KUCHING: The Federation of Malaysian Manufacturers (FMM) is appealing to the government to consider relaxing some of the measures introduced in the Prihatin Rakyat Economic Stimulus Package (Prihatin).
Its president Tan Sri Dato Soh Thian Lai said in addition, FMM also had several new proposals which could help ease the immediate cash flow and financial constraints of businesses, particularly small and medium enterprises (SMEs) that are facing disruption in production and trade in an unprecedented manner due to the Covid-19 pandemic and the movement control order (MCO).
“On the RM50 billion Danajamin guarantee scheme, FMM hopes that banks will fully assist affected companies with reasonable interest charges and focus on saving financially distressed companies from folding with easier complied conditions since the government already provides guarantee and with low interest,” he said in a press statement yesterday.
Soh said the federation hopes Bank Negara Malaysia (BNM) will further intervene to ensure that there is consistency across all financial institutions in the treatment of interest during the automatic six-month moratorium period announced recently.
FMM is of the opinion that banks should not compound interest but rather waive or reduce the interest during the moratorium period to further assist companies affected, he added.
He said FMM hoped that the interest on the RM5 billion special relief facility for SMEs could be further reduced to two per cent, and lending conditions including the strict collateral requirement be lessened.
In view of the prolonged MCO, he said many businesses were already grounded to a halt while employers were not allowed to cut wages or request employees to utilise annual leave.
“Except for the essential product manufactures that have been allowed to resume operations but with a 50 per cent reduction in employees, the majority would have to continue paying wages with no work performed during the MCO period.
“While FMM appreciates the government’s initiative to introduce the RM5.9 billion Wage Subsidy Programme to mitigate business cost, we are of the view that the RM5.9 billion should be doubled to RM12 billion as the allocated amount is not sufficient since it is estimated to only cover 3.3 million workers.”
Soh added that the RM600 wage subsidy should have been extended to all employees regardless of wage level, and that it should be automatic without the need for companies to prove reduction in earnings by 50 per cent as all companies would be experiencing a significant reduction in revenue and sales as the result of the pandemic and MCO.
According to him, FMM has proposed for a 30 per cent wage subsidy by the government on a tripartite shared basis with employers and employees.
He said the federation also proposed a complete exemption or reduction in the employers’ contribution to the Employees Provident Fund (EPF) until the end of December instead of the current announced deferment, restructuring or rescheduling option of payment.
The current initiative of deferment would still tie employers down financially as they focus on their respective business revival plans to ensure business viability and continuity and keeping jobs in the next six months to a year, he reasoned.
He also said the increase in electricity discounts appeared to only benefit domestic and low voltage users while the major industrial and large users including the medium and high voltage customers would not benefit much from the discount.
“It is this group that is most impacted by the interruptions to operations. Energy cost is a major cost factor to the industry.
“With the disruptions to operations and the anticipated further slowdown in business in the coming months, FMM appeals to the government for all industrial power users, irrespective of the kilowatt usage a month, get at least a 15 per cent discount in electricity for the next six months.”
Soh said the government should also remove maximum demand charge for medium and high voltage industrial customers for cement, iron and steel, petroleum and chemicals processing industries.
“Also, reduce natural gas tariffs by 35 per cent until end of 2020 and remove the ‘Take or Pay’ penalty clause imposed on customers, given the current impact on business as well as the overall drop in oil prices,” he added.
He said FMM proposed that the government introduce a special soft loan scheme of RM5 billion with a low two per cent interest rate for companies to cover the fixed capital payments such as rents and utilities as well as administrative payments including salaries, during this period.
“The government should waive income tax for the 2020 fiscal year for all corporations irrespective of size and also fix personal income tax at 10 per cent on the maximum scale and suspend the monthly tax deduction (MTD) for a period of six months,” he said.
He added FMM is hoping for the government to introduce the ‘Certificate of Force Majeure’ – similar to the facility instituted by the Chinese authorities – to assist exporters that are unable to meet contractual obligations due to delays in resuming manufacturing activities following the implementation of the MCO.
“FMM urges the government to respond swiftly to the above requests and proposals to ensure business viability and continuity and for the survival of the economy,” said Soh.
Source : https://www.theborneopost.com/2020/03/31/fmm-asks-for-relaxation-of-some-prihatin-measures/