COVID-19 STIMULUS MEASURESFOR ASEAN SMEs Information as of 15 April 2020

COVID-19 STIMULUS MEASURES FOR ASEAN SMEs

BRUNEI

OVERVIEW

INDIVIDUAL COUNTRY MEASURES

Types of stimulus measures for SMEs BRUNEI CAMBODIA INDONESIA LAOS MALAYSIA MYANMAR PHILIPPINES SINGAPORE THAILAND VIETNAM

Sector-specific

measures only

6 months deferment from April 2020 on Employees Trust Fund (“TAP”) and Supplementary Contributory Pension (“SCP”) for micro, small and medium enterprises (“MSMEs”)1 with employees earning less than $1,500. The government will continue monthly contributions to ensure that the annual dividend payments to employees are not affected. MSMEs need to apply for the deferment and are to repay the contributions within a year after the final month of deferment;

MSMEs can claim 25% in salary subsidies for three months (from 1 Apr 2020) for their Bruneian employees with salaries less than $1,500.

Employment support02

All business, personal and property loan principals to be deferred till March 2021. Interest / profit rate still have to be paid.

Loans01

Taxes

Leases

Financing(e.g. loans)

Employment support

Others(e.g. upgrading)

BACKGROUND

The measures listed in this document are general measures applicable to all businesses in addition to those specifically for SMEs. “SMEs” are defined as per each country’s definition – which may differ from one country to another. Sector-specific measures i.e. for aviation, hospitality, tourism, transportation,

healthcare, manufacturing sectors etc. are not included, with the exception of professional services and/or legal services. Unless otherwise mentioned, all monetary figures are in local currencies.

COVID-19 STIMULUS MEASURES FOR ASEAN SMEs

No general business stimulus measures apart from sector-specific measures targeting the manufacturing, tourism, aviation, agriculture, and property sectors. The government has however, called on landlords to neither terminate lease contracts nor force renters out of their home if renters cannot afford to pay rent on time.

CAMBODIA

INDONESIA

LAOS

Credit restructuring, guarantees, and financing for Micro, Small and Medium Enterprises (“MSMEs/UMKM”) and businesses-at-large;

Rules governing loan restructuring for SMEs will be eased allowing local banks to restructure loans regardless of credit ceiling limits. Additionally, SMEs are eligible for loans of up to 10 billion rupiah if they have a good credit history and have the capacity to pay back the loan.2

Loans & business funding02

Corporate tax rates are slashed to 22% effective immediately until 2021, and a further trim to 20% starting in 2022.

Corporate tax adjustments01

Commercial banks and financial institutions are incentivized3 to defer repayment of loans / interest, reduce interest rates, reduce fees, and extend credit to borrowers affected by COVID-19.

Loans & business funding02

Exemption of corporate income tax for micro enterprise for three months (April 2020 – June 2020)

Corporate tax & import duties exemptions01

Employment support03Delivery of compulsory social security contribution of affected business units to be postponed for three months (April 2020–June 2020).

COVID-19 STIMULUS MEASURES FOR ASEAN SMEs

MALAYSIA

Companies will be allowed to revise their tax estimates earlier (i.e. in the third month of the instalment payment schedule, if the third month falls in year 2020;

Deferment of CP204 payment for 3 months beginning April 2020 until June 2020 for SME status businesses4;

Deferment of CP500 instalment payments for March 2020 and May 2020;

Capital expenditure on machinery and equipment including ICT equipment incurred from 1 March 2020 to 31 December 2020 will be granted an accelerated capital allowance with initial allowance at 20% and annual allowance at 40% i.e. fully claimable in 2 years;

Businesses that incur qualifying expenditure on renovation and refurbishment of its business premises from 1 March 2020 to 31 December 2020 shall be given tax deduction up to RM300,000.5

Corporate tax adjustments01

All banks are required to provide financial relief in the form of payment moratorium comprising restructuring and rescheduling loans for affected businesses and individuals for 6 months;

RM50 billion Danajamin guarantee scheme with up to 80% guarantee for working capital needs with a minimum RM20 million loan size per company;

Special Relief Facility provided by Bank Negara Malaysia (“BNM”) worth RM5 billion, particularly in the form of working capital for SMEs at an interest rate of 3.5%;

Expanded All Economic Sectors (“AES”) facility by BNM (from RM5.8bil to RM6.8bil) to enhance access to financing for SMEs and to support growth (maximum financing rate is also reduced from 8% per annum to 7%);

Syarikat Jaminan Pembiayaan Perniagaan (“SJPP”) will provide RM5 billion worth of guarantees with the guaranteed coverage increasing from 70% to 80% for SMEs that face difficulties in obtaining loans;

Moratorium payments are extended to loans given to SMEs by TEKUN, MARA, cooperatives and other government agencies beginning 1 April 2020;

SMEs with business records of less than four years can obtain funds from the BizMula-i and BizWanita-I schemes for financing up to RM300,000 under the Credit Guarantee Malaysia Berhad (“CGC”).

Loans & business funding603

Landlords who provide rental reduction / waiver to SME tenants are given a further tax deduction which is equivalent to the amount of rental reduction for the months of April until June 2020. This further tax deduction is subject to the condition that the rental reduction is at least 30% of the original rental rate for that particular period.

Property tax rebates & incentives02

COVID-19 STIMULUS MEASURES FOR ASEAN SMEs

Employment support04Tiered wage subsidies for 3 months for all companies with local employees earning a monthly salary each of RM4,000 and below: RM600 per month per worker for companies with >200 workers (claimable up to 200 employees); RM800 per month per worker for companies with 76-200 workers; RM1,200 per month per worker for companies with 75 or less workers7;

Foreign worker levy reduction by 25% to all companies with work permits that will expire in the period of 1 April to 31 December 2020;

Employer Consultation Services Program on 15 April 2020 where employers may opt for deferment of payment, restructuring, or rescheduling of employers’ contribution;

Waiver of Human Resource Development Fund (HRDF) contribution for 6 months for all sectors effective 1 April 2020.

Automation and Digitalisation Facility (“ADF”) of up to RM250,000 (4% interest rate) for SMEs to purchase of equipment, machinery, computer hardware and software, IT solutions and services, technology support services and other intangible assets.

Business upgrading05

MYANMAR

SMEs now have until September to make their quarterly income tax and monthly commercial tax payments;

Businesses will be exempted from paying the 2 percent advance income tax on exports until the end of current fiscal year on Sept. 30.8

Corporate & business tax deferment / exemptions01

Government loans (at 1% interest rate) for one year for locally-owned businesses9 to fund employee salaries and operations.

Loans & financing02

COVID-19 STIMULUS MEASURES FOR ASEAN SMEs

SINGAPORE

Rebate of 25% of tax payable, capped at $15,000, for Year of Assessment (“YA”) 2020;

Additional 2 months of interest-free instalment if company is on GIRO and Estimated Chargeable Income (“ECI”) filed on time;

Automatic 3-month deferment of payments due in the months of April, May, and June 2020 (to be collected in July, August, and September 2020 instead);

Unabsorbed capital allowances (“CA”) and trade losses for YA2020 (together “qualifying deductions”) for YA2020 may be carried back up to 3 immediate preceding YAs, capped at $100,000 of qualifying deductions, and subject to conditions;

Allow acceleration of the write-off of the cost of acquiring plant and machinery (“P&M”) in the basis period for YA2021 (i.e. financial year (FY) 2020) over 2 years (75% 1st year; 25% 2nd year);

Allow acceleration of the deduction of expenses incurred on renovation and refurbishment (“R&R”) during the basis period for YA2021 (i.e. FY2020) for the purposes of company trade, profession or business will have an option to claim R&R deduction in one YA (capped at $300,000 for every relevant period of three consecutive YAs.

Corporate tax rebates & cash-flow support01

30% rebate on property tax for FY2020 for offices and full remission of the rebate to tenants;

Temporary relief of rent payments on / after 1st Feb 2020 if tenant’s inability to do so is materially caused by COVID-19 (and related events e.g. government orders).

Property tax rebates & rent deferments1102

PHILIPPINES

All lenders and credit granting financial institutions under the supervision of the Bangko Sentral ng Pilipinas, Securities and Exchange Commission, and Cooperative Development Authority, including the Government Service Insurance System, Pag-ibig Fund and Social Security System shall implement a mandatory 30-day grace period for all loans to MSMEs with principal and/or interest falling due within the Enhanced Community Quarantine (ECQ) Period without incurring interest on interest, penalties, fees and other charges10;

All lenders and credit granting financial institutions under the supervision of the Bangko Sentral ng Pilipinas, Securities and Exchange Commission, and Cooperative Development Authority, including the Government Service Insurance System, Pag-ibig Fund and Social Security System shall not charge or apply interest on interest, fees and charges during the mandatory grace period to future payments/amortizations of micro, small and medium enterprises (MSMEs).

Financing01

COVID-19 STIMULUS MEASURES FOR ASEAN SMEs

Enhanced Wage Credit Scheme (“WCS”): automatic government co-funding (20% of wage increase in 2019 & 15% in 2020) of employee wage increases (min $50 or more) for employees with gross monthly wages not higher than $5,000 and on employer’s payroll for at least 3 months;

Jobs Support Scheme (“JSS”): automatic government co-funding of the first $4,600 of gross monthly wages paid to each local employee (i.e. citizens and / or PRs) for 9 months (from Oct 2019 – July 2020) at 75% for Apr 2020 and 25% for the other 8 months;

Waiver of monthly Foreign Worker Levy due in Apr 2020;

Foreign Worker Levy Rebate of $750 in Apr 2020 from levies paid this year, for each Work Permit or S Pass holder;

SGUnited Traineeships Programme for employers to tap on Government support i.e. co-funding of training allowance during the traineeship period for fresh graduates.

Employment support04

Enhanced SME12 Working Capital Loan of up to $1 million (available till March 2021) with overall loan exposure limit of S$50 million per borrower group across all areas;

Temporary Bridging Loan Programme (“TBLP”) for eligible enterprises13 of up to $5 million with interest capped at 5% p.a.(available till March 2021);

Enhanced Loan Insurance Scheme (“LIS”) for short-term trade loans with 80% of insurance premiums supported by the Government14;

Enhanced Trade Loan to finance trading needs of up to $10 million (available till March 2021) with overall loan exposure limit of S$50 million per borrower group across all areas.15

Loans03

SG Together Enhancing Enterprise Resilience (STEER) Programme: Government will match $1 for every $2 raised by industry-led initiatives (i.e. by Trade Associations and Chambers (TACs) or industry groupings), up to S$1 million per fund for business sustenance, business growth, and capability upgrading (valid till March 2021);

Enhanced Productivity Solutions Grant (“PSG”) for SMEs: government funding of up to 80% on digitalisation and productivity upgrading efforts including business continuity measures;

Enhanced Enterprise Development Grant (“EDG”): government funding of up to 90% for projects for business upgrading, innovation, or venturing overseas16;

Enhanced SMEs Go Digital Programme: government funding of up to 80% for advanced solutions to deepen their capabilities and cover costs incl hardware and software, infrastructure, connectivity, cybersecurity, integrations, development, enhancement and project management. It can also cover costs of replacing or expanding legacy systems and existing infrastructures;

Enhanced absentee payroll support till end-2020 for employers who send employees for selected training programmes with funding at 90 per cent of hourly basic salary, capped at $10 per hour, up from 80 per cent.

Upgrading & transformation05

COVID-19 STIMULUS MEASURES FOR ASEAN SMEs

Rate for compulsory social security contributions by employers and insured persons will decrease from 5% to 4% for the six month salary cycles from March to August 2020;

Financial support of THB 30 billion at low interest rate to Social Security Funds (“SSF”) companies/employers. SSS registered companies/employers must have contributed to the SSF for at least 3 months and maintains the employment at least 80% of total SSF employees on the day of receiving the loan for the period of 3 years.

Employment support03

Soft loans to SMEs of 2% per annum for 2 years on the first THB 20 million, with the first 6 months being interest-free20;

A loan payment holiday on principal and interest for 6 months for all SMEs with a credit line not exceeding 100 million baht;

Special Financial Institutes (“SFI”)21 will relax the terms and conditions of repayment by extending grace period for repayment on principle, reducing interest rate, extending the repayment period etc;

Bank of Thailand is providing guidelines to support those affected loan-takers. All financial institutions are to proactively support their customers by relaxing the loan classifications and giving more flexibility on loan approval to ensure liquidity and the continuity of everyday business.

Loans & financing02

THAILAND

Withholding tax imposed on payment for services, hire of work, commissions (paid to juristic person only) and liberal professional fees will be reduced from 3% to 1.5% for the payments made from 1 April to 30 September 2020. The withholding tax will subsequently be reduced to 2% from 1 October 2020 to 31 December 2021 if the payment is made via e-Withholding Tax system;

Eligible SMEs can claim a 150% deduction for interest expenses incurred on loans obtained under the Government’s funding initiative to provide THB 150 billion in soft loans to SMEs with an interest rate of 2 percent for the first two years17;

SME employers can deduct 300% of eligible salary costs paid to employees in the period from April to July 2020 for corporate income tax purposes18;

Date for filing corporate income tax extended to 31st August 2020 (for FY19) and 30th September (for H12020);

Filing of excise tax by service businesses extended by one month;

Delaying the filing, submission, and payment of all types of tax incl VAT, Specific Business Tax etc. by 3 month19.

Corporate & business tax reductions & deferments01

COVID-19 STIMULUS MEASURES FOR ASEAN SMEs

VIETNAM

Deferment of VAT for SMEs22 by 5 months from the statutory deadlines for the period March to June 2020 (for monthly VAT declarations) and for the first and second quarters of 2020 (for quarterly VAT declarations). VAT return filing deadlines have not been extended however23;

Deferment of Corporate Income Tax (“CIT”) by 5 months from the statutory deadlines for the 2019 CIT finalization and for the first and second business quarters of 2020 in the case of provisional CIT liabilities24.

Corporate & business tax deferment01

Payment deadlines are extended by 5 months from 31 May 2020 for the first land rental fee payments of 2020 due fromtaxpayers who lease land directly from the Government.

Land rental deferment02

www.zicolaw.comCOVID-19 STIMULUS MEASURES FOR ASEAN SMEs

KEY CONTACTS

CAMBODIABRUNEI

LAOSINDONESIA

MYANMARMALAYSIA

SINGAPOREPHILIPPINES

Mohamad Rozaiman Abdul RahmanManaging Partner ZICO R.A.R (a member of ZICO Law)

rozaiman.ar@zicolaw.com t. +673 713 2929

Dr Sok SiphanaManaging Partner Soksiphana&associates (a member of ZICO Law)

sok.siphana@zicolaw.comt. +855 23 999 878

Leoni SilitongaCo-Executive PartnerRoosdiono & Partners (a member of ZICO Law)

leoni.silitonga@zicolaw.comt. +6221 2978 3888

Geraldine OhResident PartnerZICO Law Myanmar

geraldine.oh@zicolaw.comt. +95 1 538 362

Aristotle DavidManaging PartnerZICO Law Laos

aristotle.david@zicolaw.comt. +856 21 410 033

Gilbert GanManaging Partner Zaid Ibrahim & Co. (a member of ZICO Law)

gilbert.gan@zicolaw.comt. +603 2087 9999

Yap Lian SengManaging DirectorZICO Insights Law LLC

lian.seng.yap@zicolaw.comt. +65 6904 4184

Felix SyManaging PartnerInsights Philippines Legal Advisors (a member of ZICO Law)

felix.sy@insights-law.comt. +63 2 7903 1290

VIETNAMTHAILANDPhuong NguyenManaging PartnerZICO Law Vietnam

phuong.nguyen@zicolaw.comt. +84 4 3826 1515

Nuttaphol ArammuangManaging Partner ZICO Law Thailand

nuttaphol.a@zicolaw.comt. +66 2677 7588

COVID-19 STIMULUS MEASURES FOR ASEAN SMEs

1 MSMEs are defined as businesses with less than 100 employees.2 The government has mentioned that companies seeking to receive

funding must keep at least 90% of their workforce with the same salary amounts.

3 Banks complying with the decision will be exempted from the Decision on Debt Classification and Deduction of Reserved Fund for Debt of Commercial Bank No. 512/BOL dated 29/06/2018, Regulation on Debt Classification and Deduction of Reserved Fund for Debt of Micro Financial Institutes No. 02/BOL dated 04/02/2015 and Decision on Management of Credit and Deposit Saving Cooperative No. 03/BOL dated 20/06/2008.

4 A company resident and incorporated in Malaysia which has a paid-up capital of RM2.5 million ordinary share capital or less and its gross business income does not exceed RM 50 million for that year of assessment. See here for more details on the definition of SMEs.

5 Deduction shall not apply if capital allowance under Schedule 2 or Schedule 3 of the Income Tax Act 1967 has been claimed on the expenditure.

6 Does not include measures for micro enterprises (companies with gross yearly turnover lower than RM300,000 or with 5 or less employees) which include, amongst other schemes, a RM700 million Micro Credit Scheme at 0% interest provided by Bank Simpanan Nasional and the National Entrepreneur Group Economic Fund (TEKUN).

7 Employers who claim this benefit are required to retain their employees at least for a period of 6 months, that is 3 months during the period receiving the subsidies and 3 months thereafter. There is also an additional requirement for companies with more than 76 workers to have had at least a 50% reduction in revenue compared January 2020 or months prior, in order to qualify for the wage subsidy.

8 It isn’t clear if this measure applies to all businesses in general or just for certain sectors / SMEs, neither is it clear if it refers to export of goods and services or just the former.

9 See Note 9. In order to qualify for the loan, the business must have been “actually” harmed by COVID-19 and must have temporarily halted operations for three months from the date of the announcement of the loan programme (29 March 2020), but is able to re-start operations immediately upon receiving the loan.

10 BSP Memorandum No. M-2020017 Implementing Rules and Regulations of Section 4(aa) of the Republic Act no. 11469, otherwise known as the “Bayanihan to Heal as One Act”.

11 Please see COVID-19 (Temporary Measures) Act 2020 for the compulsory rebate remissions and temporary relief of rent payments.

12 Defined as companies with group annual revenue less than S$100M or group employment size not more than 200 employees, and with minimum 30% local shareholdings (i.e. citizen and / or PRs).

13 Registered and physically present in Singapore with minimum 30% local shareholdings (i.e. citizen and / or PRs).

14 Same eligibility as the SME Working Capital Loan.15 Borrowers must have Group revenues of $500 million or less, be

registered and operating in Singapore, and have minimum 30% local shareholdings (i.e. citizen and / or PRs).

16 From 1 April 2020, all EDG applications should include commitments to worker outcomes as part of the qualifying requirements. Worker outcomes include increase in wage increment, job creation, job re-design, or training for existing staff.

17 To be eligible for the increased tax deduction, the SME must meet the following conditions for the latest accounting period ending on or before 30 September 2019: annual revenue must not exceed THB 500 million, number of employees must not exceed 200 persons, and the SME must maintain a single set of accounts only.

18 Eligibility for the tax deduction: annual revenue does not exceed THB 500 million, total number of employees does not exceed 200 persons, salaries eligible for the 300% deduction do not exceed THB 15,000 per month per employee, employees must be insured under the social security fund, and the number of insured employees in the said period should not be lower than the number of insured employees as at 31 December 2019.

19 For Entrepreneurs who have to close their establishments according to government orders such as the Ministry of Interior Local government organization Ministry of Public Health, etc. and other operators that are affected by the spread outbreaks of COVID-19 viral diseases, with justifiable grounds to delay.

20 To be eligible, SMEs must also operate domestically, not be listed in the Stock Exchange of Thailand or the Market for Alternative Investment (MAI), have a credit line with a financial institution not exceeding THB 500 million, and still have a performing loan with normal repayment status or arrears of less than 90 days (non-NPL) as of 31 December 2019.

21 These are institutions whose objectives are to serve the government policies in promoting economic development and supporting investment. E.g. Bank for Agriculture and Agricultural Cooperatives (BAAC), Government Saving Banks (GSB), Government Housing Banks (GHB), and Export-Import Bank of Thailand (EXIM) etc.

22 “SMEs” are defined in accordance with Law No. 04/2017/QH14 and Decree 39/2018/ND-CP dated 11 March 2018 on the Support of Small and Medium Enterprises.

23 Dependent units and branches within the eligible sectors will be entitled to defer their tax payments. Note that VAT filing deadlines are not extended.

24 If CIT payments for the 2019 CIT finalization were already made, these may be used to offset with other tax liabilities. Dependent units and branches may apply similar rules to defer VAT payments.

FOOTNOTES

www.zicolaw.com BRUNEI | CAMBODIA | INDONESIA | LAOS | MALAYSIA MYANMAR | PHILIPPINES | SINGAPORE | THAILAND | VIETNAM

ASEAN INSIDERS,by origin and passion

All rights reserved. No part of this document may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without our

prior written permission.

The information in this publication is current as at 15 April 2020, unless stated otherwise. The information in this publication is for general information only and is not a substitute for legal advice. For further information regarding the stimulus packages available in your country, please contact the managing country partners

above or your relationship ZICO Law partner.