In this unprecedented challenging situation, various governments all over the world have come up with stimulus packages to sustain economies and to take care of people’s welfare. Malaysia’s stimulus package is valued at around MYR 260 billion (as on 7th April 2020), accounting for more than 17% of national GDP, the highest in Southeast Asia. The fiscal injection constitutes slightly above 10% of the said stimulus value.
Figure 1: Malaysia’s Stimulus Package
Source: Malaysia Prime Minister’s Office
Potential impact on real estate
The stimulus package includes a six-month loan repayment moratorium, effective 1st April, on all loans/financing with an exception to credit card payments. This inclusion has the most direct effect on the real estate industry as it can significantly help mortgage payments.
Several aspects of the stimulus package are also expected to have an indirect impact on real estate. The relief targets to maintain business continuity and sustainability and is to be channelled to small and medium enterprises (SME) and others in the corporate sector, be it micro-entrepreneurs or large corporations. The support will come in the form of grants, tax relief, reduction on levy for foreign workers, and wage subsidies, amongst others.
A particular section in the stimulus package, dubbed as the Employment Retention Programme, aims to help companies and employers to sustain employment in the country, which in turn help maintaining occupancy rates across the commercial and industrial sectors. This and various categories of financial support for households and individuals can also help to stem rising unemployment and sustain demand in the retail, residential and potentially, the hospitality sectors.
Other support measures may also be considered in the future to bolster the stimulus package:
- Property tax relief: Beneficial for all sectors but will be welcomed particularly by retail landlords and hotel owners
- Rent relief: Tenants could also benefit from rental support measures should the current situation worsen
Facing the future in unity
Commercial banks have agreed to offer the moratorium without having interest compounded. Various government-linked companies, such as Majlis Amanah Rakyat, Petronas, and Permodalan Nasional Berhad, are also offering reliefs, in the form of fund contributions, rental or payment exemptions, discounts, rebates, moratorium, and negotiable payment restructuring. Landlords across all sectors are working together with their tenants to provide rent reliefs and possible cash-voucher purchases (in the case of retail). Numerous corporations and capable individuals have raised and donated funds towards the healthcare system, mainly through the Prime Minister’s Office, as well as various small initiatives of everyday Malaysian citizens.
The federal government has been proactive in stimulating economic growth, as evident by the third announcement of the stimulus package, which targeted to help SMEs. State governments are also announcing their stimulus packages on top of those from the federal government. With various institutions and corporations cooperate to strengthening the relief effort, we are confident that market recovery is on the horizon.
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