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FMM says RM200b govt stimulus package needed to help businesses survive extended lockdown

FMM In The News: THE EDGE MARKETS, KUALA LUMPUR, Saturday, June 12, 2021 - The Federation of Malaysian Manufacturers (FMM) is calling on the government to pump-prime the economy with a RM200 billion stimulus package and a RM30 billion direct fiscal injection, following the extension of the movement control order (MCO) 3.0, which it warned today will have a devastating impact on small and medium enterprise (SME) manufacturers that are just starting to show signs of recovery following the pandemic and previous MCOs.

It also said about 80% of all businesses fall under the non-essential sectors and are not allowed under the extended lockdown period, while the essential sectors are only allowed to operate at 60% capacity, which would cripple the entire manufacturing sector and its contribution to global supply chains.

“With companies in the US and the EU (European Union) starting to operate at full force, it is imperative that Malaysia, as a key manufacturing hub, support these markets as part of their global supply chains.

“It is also feared that the extended full MCO (FMCO) is going to have a profound negative impact on investments, especially foreign direct investment, as well as scaring away foreign investors,” FMM president Tan Sri Soh Thian Lai said in a statement today.

As it is, Soh said those in the essential sectors are facing great challenges to operate because they are not able to sustain their 60% capacity operations as part of their supply chains supplying raw materials and services have been disallowed to operate despite repeated appeals that are supported by their customers from the essential sectors.

There have also been incidents where those with Covid-19 Intelligent Management System (CIMS) 3.0 approval given by the Ministry of International Trade and Industry (MITI) to operate during the lockdown period were "tormented with almost daily checks and raids by multiple enforcement teams", which disrupted production operations.

Soh said the current direct financial assistance announced in the PEMERKASA+ programme — in the form of a one-month extension of the Wage Subsidy Programme 3.0 for local workers, together with a three-month automatic loan moratorium for individuals and SMEs, and the one-month human resources development (HRD) levy exemption — does little to assist most manufacturing companies.

"The assistance will not be able to sustain the industry over the extended lockdown period and the post-lockdown period. In this regard, industries need a big relief fund to shore up the recovery to avoid the country going into the worst recession that will take years to recover," Soh stressed.

As such, he said the multibillion stimulus package is needed, including some of the following forms of assistance, to ensure that businesses can sustain their operations and keep their workers employed:

  • Extend the automatic loan moratorium to all businesses impacted by the lockdown regardless of size until December 2021;
  • Extend the Wage Subsidy Programme for all industries until December 2021 with RM1,000/employee for all statutory-contributing employees, which include both local and foreign employees;
  • Suspend selected statutory payments, such as the HRD levy, and extend the payment date for all statutory contributions until December 2021;
  • Waiver of TNB’s maximum demand charge for May 2021 given that industries have already been on a reduced workforce of 60% from May 25, 2021 and the lockdown period just announced, which could possibly be from June to July 2021;
  • Energy discounts of 60% for industries that are not able to operate at all and 10% for those operating at reduced capacity, and continue with the electricity rebate for the next six months from July to December 2021;
  • Suspension of Gas Malaysia Bhd's take or pay (TOP) in gas off-take agreements for May 2021 given that industries have already been on a reduced capacity of 60% from May 25, 2021 and the lockdown period just announced, which could possibly be from June to July 2021;
  • Expand measures for reducing the impact of the Covid-19 Act 2020 to provide relief for manufacturing and other manufacturing-related services, such as trading or distributorship and logistics, which are currently not included.

Aside from that, the association expressed its full support and cooperation to the roll-out of the Public-Private Partnership Industrial COVID-19 Immunisation Programme (PIKAS) under Phase 4 of the National Covid-19 Immunisation Programme that will start on June 16.

“We hope that the daily vaccination rate under PIKAS could be increased to 300,000/day through vaccine administration centres and mobile vaccination trucks. We also hope for parallel vaccination implementation by private hospitals and clinics.

"The National Pharmaceutical Regulatory Agency (NPRA) should also accept WHO (World Health Organization)-approved vaccines without imposing additional requirements at the national level, so that the private sector can purchase vaccines not used by the National [Covid-19] Immunisation Programme. In addition, the government should also expedite nationwide mass testing as part of the Test, Trace and Treat protocol," Soh added.

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