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FMM Appeals to Government to Further Relax Conditions for Several Initiatives Introduced in the Prihatin Rakyat Economic Stimulus Package and Consideration of Other Proposals to Assist Businesses

FMM Appeals to Government to Further Relax Conditions for Several Initiatives Introduced in the Prihatin Rakyat Economic Stimulus Package and Consideration of Other Proposals to Assist Businesses

Kuala Lumpur, March 30, 2020 – The Federation of Malaysian Manufacturers (FMM), has appealed to the Government to consider relaxation of some of the measures introduced in the Prihatin Rakyat Economic Stimulus Package and well as some new proposals for urgent consideration which would help ease the immediate cash flow and financial constraints of businesses in particular the SMEs and businesses that have faced disruption to production and trade in an unprecedented manner due to the COVID-19 and the Movement Control Order (MCO).

FMM has requested for the relaxation of conditions for the following measures:

i. RM50 billion Danajamin guarantee scheme: FMM hopes that banks will fully assist affected companies with reasonable interest charges and focus on saving the financially distressed companies from folding with easier complied

ii. Automatic six month moratorium announced by Bank Negara Malaysia on repayment/payment of loans/financing for small and medium-sized enterprises (SMEs) and individuals: FMM appeals for BNM’s further intervention to ensure that there is consistency across all financial institutions in the treatment of interest during the moratorium period. FMM is of the view that banks should not compound interest but rather waive or reduce the interest during the moratorium period to further assist companies affected;

iii. RM5 billion Special Relief Facility for SMEs: The increase in funds would certainly allow more affected SMEs to tap on the Fund given the large number of SME establishments in the country. FMM however hopes that the interest could be further reduced to 2% and lending conditions be lessened including the strict collateral requirement;

iv. RM5.9 billion Wage Subsidy Programme: In view of the prolonged MCO, many businesses are already grounded to a halt. In addition employers are not allowed to cut wages or request employees to utilise annual leave during this period. Except for the essential product manufactures that have been allowed to resume operations but with a 50% reduction in employees, the majority would have to continue paying wages with no work performed during the MCO period. While FMM appreciates the Government’s initiative to introduce the wage subsidy measure to mitigate business cost we are of the view that the following improvement could be made to the scheme:
  • RM5.9 billion should be doubled to RM12 billion as the allocated amount is not sufficient since it is estimated to only cover 3.3 million workers;
  • The RM600 wage subsidy introduced should have been extended to all employees regardless of wage level; and
  • The subsidy should be automatic without the need for companies to prove reduction in earnings by 50% as all companies would be experiencing a significant reduction on revenue and sales as the result of the COVID-19 and the current MCO. In fact, FMM had proposed for a 30% wage subsidy by the Government on a tripartite shared basis with employers and employees;
v. Deferment of employer’s contribution to Employees Provident Fund (EPF): FMM proposes that there should be a complete exemption or a reduction in the employer contribution to the Employees Provident Fund until end of December 2020 instead of the current announced deferment / restructuring / rescheduling option of payment. The current initiative of deferment would still tie employers down financially as they focus on their respective business revival plans to ensure business viability and continuity and keeping jobs in the next 6 months to a year;

vi. Electricity Discounts of between 15% - 50%: The increase in electricity discounts appear to only benefit domestic and low voltage users while the major industrial and large users including the medium and high voltage customers would not benefit much from the discount. It is this group that is most impacted by the interruptions to operations. Energy cost is a major cost factor to the industry. With the disruptions to operations and the anticipated further slowdown in business in the coming months, FMM appeals to the Government for all industrial power users irrespective of the kilowatt usage a month get at least a 15% discount in electricity for the next six months. In addition, to remove maximum demand charge for medium and high voltage industrial customers for cement, iron & steel, petroleum and chemicals processing industries. Also, reduce natural gas tariffs by 35% until end of 2020 and remove the “Take or Pay” penalty clause imposed on customers given the current impact on business as well as the overall drop in oil prices. This would help lower business costs and sustain operations;

FMM’s new proposals for the urgent consideration of the Government:

vii. Special Soft Loan scheme: FMM proposes that the Government introduce a Special Soft Loan scheme of RM5 billion with a low 2% interest rate for companies to cover the fixed capital payments such as rents and utilities as well as administrative payments including salaries during this period;

viii. Waive Income Tax: Waive YA2020 income tax for all corporations irrespective of size and also personal income tax be fixed at 10% on the maximum scale and suspend the monthly tax deduction (MTD) deduction for a period of 6 months; and

ix. Force Majeure Certificate: Government strongly urged to introduce the Certificate of Force Majeure similar to the facility instituted by the Chinese authorities to assist exporters that are unable to meet contractual obligations due to delays in resuming manufacturing activities following implementation of the MCO.

FMM urges the Government to respond swiftly to the above requests and proposals to ensure business viability and continuity and for the survival of the economy.

Tan Sri Dato’ Soh Thian Lai
President, Federation of Malaysian Manufacturers

FMM Advocates Transparency, Integrity and No Corruption

About FMM
The Federation of Malaysian Manufacturers (FMM) has been the voice of the Malaysian manufacturing sector since 1968. Representing over 10,000 member companies (3,000 direct and 7,000 indirect) from the manufacturing supply chain, FMM is actively engaged with government and its key agencies at Federal, State and local levels. FMM is also well-linked with international organisations, Malaysian businesses and civil society. Apart from benefiting from FMM’s advocacy, FMM members enjoy value-add services, including training, business networking and trade opportunities as well as regular information updates.

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