes (VTLs) where vaccinated travellers will be able to take flights between Changi Airport and Kuala Lumpur International Airport without quarantine. The VTL for land travel between Singapore and Johor Bahru also started on 29th November amid worries over the Omicron variant. The vaccinated travellers under the scheme must be citizens, permanent residents, or long-term pass holders of the country that they are entering. The government is aiming to expand the land VTL to include general travellers from the middle of December, taking into account the public health situation. On 15th December, Ministry of International Trade and Industry (MITI) recently announced that the Malaysia-Singapore VTL Land will be extended to all travellers from Malaysia and Singapore from 20th December. The VTL-Land will still be limited to only bus transportation. On 10th November, National Recovery Council stated that the country’s borders should be opened to foreigners by 1st Jan at the latest with the announcement of opening up a Vaccinated Travel Corridor (VTC) between Kuala Lumpur, Malaysia and Jakarta, Indonesia early next year. Besides, Thailand’s land crossings along the Malaysian border will reopen in mid-January under the Test & Go quarantine exemption scheme for fully vaccinated travellers. Under the Test & Go scheme, quarantine is exempt for vaccinated travellers from approved countries who pass a RT-PCR Covid-19 test upon arrival.

    Malaysians are banned from visiting several African countries following the emergence of the new B.1.1.529 Covid-19 variant. The countries involved are South Africa, Botswana, Eswatini, Lesotho, Mozambique, Namibia, Zimbabwe and Malawi. Foreigners with a history of travel to those countries over the past 14 days would not be allowed to enter Malaysia. However, Malaysians, permanent residents and travellers holding Short Term and Long-Term Pass returning Malaysia after visiting those African countries are allowed to enter Malaysia but must undergo a mandatory 14-day quarantine.

    The Malaysian government is very open to business and welcomes the entry of business travellers amid the pandemic. The government established the One Stop Centre (OSC) in October 2020, aiming to expedite business travellers’ business entry to Malaysia. The government has also created a Safe Travel Portal containing information and advisory services to facilitate Short-Term (who are not holding any passes and intend to stay in Malaysia for 14 days or less) and Long-Term (who have valid passes and intend to stay in Malaysia for over 14 days) business travellers’ entry into Malaysia. The application can be made via https://safetravel.mida.gov.my.

    Effective 1st November 2021, foreigners holding valid Malaysian long-term visit passes can enter the country without immigration clearance via MyTravelPass/MyEntry. Other foreigners are required to apply via MyTravelPass/MyEntry before entering Malaysia.

    For more information:

    COVID-19 Variants of Concern (VOC)

    The Beta and Delta variants of concern (VOC) dominate COVID-19 infections in the country, especially among unvaccinated individuals. Travellers arriving from countries with VOC (B.1.351, B.1.1.7, B1.1.28/P1, and B.1.617) must be tested 3 days before departure date and undergo mandatory quarantine stations for 14 days and undergo a second sample screening on the 10th day of quarantine. The government will update the list of countries with the Variant of Concern (VOC) SARS-Cov-2 from time to time.

    Malaysians are banned from visiting several African countries following the emergence of the new B.1.1.529 Covid-19 variant. Foreigners with a history of travel to those countries over the past 14 days would not be allowed to enter Malaysia, while Malaysians and permanent residents returning home after visiting those African countries are allowed to enter Malaysia but must undergo a mandatory 14-day quarantine. In addition, the cumulative total of Covid-19 Omicron variant cases in Malaysia stands at 13 on 18th December, all imported cases.

    For more information: List of Countries with VOC As Of 16th May 2021

    ​Travel Procedures & Quarantine Order

    Travellers must hold a valid MYTravel Pass (MTP) before entering Malaysia. Travellers arriving from overseas must provide a hardcopy negative RT-PCR test result taken within 3 days before departing to Malaysia. Upon arrival, travellers must undergo COVID-19 screening test which may take up to 2 hours. All travellers arriving from overseas must go through a Health Assessments by the medical officer on duty upon their arrival, subject to the traveller’s health condition. All fully vaccinated travellers arriving from overseas must observe a 7-day quarantine. Unvaccinated or partially vaccinated travellers must observe a 10-day quarantine upon entry into Malaysia.

    All costs that include screening test, transport, accommodation, meal, and handling cost as determined by the Ministry of Health will be borne by travellers. The cost for citizens is around RM1,050 to RM1,500, whereas for non-citizens is around RM3,650 to RM4,100. Via the MySafeTravel System, travellers may choose their preferred quarantine accommodation, make payments in advance, and obtain a QR code that is used for entry verifications.

    Fully vaccinated travellers, including Malaysians and foreigners who have a residence in Malaysia, including permanent residents and MM2H visa holders returning from overseas, may undergo home quarantine, subject to strict requirements. The Ministry of Health defines “fully vaccinated” as 14 days after the second dose of Pfizer, AstraZeneca, or Sinovac; or 28 days after one dose of Johnson & Johnson or Cansino.

    On 28th November, the health minister says booster shots may become a requirement for someone to be deemed as being fully vaccinated against Covid-19. This was still being considered by the ministry, in view of the emergence of the Omicron variant, the decline of vaccine efficacy in recipients, as well as public complacency towards the virus after their second jab. On 16th December, health minister announced that Sinovac vaccine recipients aged 18 and above and individuals aged 60 and older, regardless of the type of primary vaccination, must get Covid-19 booster shots by Feb 2022 to maintain fully vaccinated status.

    In addition, all travellers must download and install the MySejahtera application on their mobile phones. MySejahtera is an application developed by the Malaysian government to assist the Ministry of Health (MOH) monitor users’ health conditions and facilitate contact tracing for COVID-19.

    Please visit the link to download the MySejahtera application: https://mysejahtera.malaysia.gov.my/.

    For more information:

    MySafeTravel Portal

    MySafeTravel FAQ - Update on 24122020

    3. Exit strategy

    Since 15th June 2021, the Malaysian government will use National Recovery Plan (NRP) four phases to assist Malaysia in exiting the pandemic. The transition from one phase to the next phase will be based on three threshold indicators:

    1. The state of COVID-19 transmission in the community based on the number of daily cases of infection;
    2. The capacity of the public health system based on the rate of ICU wards occupancy;
    3. The percentage of the population covered with two doses of vaccine injection.

    The government is currently implementing the National COVID-19 Immunisation Programme (PICK). Malaysia’s vaccine portfolio has 8 types of COVID-19 vaccines from 6 suppliers, including the global vaccine-sharing programme COVAX, which 78.2% of the Malaysian total population have completed their vaccination, as of 19th December 2021. The vaccines are Pfizer-BioNTech, AstraZeneca-Oxford, Sinovac, CanSino, Sinopharm, and Johnson & Johnson. Also included are the Novavax vaccine and Sputnik V, which are still under evaluation by the National Pharmaceutical Regulatory Agency (NPRA). NPRA has given conditional registration for emergency use of Moderna’s mRNA vaccine in Malaysia. In addition, Malaysia is among the countries weighing in on the need for COVID-19 booster jabs against the fast-spreading Delta variant. The government has accelerated the vaccine booster programme and prioritising front-liners and high-risk groups, in which the total booster shots had reached 4.57 million as of 19th December 2021. Sinovac Life Sciences of China appointed Pharmaniaga LifeScience Sdn. Bhd. as their exclusive local “fill-and-finish” producer and distributor of Sinovac COVID-19 vaccines. Malaysia has allocated RM5 million for the vaccine research and development. The locally developed mRNA vaccine is still in the proof-of-concept stage.

    PICK will be implemented in 3 phases, starting from 24th February 2021, where First-Phase for frontliners, Second-Phase for elderly people and high-risk groups, while Third-Phase (May 2021 until February 2022) for over 13.7 million people, citizens & non-citizens aged 12 and above, prioritised the high-risk zones. The vaccination is voluntary and will be provided free of charge to all Malaysian citizens and non-citizens. All individuals aged 12 years old can apply to take the vaccine. The government aims to achieve at least 80% of Malaysia’s adult population receiving vaccines by February 2022 to reduce infection. As of 19th December 2021, a total of 22.81 million people representing 97.5% of Malaysia’s adult population, had completed their vaccination. Meanwhile, 23.12 million representing 98.8% of its adult population, had at least one dose of the vaccine. Vaccinations will be carried out at 672 Vaccination Administration Centres (VACs). Vaccination registration and appointments can be made via MySejahtera mobile application and the official website.

    Public-Private Partnership COVID-19 Industry Immunisation Programme (PIKAS) established as Phase 4 of the PICK to help expedite vaccination for the public, where PIKAS focuses on the workforce in critical manufacturing sectors. As of 5th September 2021, out of a total of over 900,000 workers scheduled to get vaccinated under PIKAS, more than 98 percent have done so. Under PIKAS, the government will provide free vaccines, while the private sector will manage the administration of the VACs, including engaging the services of private medical practitioners.

    For more information:

    The Special Committee On COVID-19 Vaccine Supply (JKJAV)

    PIKAS (miti.gov.my)

    4. Economy

    a. Economic impact

    • The COVID-19 pandemic has significantly impacted the Malaysian economy, leading to the currency devaluation (MYR) and the decline in the country's gross domestic product (GDP). Malaysian economy contracted 5.6% in 2020, its worst performance since the 1998 Asian Financial Crisis. The country’s GDP is expected to regain its growth in 2021 from 6.5% to 7.5%. Several key sectors such as entertainment, markets, retail, hospitality and tourism are adversely affected by the pandemic. Postal and Courier Services are recognised as one of the least impacted sectors. Besides, all businesses have to cope with the SOPs imposed by the government, which affected their operations. The government suffered losses of RM1 billion daily throughout the current FMCO 3.0.All tourism-related sectors are heavily affected by travel restrictions and consumer’s risk aversion.
    • Heightened financial market volatility due to various external uncertainties.
    • Most businesses’ sales/revenue declined and faces financial and cash flow risks. As of 1st May 2020, 67.8% of the total 4,094 Malaysian companies responded that no sales/revenue during the MCO period.
    • Supply disruption in the commodities sector due to unfavourable weather conditions continued maintenance works and MCO SOPs.
    • The unemployment rate rose to 4.9% in January 2021.

    The government increasingly encourages Malaysians to opt for online shopping to limit movements, brings up the online sales of fast-moving consumer goods growth by over 40%. Malaysians are also getting used to cashless contactless payment methods.

    b. Trade barriers

    There are no new trade barriers added at this time.

    As gazetted in the Control of Supplies (Prohibition on Export) (Amendment) Regulations 2020, the Malaysian government has banned exports of Face Masks as listed below:

    • Face Mask (Surgical/Medical) 1 Ply (Ear Loop)
    • Face Mask (Surgical/Medical) 2 Ply (Ear Loop)
    • Face Mask (Surgical/Medical) 3 Ply (Ear Loop/ Head Loop/Head Tie-On)
    • Face Mask (Surgical/Medical) N95

    A letter of approval issued by the Controller of Supplies, Ministry of Domestic Trade and Consumer Affairs under the Control of Supplies Act 1961 is required for any export of prohibited goods.

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    c. Measures for economic relaunch

    a. Malaysian Budget 2021

    Budget 2021 themed “Stand United, We Shall Prevail”, with the allocation of RM322.5 billion expenditure to revive the economy and help Malaysians weather the COVID-19 pandemic. The 2021 Budget has three key areas of focus: ensuring the wellbeing of the people, business continuity, and resilience of the economy. 73.30% of the total budget is allocated for Operating Expenditure, 21.40% for Development Expenditure and a special allocation of 5.30% for the COVID-19 fund. Budget 2021 extends the support provided in the earlier announced economic stimulus packages. Key highlights of Budget 2021:

    • Tax Incentive for Global Trading Centre: 10% income tax rate for a period of 5 years and renewable for another 5 years.
    • Extension of Principal Hub Incentive: Extended for another 2 years to 31st December 2022.
    • Relocation Incentives for Selected Services Sector: Income tax rate of 1% to 10% for 10 years for a new company, and 10% for 10 years for existing company with new service segment.
    • Relocation Incentives for Manufacturing Sector: Extended for another 1 year to 31st December 2022. Income tax rate of 0% for 10 or 15 years for new companies, or 100% investment tax allowance for 5 years for existing companies.
    • Tax Incentive for Manufacturers of Industrialised Building System (IBS) Components: Extended for another 5 years to 31st December 2025. Investment tax allowance of 60% on qualifying capital expenditure incurred within 5 years to be set off against 70% of statutory income.
    • Tax Incentives for Bionexus status company, Economic corridor developments, MRO activities for aerospace, and Building and repair of ships: Extended for another 2 years.
    • Tax Incentives for Manufacturers of Pharmaceutical Products including Vaccines: 0% to 10% income tax rate for the first 10 years and 10% for the subsequent 10 years.

    For more information: https://www.treasury.gov.my/index-en.html  

    b. National Economic Recovery Plan – PENJANA (Pelan Jana Semula Ekonomi Negara)

    On 5th June 2020, Prime Minister Tan Sri Dato’ Haji Muhyiddin Yassin announced the Short-term National Economic Recovery Plan – PENJANA amounting to RM35 billion which aimed at reviving the country’s economy. PENJANA will complement the various announced economic stimulus packages. Under the 6-Phase Plan (6Rs): Resolve, Resilience, Restart, Recovery, Revitalise and Reform, Malaysia is currently in the 4th Phase: Recovery. PENJANA has 40 initiatives, focusing on 3 key thrusts - Empower People, Propel Businesses and Stimulate the Economy. For instance, PENJANA’s Wage Subsidy Program 1.0 benefitted over 322,177 employers and 2.64 million employees.

    For more information, please refer to the link below:

    c. Pemerkasa Plus (PEMERKASA+)

    On 31st May 2021, the government has rolled out a RM40 billion financial aid package - PEMERKASA+ to assist affected Malaysians and tackle the economic impact following the Full MCO (FMCO) beginning 1st June 2021. PEMERKASA+ has three (3) main goals: Enhancing Public Health Capacity; Continuing the ‘Prihatin Rakyat’ Agenda; and Supporting the Business Continuity.

    For more information, please refer to: https://www.pmo.gov.my/ms/pemerkasa/

    d. Kita Prihatin Economic Stimulus Package

    On 23rd September 2020, the government has rolled out the Kita Prihatin Economic Stimulus Package to assist micro-entrepreneurs, workforce, and those from the lower- and middle-income groups. The government allocated total RM755 million for Special Prihatin Grant to benefit 200,000 micro-entrepreneurs, RM2.4 billion for Wage Subsidy Programme 2.0 and RM7 billion for the Bantuan Prihatin Nasional 2.0 – cash aid for the eligible Malaysians. As of 26th February 2021, RM808.31 million has been channelled to 66,591 employers and maintain jobs for 554,876 employees under the Wage Subsidy Programme 2.0. 

    For more information, please refer to: https://pre2020.treasury.gov.my/index_en.html

    d. Economic outlook

    It is known that the COVID-19 pandemic has impacted the Malaysian economy heavily, more so, the global economies. Below are the country’s key economic indicators recorded in Q1 2021:

    • Malaysia’s economy increases significantly at +16.1% (Q4 2020: -3.4%).
    • GDP at current price: RM 336.30 billion (€69.85 billion)
    • Exports: 37.4% (Q1 2021: 11.9%)
    • Imports: 37.6% (Q1 2021: 13.0%)
    • Economic performance was supported by the Manufacturing sector (26.6%) and bounced back of Services sector (13.4%).
    • Manufacturing sales increased by 6.8% to RM126.5 billion(€26.28 billion)

    Most businesses’ operations are affected by the measures/SOPs imposed by the government. Over 66% of businesses experienced a drastic drop in demand due to the decline in private consumption. The government has proactively taken measures to stimulate and boost the economy and increase private consumption. The government also expect the National COVID-19 Immunisation Programme to resolve the current health crisis and stimulate economic performance.

    e. Short term opportunities

    a. Manufacturing Sector

    Malaysia has a well-established Manufacturing Sector but has too much reliance on the Oil and Gas Sector. Malaysia remains an attractive investment destination, with the availability of well-educated labour, investor-friendly policies and incentives, well-developed Infrastructure and preferred gateway to enter the ASEAN market. Malaysia’s technologically-inclined economy is proven by the country's involvement in advanced industries such as E&E manufacturing, R&D, biotechnology, photonics, logistics, design, innovation, automotive and others.

    The COVID-19 pandemic has triggered the Malaysian Government’s actions in ensuring smooth supplies of medicine, food and other essential goods. This shows short and long-term opportunities for the Manufacturing sector, especially for the Medical & Health industry and the Food & Beverages industry. The Malaysian government announced many attractive tax incentives for the manufacturing sector, including:

    • Tax Incentive for Global Trading Centre: 10% income tax rate for a period of 5 years and renewable for another 5 years
    • Principal Hub Incentive
    • Relocation Incentives for Selected Services Sector: Income tax rate of 1% to 10% for 10 years for a new company, and 10% for 10 years for existing company with new service segment.
    • Relocation Incentives for Manufacturing Sector: Income tax rate of 0% for 10 or 15 years for new companies, or 100% investment tax allowance for 5 years for existing companies.
    • Tax Incentive for Manufacturers of Industrialised Building System (IBS) Components: Investment tax allowance of 60% on qualifying capital expenditure incurred within 5 years to be set off against 70% of statutory income.
    • Tax Incentives for Bionexus status company, Economic corridor developments, MRO activities for aerospace, and Building and repair of ships
    • Tax Incentives for Manufacturers of Pharmaceutical Products including Vaccines: 0% to 10% income tax rate for the first 10 years and 10% for the subsequent 10 years.

    For more information: https://www.mida.gov.my/home/

    b. Manufacturing Sector - Electrical and Electronic Industry

    The Electrical and Electronics (E&E) industry is poised to remain firm in 2020, despite the COVID-19 crisis, thanks to the Malaysian Government‘s proactive measures during the MCO period. According to Ms. Bee Bee Ng, President of SEMI Southeast Asia, Malaysian E&E landscape will remain robust in 2020, supported by the immense opportunities offered by the industry, especially with the rise in remote working, virtual learning and e-commerce. The increasing demand for smart manufacturing capabilities, automation and technological innovations would potentially stabilise the E&E industry.

    Today, the Malaysian Investment Development Authority (MIDA) is looking into attracting investments in new and high technology areas post-COVID-19 supported by the well-developed infrastructure and numerous incentives for potential investors. MIDA is focusing on the companies from countries that are affected (by the trade war), to shift their operations to Malaysia and utilise Malaysia as a hub to penetrate the South-East Asian market.

    c. Food Agriculture (Agri-food) Sector

    The COVID-19 pandemic has triggered Malaysian Government actions to address food security issues, as the country is highly relying on the imports of F&B products, animal feeds for livestock and poultry sectors and raw materials for further food processing. The emphasis on food security has opened up promising opportunities in the Agri-food Sector for FDI, such as knowledge exchange and assistance in modernising the Agri-food Sector. This has sparked Malaysia to invest in the R&D of the Agri-food Sector to develop a food self-sufficient nation. The available opportunities including potential collaboration between Malaysian and Flemish companies in Agri-related knowledge transfer, adoption or selling of advanced technologies and machinery to modernise the Sector.

    The PENJANA Short-term Economic Recovery Plan announced on 5th June 2020 has highlighted few supports for the Agriculture and Food sector, including:

    • Incentives to pioneer companies to train and educate the people to venture into agriculture and plantation.
    • Special Reinvestment Allowance for manufacturing and selected agriculture activity, from YA 2020 to YA 2021.
    • Micro Credit Financing for Agropreneurs under Agrobank (including commodity players) totalling RM350 million with an interest rate of 3.5%.

    d. Drivers of the Logistics Sector

    Malaysia has the 2nd highest E-Commerce penetration rate in the ASEAN region. During the COVID-19 pandemic, Malaysia’s E-Commerce Industry has expanded at a fast pace. The accelerated E-Commerce industry’s growth is mainly due to the increase in the number of online shoppers. The growth has triggered the transformation of the Malaysian retailers’ business strategy toward E-Commerce and Internet-Of-Things (IoT). As indicated by GlobalData’s E-Commerce Analytics, Malaysia’s E-commerce market is assessed to register a CAGR of 14.3% between 2020 and 2024. There are open opportunities for the country’s main logistics drivers such as Manufacturing, Pharmaceuticals, Food and Beverages, E-Commerce and Third-Party Logistics sectors.

    f. Long term opportunities

    While Malaysia is concentrating on the immediate economic outcomes after COVID-19, TAPiO Management Advisory (a leading advisory company in Malaysia) has an alternative view that Malaysia should be seriously look into revamping future-ready sectors to stay competitive:

    • Diversify and modernise the Healthcare Sector by investing in the R&D Sector and establishing partnerships with key foreign stakeholders.  
    • Enhance the quality of Malaysia’s Education system.  Partnering with foreign higher education institutions to promote students’ international perspective.
    • Diversifying and modernise the sectors related to Food, Farming and Agriculture. To diversify from simply planting commodities to a new/existing commodity with wider job opportunities and downstream activities.
    • Diversify the Foreign Direct Investments (FDI) into the country, which is mainly contributed by the Oil and Gas Sector. This can be done by promoting innovative and advanced technologies in all existing or new industries.
    • Encourage foreign investors to establish or relocate subsidiary in/to Malaysia. Malaysia could take advantage of the current disruption in the global supply chain, as several Multinational Corporations are looking to relocate their companies from China.
    • Despite the current economic uncertainties, Malaysia is still firmly preparing to implement the National Fiberisation and Connectivity Plan (NFCP), which aims to improve the country’s digital connectivity by rolling out 5G in Q32020. Minister of Communications and Multimedia mentioned that reliable and affordable high-speed broadband connectivity is the key catalyst for bringing FDI into Malaysia’s digital economy. The NFCP is also expected to positively impact the Global Business Services (GBS) in Malaysia by empowering the employees to work from home.
    • In the COVID-19 aftermath, the Malaysian government is expected to improve the national competitiveness in FDI by introducing more investor-friendly policies and incentives.

    5. Usefull links

    6. Dossier coronavirus

    Het coronavirus heeft een wereldwijde impact, niet alleen op de gezondheid maar ook op de economie. Ook uw export kan hiervan gevolgen of zelfs hinder ondervinden.

    FIT monitort de risico's dagelijks en ons buitenlands netwerk informeert u over alle implicaties voor Vlaamse exporteurs op hun internationale activiteiten.

    In het dossier Coronavirus vindt u een aantal nuttige tips, adviezen en inzichten in de economische impact van de verspreiding van het virus op internationaal ondernemen.

    Met vragen over internationaal ondernemen in tijden van Corona, kan u terecht bij exportadvies-corona@fitagency.be.

    21 december 2021