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Advisory Ideas & Insights Newsletter

Smart Automation Grant (SAG)

SAG

Smart Automation Grant (SAG)

Key Takeaway

  • The qualified company will be eligible for Smart Automation Grant given on matching basis (1:1) up to RM1 Million per company.
The Smart Automation Grant was introduced in the National Economic Recovery Plan or Pelan Jana Semula Ekonomi Negara (PENJANA) in June 2020. The main objectives of the Smart Automation Grant is to assist Small and Medium Enterprises (SMEs) and Mid-Tier Companies (MTCs) to automise and digitalise operations, production and trade channels.

SAG will be given on a matching basis (1:1) based on eligible expenditures, up to a maximum grant of Ringgit Malaysia One Million (RM1,000,000) per company.

Who Is Eligible For Smart Automation Grant

1. Incorporated under the Companies Act 1965/2016;
2. Effective equity of the company must be at least 51% owned by Malaysians;
3. The company possess a valid Business Licence from the Local Authority;
4. Must be in operation for at least 12 months;
5. Must engage in manufacturing activity in compliance with the Industrial Co- ordination Act, 1975 or service activities which are regulated by specific acts/regulations or governed by relevant ministries/agencies;
6. Eligible for Small and Medium Enterprises (SMEs) and Mid-tier Companies (MTCs). Definition of SMEs and MTCs as below:

Manufacturing

Services
SME
  • Sales turnover not exceeding RM50 million; or
  • Employees not exceeding 200
  • Sales turnover not exceeding RM20 million; or
  • Employees not exceeding 75

MTC

  • Sales turnover from RM50 million to RM500 million
  • Sales turnover from RM20 million to RM500 million.
7. Must meet at least one of the Committed Deliverables as below:-
  • Reduction of Unskilled Workers
  • Reduction in Man Hours
  • Increase in Production Volume
  • Quality Improvement – Reduction in Defect Rate
  • Increase in Services Delivery
  • Reduction of Man Hours in Delivering Services
8. Eligible expenditures are the automation machine, equipment or software that are used directly in the overall value chain of manufacturing and services activities

What Is The Project Duration Under This Matching Grant?

  1. Project must be completed within 12 months from the date of the Approval Letter issued by Authority;
  2. Any unutilised grant amount after 12 months will be withdrawn by Authority;
  3. Any request for extension is required to be made at least 2 months before the project end date and is subjected to the approval of the Authority Committee.

Effective Date Of Application

Application must be submitted to MIDA between 4th December 2020 to 31 December 2021.

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Amendment to the Malaysian Anti- Corruption Commission Act – the New Corporate Liability Offence For Corruption

Amendment to the MACCA

Amendment to the Malaysian Anti- Corruption Commission Act - the New Corporate Liability Offence For Corruption

Key Takeaway

  • Pooling of resources and cost savings as compare to an entity itself alone to engage consultancy to implement the procedures
  • Encouraging positive behaviour and assuring best practice and internal control throughout the organization
  • Promote strong brand reputation
  • More resilient to risk of fraud, corruption and contingency loss
In 2019, the Malaysian Anti-Corruption Commission has amended the Malaysian Anti-Corruption Commission Act (“MACC Act”). Under the Act, Section 17 A introduces the implementation of the corporate liability provision involving commercial organisations and came into force on 1st June 2020. A commercial organisation includes a company, limited liability partnership or partnership which is formed under Malaysian law, or a company or partnership which carries on a business or a part of a business in Malaysia.

The provision under Section 17A MACC Act 2009 stipulates a corporate liability principle where a commercial organisation can be considered guilty if any of its employees and/or associates commit corruption for the benefit of the organisation. The commercial organisation is also considered guilty regardless whether the upper management or its representatives are aware about the corruption acts committed by its employees or associates.

If a commercial organisation is found guilty under Section 17A, the penalty under Section 17A (2) is:
  1. a fine of not less than 10 times the value of the bribe or RM 1 million, whichever is higher, or
  2. imprisonment for up to 20 years, or
  3. both
However, a commercial organisation can defend itself if it can demonstrate that the organisation implemented ‘Adequate Procedure’ in its operation. The commercial organization has to prove its establishment of appropriate internal management procedures to prevent its related personnel from being involved in corruption and bribery acts.

In order to assist the commercial organization to have further understanding of the mentioned Adequate Procedure, the Prime Minister’s Department has issued Guidelines on Adequate Procedures pursuant to Section 17A.

In essence, the Guidelines on Adequate Procedures outline five guiding principles, represented by the acronym ‘T.R.U.S.T’.
  1. Top Level Commitment.
  2. Risk Assessment.
  3. Undertake Control Measures.
  4. Systematic Review, Monitoring and Enforcement.
  5. Training and Communication.
Due to this amendment, the potential for commercial organisations and its directors, partners or managers to be prosecuted for bribery committed by their employees, agents and other associated parties will increase drastically. It is therefore crucial for commercial organisations to implement the relevant procedures to prevent bribery from being committed.

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Movement Control Order – Supplementary Stimulus Package For SMEs

MCO-Supplementary

Supplementary Stimulus Package For SMEs

Key Takeaway

  • Wage subsidy programme expanded
  • Grants for eligible micro enterprises
  • Additional tax deduction for rental reduction to SMEs
  • Reduction of foreign workers levy by 25%
  • Automatic 30-day moratorium for companies to lodge the statutory documents to SSM


On 6 April 2020, our Prime Minister has announced a supplementary stimulus package valued at RM10 billion which is specially targeted to support small and medium enterprises (SMEs). SMEs are a key driver of the country’s economy which contribute to more than two thirds of total employment in the country and almost 40 percent to the economy.

The additional measures highlighted in the supplementary stimulus package are:

(a) Wage subsidy programme expanded from RM5.9 billion to RM13.8 billion. All companies with local employees earning a monthly salary each of RM4,000 and below will receive wage subsidies as follows:
Company Size
Companies with up to 75 employees
Companies with 76-200 employees
Companies with more than 200 employees
Financial Assistance
RM1,200 subsidy per month for each eligible employee
RM800 subsidy per month for each eligible employee
RM600 subsidy per month for each eligible employee
Limitations on the Number of Employees
75 employees
200 employees
200 employees

Other conditions to qualify for the wage subsidy programme:

  • Assistance is for a 3-month period.
  • Employer must be registered with the Companies Commission of Malaysia (SSM) or local authorities before 1 January 2020 and are registered with the Social Security Organisation (SOCSO)
  • Companies must be in operation prior to 1 January 2020
  • The companies must retain the employees for 6 months i.e. during the 3 months when the subsidy is in effect followed by the next 3 months.


(b) A Special PRIHATIN Grant amounting to RM2.1 billion will be established for eligible micro enterprises, where a grant of RM3,000 will be provided to each company. The micro SMEs will have to register with the Inland Revenue Board of Malaysia to enjoy this assistance. The local authorities and SSM will provide the list of eligible micro enterprises to Government.

(c) Abolishing the 2% interest rate to 0% under the Micro Credit Scheme amounting to RM500 million under Bank Simpanan Nasional (BSN). The soft loan scheme for micro enterprises is also extended to TEKUN Nasional with a maximum loan limit of RM10,000 at 0% for each enterprise. A total of RM200 million fund will be allocated for this purpose. Applicants are given an option to choose either scheme to ensure more beneficiaries of this facility.

(d) Owners of private business premises which provide rental reduction or waiver to tenants that consist of SMEs are given an additional tax deduction which is equivalent to the amount of rental reduction for the months of April until June 2020. To qualify for the this additional tax deduction, the rental reduction must be at least 30% of the original rental rate for that particular period.

(e) Reduction of foreign workers levy by 25% to all companies with work permits which will expire from 1 April 2020 to 31 December 2020. This reduction however, does not apply to domestic workers.

(f) An automatic 30-day moratorium from the last day of Movement Control Order (MCO) for companies to lodge the statutory documents to SSM. A 3-month extension will also be granted for the lodgement of financial statements for companies with financial year ended 30 September 2019 to 31 December 2019. Companies are required to apply to SSM for this extension and no fees will be imposed by SSM.

Our Comments

We expect more clarification on the administrative and qualifying aspects of the various measures highlighted above, in the weeks to come.

According to SME Corporation Malaysia, the definition of ‘micro’, ‘small’ and ‘medium’ enterprises is as follows:
CATEGORY
MICRO
SMALL
MEDIUM
Manufacturing

Sales turnover of less than RM300,000

OR

employees of less than 5

Sales turnover from RM300,000 to less than RM15 million

OR

employees from 5 to less than 75
Sales turnover from RM15 mil to not exceeding RM50 million

OR

employees from 75 to not exceeding 200
Services and Other Sectors
Sales turnover of less than RM300,000

OR

employees of less than 5
Sales turnover from RM300,000 to less than RM3 million

OR

employees from 5 to less than 30
Sales turnover from RM3 million to not exceeding RM20 million

OR

employees from 30 to not exceeding 75
The following businesses are excluded from the definition of SMEs:

  • Public-listed companies in the main board such as Bursa Malaysia or main bourses in other countries.
  • Subsidiaries of the following entities:
  • Public-listed companies in the main board; and
  • Large firms, multinational corporations (MNCs), Government-linked companies (GLCs), Syarikat Menteri Kewangan Diperbadankan (MKDs) and State-owned enterprises.

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FAQ on Wage Subsidy Programme

FAQ on Wage Subsidy Programme

FAQ on Wage Subsidy Programme

Key Takeaway

  • Documents required to apply for the Wage Subsidy Programme
  • Table of the enhanced Wage Subsidy Programme
  • Who is not eligible to apply

This Alert presents the Frequently Asked Questions (FAQ) about the enhanced Wage Subsidy Programme (WSP) which was announced on 6 April 2020 and replaces the previous programme announced on 27 March 2020.

Documents required to apply for the WSP

  1. Employee name list (according to enterprise size qualification and restrictions)
  2. Employer bank account information (the first page of bank statement)
  3. Details of the employer’s panel bank registration (pengenalan pendaftaran bank panel majikan)
  4. Copy of the employers’ Companies Commission of Malaysia (SSM)/ROS/ROB registration or business licence
  5. Other supporting documents such as financial statements or sales reports which have been certified by the management (required for employers having 76 employees and above)

Table of the enhanced WSP (6 April 2020)

Businesses in the tourism industry such as travel agencies, hoteliers and airlines will be given a deferment of their monthly tax instalment payments for six (6) months from 1 April 2020 to 30 September 2020.

 

This will affect instalment payments from 1 April 2020 to 30 September 2020 and the Inland Revenue Board (IRB) clarified in their media release dated 9 March 2020, that an application for the deferment has to be made via a manual form to the Tax Operations Department of the IRB.

a) Company size
Companies with up to 75 employees
Companies with 76-200 employees
Companies with more than 200 employees
b) Financial assistance
RM1,200 subsidy per month for each eligible employee

RM800 subsidy per month for each eligible employee

RM600 subsidy per month for each eligible employee
c) Limitations on the number of employees
75 employees

200 employees

200 employees

d) Period of assistance
3 months
3 months
3 months
e) Qualifying conditions
Rate of decrease in revenue or sales
No conditions specified
Reduction of 50% or more of total sales or revenue compared to January 2020 or the following months

Employer registration

1. Employers and employees must be registered or contributing to SOCSO
2. The employer is registered with the Companies Commission of Malaysia
3. (SSM) or Local Authorities before January 1 2020
4. Employers must have started operations before January 1 2020
Employee’s salary
Employees earning a monthly salary of RM4,000 and below
Other conditions
For employers who choose to receive this assistance, they are required to retain their employees for a period of at least 6 months, i.e. during the 3 months when the subsidy is in effect followed by the next 3 months.
f) Effective Date
1 April 2020
g) How to Apply

Employers must apply online through SOCSO’s official website prihatin.perkeso.gov.my

 starting from April 9 2020.

h) Application Deadline
September 15 2020 or subject to the availability of funds or any decision by the Government.
i) Payment Method
The wage subsidy payment will be credited to the employer’s account within 7-14 days from the date of approval.

Who is NOT eligible to apply for the WSP?

  • Employer or company which registered and started operations on or after January 1, 2020;
  • Employers and employees who have not registered or contributed to Social Security Organisation(SOCSO);
  • Employees who are receiving the Employment Retention Program (ERP) financial aid during the
    same month;
  • Employees with salaries of more than RM4,000 per month;
  • Employees who have been terminated;
  • Employees of the public sector, federal and state statutory bodies, Local Authorities and self- employed (without employers) including freelancers; and
  • Foreign workers and expatriates.

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