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FMM: RM10 bln additional allocation for SMEs welcome

FMM In The News: BORNEO POST, KUALA LUMPUR, Monday, April 6, 2020 - The Federation of Malaysian Manufacturers (FMM) expressed its gratitude towards Prime Minister Tan Sri Muhyiddin Yassin for allocating an additional RM10 billion to assist small and medium enterprises (SMEs).

Its president Tan Sri Dato Soh Thian Lai commended the RM7.9 billion allocation towards the wage subsidy programme, which now amounted to RM13.8 billion in total.

“This increase in allocation will help more SMEs and benefit 4.8 million workers. The additional wage subsidy would most definitely help to alleviate the wage cost burden for the SMEs employers for the next three months,” said Soh.

He said the amount announced by Muhyiddin exceeded the RM12 billion that FMM had proposed in their appeal to the government following the announcement of the Prihatin Rakyat Economic Stimulus Package.

“We also note that the limit on numbers eligible for the wage subsidy has been increased for the large companies from 100 previously to now 200 per company.”

However, Soh hoped the condition of a 50 per cent reduction in revenue to qualify for the wage subsidy would be removed, as well as the ceiling of RM4,000.

“We continue to appeal to the government to remove this condition in view that many companies given the Movement Control Order (MCO) have yet to finalise their financial accounts for March 2020.”

In addition, he said the condition for employers to retain their workers for the next six months would be a challenge in view that there is currently a lot of uncertainty of the continued viability of businesses in this unprecedented situation.

“We, however, welcome the consideration accorded by the government to agree for negotiations between employers and employees on the terms of employment during this MCO, including cost cutting measures such as pay cuts and unpaid leave.”

FMM also lauded the government on the introduction of measures targeted primarily on micro enterprises, such as the Prihatin Special Grant amounting to RM2.1 billion, which will benefit 700,000 firms to be registered with the Inland Revenue Board (IRB).

The abolishment of two per cent interest rate under the Micro Credit Scheme under the Bank Simpanan Nasional and extending the interest free facility to Tekun Nasional is very much welcome, he adds.

He also praised the waiver or discount by government linked companies (GLC) on rental of premises to SMEs from April to June 2020, in addition to encouraging private landlords to follow suit and be eligible for additional tax deduction, provided that the reduction in rental is at least 30 per cent.

“In alleviating the cost burden on employers, especially those that employ foreign workers, the announcement of the 25 per cent reduction in foreign worker levy from April 2020 to December 2020 is welcomed.”

However, given the impact of the levy expenses on overall employment cost, Soh hoped that there could be a total suspension of levy payment for a period of one year starting from April 2020.

He pointed out the government’s initiative to allow an automatic moratorium of 30 days from the last date of the MCO for submission of financial statement to Companies Commission of Malaysia (SSM) will assist to alleviate the administrative burden for all businesses.

On his recommendations, he seek the government attentions on the waiver of interest for moratorium period of six months and moratorium to be also extended to trade facilities, overdraft and leasing.

Soh also requested to further reduce interest rates for the RM5 billion special relief facility for SMEs from 3.5 per cent to two per cent.

“Lessen lending conditions including collateral requirement. Reduce the bureaucratic red tape involved in accessing the facility including the supporting documents required and conditions attached,” he adds.

Lastly, Soh asked the government to review the stimulus package from time to time to also assist large corporations as SMEs are dependent on them as part of the overall business ecosystem.

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