Corporate companies are already reviewing their procurement contracts and hinting that cost-cutting efforts are in the fray
By NUR HAZIQAH A MALEK / Pic By MUHD AMIN NAHARUL
THE government needs to take pre-emptive measures to protect small and medium enterprises (SMEs) and industries as the corporate sector is likely to embark on austerity measures due to the Movement Control Order (MCO), the Kuala Lumpur and Selangor Indian Chamber of Commerce and Industry (KLSICCI) said.
“We would like to emphasise and reaffirm to the government that we need more assistance to survive the Covid-19 onslaught,” KLSICCI president Datuk R Ramanathan said in a statement yesterday.
“This is because corporate sectors will be planning to opt for retrenchment and belt-tightening measures once the MCO ends in mid-April or in mid-May, if it’s extended further. Many corporate companies are already reviewing their procurement contracts and hinting that cost-cutting efforts are in the fray,” he added.
SMEs contribute up to 38% to the country’s GDP, but it has been heavily impacted by the pandemic outbreak that began in January 2020, and further affected following the MCO announcement. Ramanathan said despite the industry’s contribution to the GDP, priority was not given to them in the stimulus package announced by Prime Minister Tan Sri Muhyiddin Yassin last Friday.
The stimulus package comprised an allocation of an additional RM4.5 billion to five initiatives, namely additional funds for the special relief facility for SMEs, which provides an additional RM500 million under the microcredit scheme.
The facility focused more on loans and credit, while also having stringent criteria to obtain it, further hampering on the SMEs’ recovery from the MCO.
“Malaysian Institute of Economic Research predicts that 2.4 million jobs would be lost in couple of months.
“Losses of jobs are significantly due to companies closing down their businesses due to fear of going bankrupt,” he said.
He suggested for the Wage Subsidy Programme (RM600 salary subsidy) to be implemented across SMEs without any subjective conditions.
“All the employers should qualify for this subsidy, as long as the employees are legitimately in their payroll,” he said.
He also added that KLSICCI is requesting the government to be less stringent on the conditions and increase the subsidy to at least a minimum of RM1,000 monthly for the duration of at least one year.
“We also would like to request the government to review a few things, including to reduce the corporate tax of SMEs, reduce the foreign workers levy renewal payment, suspend or waive the employers’ Employees’ Provident Fund contribution which is at 13% currently for a period of six months and to further reduce the Tenaga Nasional Bhd’s tariffs for commercial and industry,” he said.
Similarly, it was reported that the SME Association of Malaysia president Datuk Michael Kang also thought the stimulus package announced was disappointing, and predicts that at least 50% of the companies will close down, and that four million people will lose jobs.
“The stimulus package is good for the rakyat but not for businesses. They will collapse as there is nothing much that would benefit the SMEs.
“Why would SMEs take loans to pay salaries and rental when they don’t have any income to sustain their businesses?” he was reported as saying.
According to Kang, some retailers are already preparing to shutter their business as they have been hit hard especially with the lack of customers due to MCO.