The Economic Recovery Plan, or more commonly known as PENJANA, announced by the Malaysian Government contain a number of initiatives aimed to stimulate the Malaysian economy and propel the local businesses.

We highlight below some of the initiatives and practical insights that may be useful to the small and medium-sized enterprises (SME) business owners and aspiring entrepreneurs:

  1. Digitalisation of businesses
  • Matching grants for businesses who provide EPF and PERKESO protection for its gig economy workers
  • To encourage adoption of e-commerce by micro enterprises and SMEs, the Government will work together with the private sector to provide training sessions, seller support and sales subsidy to the participating enterprises. This initiative will be run by MDEC with the selected e-commerce platform

INSIGHTS: For SME owners who run the traditional brick-and-mortar businesses, this will present a good opportunity for you to move your businesses online, especially onto well-established e-commerce platforms, rather than creating one’s own e-commerce website which typically require significant resources to start, maintain and drive internet traffic to.


  1. Financing options
  • PENJANA SME financing loan to assist SMEs who need cash flow support to sustain business operations. This financing facility will be made available in mid-June 2020, with a maximum loan size of RM 500,000 per SME.
  • PENJANA Microfinancing – allocation of up to RM 400 million under this micro-financing scheme, with RM 50 million allocated for female entrepreneurs. The aggregated approved financing will be capped at RM 50,000 per enterprise.
  • Bumiputera relief financing – dedicated financial assistance of RM 200 million through PUNB and RM 300 million through MARA for Bumiputera businesses.
  • Dana PENJANA Nasional – An investment fund will be established, which will match private capital investment with selected venture capital and early stage tech fund managers. It is noteworthy that Government has announced that the international investors who are interested to participate include renowned venture capitalists like 500 Startups, SK Group, Hanwha Asset Management, KB Investment Co Ltd, Provident Growth and The Hive.

INSIGHT: The investment fund to be established by the government will benefit the local start-ups and private sector Venture Capital funds. It will be interesting to see how exactly the matching will be done between the various funds and start-ups. With the large quantum of RM 1.2 billion involved (RM 600 million from domestic source), it is hoped that this will stimulate the growth of the local start-up scene. Perhaps a portion of this will be allocated to the government co-investment fund MyCIF, administered by the SC, which has increased its funding matching ratio from 1:4 to 1:2 for eligible Equity Crowd Funding and P2P campaigns, making it a more attractive avenue to raise funds especially for B2C type businesses.


  1. Restrategising – New businesses and Mergers of SMEs
  • New SMEs which are established between 1 July 2020 to 31 December 2021 may enjoy income tax rebates of up to RM 20,000 per year for 3 years of assessment
  • Stamp duty exemption for SMEs on any instruments executed for Mergers and Acquisitions, for period between 1 July 2020 to 30 June 2021

INSIGHTS: Businesses may need to restructure their businesses to mitigate the economic impact brought by the Covid-19 pandemic and companies can take this opportunity to explore whether there is such need for restructuring. This also presents good opportunity for companies looking to expand their capabilities horizontally or vertically to explore either acquisitions via by shares or business assets. It is also hoped that the income tax rebate will help to catalyse establishment of new businesses and in turn provide more job opportunities in the market.


  1. General
  • COVID-19 Temporary Measures Act will be tabled to minimise impact of contractual breaches and insolvency action due to Covid-19 related disruption.

INSIGHTS: This is another much welcomed move by the government after modification of the existing winding-up laws implemented earlier this year. We hope that the proposed law will provide more rescue features to help the companies in distress to navigate the impact brought by the COVID-19 pandemic.


This article was written by Shawn Ho and Ee Lyne Chong.  Shawn leads the corporate practice group of Donovan & Ho, and has been recognised as a Notable Practitioner, whilst the firm has been recognised as a Notable Firm for Corporate and M&A by Asialaw Profiles 2020.  We are also ranked as a Recommended Firm by IFLR1000 2020.

Our corporate practice group advises on corporate acquisitions, restructuring exercises, joint venture arrangements, shareholder agreements, employee share options and franchise businesses, Malaysia start-up founders and can assist with venture capital funds in Seed, Series A & B funding rounds.  Feel free to contact us if you have any queries.


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