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FMM PRESS STATEMENT: FMM Thanks the Government for the Targeted Extension of the Loan Moratorium for Individuals and Restructuring of Loan Repayments for SMEs

Kuala Lumpur, July 29, 2020 – The Federation of Malaysian Manufacturers (FMM) thanks the Government on the latest announcement on the targeted extension of the loan moratorium and restructuring of loan repayments for the most economically disadvantaged i.e. individuals who have lost their source of income and those who have had to take pay cuts as well as the small and medium enterprises (SMEs) including entrepreneurs whose businesses are still reeling from the impact of the Covid-19 pandemic and are yet on the road to recovery.

FMM also takes this opportunity to once again thank the Government for their fast action back in March 2020 on the onset of the Covid-19 Movement Control Order in instituting the automatic loan moratorium which was instrumental in helping both businesses and individuals tide over the impact of the Covid-19 at its peak to a certain extent.

Indeed, the targeted extension and restructuring initiatives would provide a much-needed breathing space especially for the individuals who have lost their jobs and yet to be re-employed including individuals on unpaid leave or continue to have to take a reduction in wages and for the SMEs who are still suffering to regain their business momentum given the soft domestic and global markets.

However, it was hoped that the extension of the moratorium could have also been extended to SMEs who are in need for the additional financial relief in order to revive their businesses. The extension of the bank moratorium for SMEs would help further ease the tight cash flow that some of them continue to face given the current circumstances.

The industry requests that the process for the restructuring of loan repayments be made simple and seamless allowing the industry to focus their time and efforts towards rebuilding their businesses. As we understand, the initiative would be based on the individual banks’ commitment and is not a directive from the Government thus giving the banks the discretion on whether to provide the flexibilities stated. SMEs have little negotiation clout with their bankers, so we hope that the restructuring process could be facilitated well.

FMM would also like to reiterate its earlier requests to the Government for further assistance in the following areas which have a significant cost impact on businesses:

  • There should be consideration for moratorium or restructuring of repayments for leasing of machinery, which is common among SMEs which has not been considered to date despite FMM requesting for this since the earlier period of the MCO.
  • Six-month moratorium from date of disbursement on all of the PENJANA financing schemes as currently only the RM500 million Bumiputera Relief Financing has provided this relief;
  • Stamp duty exemptions are now granted only for instruments of transfer (partial exemption) and loan agreements (full exemption) for sale and purchase agreements signed between June 1, 2020 and May 31, 2021. We appeal to the Government to extend this stamp duty exemption to all loan and financing instruments for a one year period from July 1, 2020 until June 30, 2021.
  • Stamp duty exemption for SMEs has now been extended on any instrument executed for Mergers & Acquisitions (M&A) between July 1, 2020 and June 30, 2021. FMM would like to further propose that the stamp duty exemption be extended to M&As and partnership agreements agreed or signed prior to the outbreak of the Covid-19 pandemic and were disrupted due to the Covid-19 pandemic and MCO. Some of the documents were signed prior to these events and are only now proceeding but will take a longer time to be implemented given the changes that have taken place over the past few months. As it stands now, these projects will not be able to enjoy the duty exemption. 
Please click here for the full details of the Press Statement.

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