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FMM asks govt to extend loan moratorium

FMM In the News: THE STAR, PETALING JAYA, Monday, July 20, 2020 - The Federation of Malaysian Manufacturers (FMM) has urged the government to consider extending the loan moratorium period for another six months to March 2021 in light of the softening economy following the coronavirus (Covid-19) pandemic.

The six-month moratorium, announced by Prime Minister Tan Sri Muhyiddin Yassin in late March, ends on Sept 30.

During the loan moratorium period, a borrower is not obligated to make a payment during a loan term.

FMM said the extended moratorium could provide financial relief to those who are currently economically disadvantaged, especially companies that are struggling to sustain their businesses and workers who had been retrenched and had lost their source of income.

In addition, the extension would reduce the cost of business survival.

“To ensure that the economy can quickly recover, the extended moratorium would allow small and medium enterprises including entrepreneurs to tap and benefit from the various initiatives that have been introduced under the Penjana Short-Term Economic Recovery Plan to assist with business recovery without further burdening businesses with the cost of servicing their loans and financing and indirectly reduce their cost of business survival, ” FMM said.

The federation pointed out that the Covid-19 pandemic and the movement control order (MCO) had caused businesses to see a big drop in their revenue, suffered financial losses and faced severe trade challenges which had impacted business sustainability, employment and productivity.

It added that while the essential sectors were allowed to operate in stages during the MCO period, these companies were impacted by disruptions to their supply chains and ability to meet their trade obligations, especially export orders, given that they were only operating at half capacity.

Meanwhile, any businesses, especially those in the non-essential products and services, only commenced operations after the recovery MCO on June 10.

“Manufacturing companies supporting the construction and hospitality industries were further impacted, as these sectors have only just started to resume operations given the additional conditions and precautionary measures and standard operating procedures to be implemented before the business could resume, ” FMM said.

“These sectors and the supporting businesses would be most impacted and would need a longer period to tide over the Covid-19 disruptions and impact on their businesses, ” it said.

There are also companies that significantly impacted both domestic and export trade, ranging from complete cessation to a significant reduction in business activity.

“This has resulted in severe challenges on capital and cash flow for these companies and employment for workers, ” FMM said.

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