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FMM: Measures in Covid-19 Bill ‘falls short’ of requests by manufacturers

FMM In The News:  THE EDGE MARKETS, KUALA LUMPUR, Tuesday, August 25, 2020 - The Federation of Malaysian Manufacturers (FMM) lauded the passing of the Temporary Measures for Government Financing (Coronavirus Disease 2019 (Covid-19)) Bill 2020, but said it fell short of meeting the requests put in by the manufacturers.

FMM president Tan Sri Soh Thian Lai said the federation had requested a wider scope of reliefs under the Act when submitting its feedback on the Bill on May 31, but the resulting Bill was not holistic.

“Given the contraction in manufacturing activities due to the harsh impact of Covid-19 pandemic on business sustainability, employment and productivity, we had proposed for the Act to provide provision for relief for manufacturing and its related supplies as well as expanded to cover other services such as trading or distributorship and logistics related services such as warehousing, transportation and shipping,” said Soh in a statement today.

However, the Bill, as it stands now, only applies to seven categories of contracts carried out from March 18, 2020, until year end, and does not cover other manufacturing-related sectors, he said.

He also pointed out that there is no provision in the legislation for a valid issuance and lodgment of notification for relief to be served due to delay or breach attributable to the pandemic and therefore it is unclear how businesses can initiate proceedings to claim temporary relief under the legislation.

“There are no clear provisions in this law to address the inevitable disagreements that will arise between the contracting parties.

"Although the Bill has a mediation provision, mediation however is not compulsory and if mediation fails, there is no further recourse for the two parties,” said Soh.

Meanwhile, he said Singapore’s Ministry of Law had established a panel of specialised assessors comprising industry experts to determine whether non-performance is due to Covid-19 and grants the necessary relief appropriate in the relevant circumstances, said Soh.

He further said this legislative safety net requires effective implementation and enforcement mechanisms, which will save jobs and give a much needed boost to SMEs that need support to survive this challenging period.

Yesterday, the temporary Bill was passed by at the policy level, after it was debated in Parliament.
It was tabled by Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz and was approved by a majority vote after the third reading.

The Bill allows the government to raise its debt ceiling to 60% of gross domestic product, enabling it to fund economic stimulus packages and recovery plans to mitigate the impact of the Covid-19 pandemic on the economy.

In addition, it will also backdate and validate all related sums paid by the government from Feb 27, when the first stimulus package totalling RM20 billion was announced by then-interim prime minister Tun Dr Mahathir Mohamad.

So far, the government has rolled out stimulus packages worth RM295 billion, including a fiscal injection of RM45 billion which has raised Malaysia’s borrowings to 56%, said Zafrul.

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