Small and medium enterprise (SME) manufacturers believe the RM200 billion stimulus package proposed by the Federation of Malaysian Manufacturers (FMM) is essential considering disruption brought by the nationwide lockdown.
Malaysian Footwear Manufacturers Association (MFMA) president Rachel Foo said the amount is necessary because non-essential factories are told to close, and the companies are figuring out how to pay the workers’ salary, rental and other expenses.
“There is a deafening silence by the government in this regard. It is questionable when the Ministry of Finance said 80% of industry players can afford the loan as most of the SMEs I know have cashflow less than one month.
“The Ministry of Human Resources has issued a statement to encourage staff to report if their employers deduct annual and unpaid leave. All these approaches are pushing the industry players to close down,” she told The Malaysian Reserve (TMR).
FMM has asked the government to pump a RM200 billion stimulus package into the economy, with a RM30 billion direct fiscal injection, over concerns that the extension of third Movement Control Order (MCO 3.0) may have a devastating impact on SME manufacturers.
According to Foo, since the pandemic hit, around 80 footwear factories under MFMA have closed down, with some of them choosing to cease operations temporarily until the situation gets better.
“Many shoe factories do not have order to sustain for this year and quite a number have closed since MCO 1.0. Locking down for a longer period will kill the economy. We know the safest place in the planet now is home, however, this comes with the condition that we have food on table,” she added.
“To lock down about 20 million workforce for four weeks is a huge loss. If footwear factories continue to not be allowed to operate, I think another 20% will close down,” she said.
Similarly, the SME Association of Malaysia national VP Chin Chee Seong said the amount requested by FMM is reasonable and necessary as the MCO extension will likely affect manufacturing productions.
“With uncertainty on how long the lockdown will last, SMEs are most affected with most of them being traders and services providers. With full lockdown extended, the impact will be much stronger.
“Non-essential products manufacturers such as apparel, stationeries, gifts, toys especially will be most affected. They are likely to survive between six to 12 months,” he told TMR.
An industry player at a small aluminium manufacturer, who requested anonymity, said their factory is unable to operate despite 10% of workforce are allowed by the International Trade and Industry Ministry (MITI).
“MITI in the first place should check each company before making decision. We are not big company. We can’t break even. We still need to pay for factory rental of RM50,000 per month.
“When we don’t operate, our chemical ingredient will spoil, and this can’t be simply thrown out, we need to use professional service to dispose of it which can cost us RM100,000 for 60-80 tonnes,” the industry player told TMR.
The source said some of the firm’s customers are exporters, and as the factory is not allowed to operate at least 60% capacity, this will definitely affect the supply chain.
“Our customers call us every day to check on their order. But we can’t operate with only 10% of workforce. We agree with FMM suggestion, but the government has to make sure the assistance reaches SMEs correctly,” said the industry player.
Source: https://themalaysianreserve.com/2021/06/17/smes-say-stimulus-package-essential-for-survival/