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RM130bil in GDP lost

FMM In The News: THE STAR, PETALING JAYA, Friday, April 10, 2020 - Manufacturers are appealing to the government to allow them to operate as they could no longer afford to remain closed with the various financial obligations they have to meet.

In anticipation of a possible further extension of the movement control order (MCO), the Federation of Malaysian Manufacturers (FMM) called on the government to allow essential product manufacturers to operate at 100% capacity and non-essential at 50%.

FMM president Tan Sri Soh Thian Lai said this was critical to prevent the industry from collapsing following an almost month-long closure of businesses.

It was estimated that a one-month stoppage in operations could reach to about RM130bil in losses to the gross domestic product.

A recent survey conducted by FMM involving 1,120 respondents from the sector revealed that 71% of them could only withstand up to four weeks of non-operation.

Some 350 of them estimated losses between RM1mil and RM5mil while at least half of the respondents estimated at least RM500,000 in losses. There are around 60,000 manufacturers in Malaysia.

Soh said while the operations of essential goods were allowed for manufacturers with approval from the International Trade and Industry Ministry (Miti), the extended and tightened MCO from April 1 has seen workers being denied permission to head to their workplaces including several cases of arrests.

He added that export and import activities were also curtailed with the insistence of Miti approvals although the Transport Ministry had said on March 26 that all export activities were to continue with proof of contract or export commitment, as it was vital to ensure that supply chains were not severed.

“Likewise, imports and clearance of cargo from the ports had only two windows of opportunity, which were from March 27 to March 29 and from April 4 to April 7.

“This has resulted in disruption to incoming raw materials and goods to manufacturers.

“FMM is also aware of cases where some manufacturing entities that are part of the supply chain of the essential products were not granted the approval to operate, in view that they do not fall under the category of essential product manufacturers, ” Soh said in a statement. He stressed that this too had hampered the operations of manufacturers that were granted approval to operate.

He added that the business community has been very supportive of the MCO and would continue to support it but there were needs for some relaxation to allow factories to resume operations.

Among FMM’s pleas were to extend the approval to include an en-bloc approval of the entire supply chain in the critical essential product cluster.

It also called on the government to establish proper guidelines and standard operating procedures to manage the implementation of the en-bloc approval for smooth supplies, distribution, warehousing and logistics with no interruptions to production and logistics supply chain.

“It is strongly proposed that essential product manufacturers and their supply chain be allowed to operate at their maximum capacity, as the current 50% employment restriction would hinder production capability to meet the people’s needs.

“To further facilitate immediate recovery of production, it is suggested that coronavirus (Covid-19) testing be carried out on all employees permitted to return to work as an added precautionary measure, ” he said.

Soh also suggested that the government fully subsidise the testing costs for micro and small businesses.

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