FMM’s suggestions include extending moratorium on repayment of foreign currency trade facilities and cutting corporate tax to 20% and personal income tax to 5%-10%
by NUR HANANI AZMAN/ pic by MUHD AMIN NAHARUL
WHILE the entire nation strives hard in a battle against the Covid-19 pandemic, more is still expected from the government to provide operational support and aid to local businesses, including increasing existing aids and grants to speed up the economy’s recovery process.
The Federation of Malaysian Manufacturers (FMM) president Tan Sri Soh Thian Lai told The Malaysian Reserve (TMR) among the steps that could be taken include expediting the disbursement of assistance under the economic stimulus package.
“The government should extend the moratorium on repayment of foreign currency trade facilities, overdraft and leasing facilities often used in the purchase of machinery and equipment,” he said.
Soh said the government could also top up the Special Relief Facility to RM20 billion and further reduce interest rate to 2% or 0% for schemes like Tekun Nasional for micro enterprises.
FMM has been informed that the Ministry of Finance is currently formulating a short-term economic recovery plan, which is expected to be announced this month.
Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz had earlier announced that the upcoming plan would see the extension of some of the measures introduced earlier, as well as several new initiatives to boost the economy.
Soh said the government should prioritise companies that have maintained their current employment levels beyond six months during the Covid-19 crisis and allow triple deduction on wages.
He said a reduction of corporate tax to 20% and personal income tax to 5%-10% depending on income brackets could also be introduced.
“The government should establish an Asean networking platform for manufacturing trade organisations to mobilise efforts to ensure uninterrupted production and supply chains.
“Private consumption can also be increased by encouraging import substitution via a Buy Made-In-Malaysia campaign, starting with the government’s own procurement market.”
Soh said the government could immediately prime the economy by expediting approved local infrastructure and development projects such as the East Coast Rail Link, Kuala Lumpur-Singapore High-Speed Rail and Light Rail Transit Line 3, as well as implementing small repair and upgrading projects.
An aggressive approach to attract foreign direct investments which could increase domestic direct investments could also be looked into. Soh said current investors can be retained using more appropriate and competitive incentive schemes.
Malaysian International Chamber of Commerce & Industry ED Shaun Edward Cheah suggested that incentives could be put in place to encourage China product replacement.
He said the world has learnt that overdependence on a single source of supply is risky.
“Malaysian supply might be a bit more expensive, but it is safer. We also need a clear directive on who has the authority to make announcements and decisions. The Ministry of Human Resources’ (MoHR) statements are not helping.
“MoHR’s statements during Movement Control Order (MCO) and Conditional MCO on employees’ guaranteed salary and no annual leave deductions have created dissidence among employees who are taking advantage of this statement by refusing to go to work,” he told TMR.
Cheah argued that discrimination now exists on which staff is chosen to continue working due to the MCO’s 50% workforce rules. “While some colleagues stay home and enjoy their salaries without working, others have to work.”
He said MoHR and the Labour and Industrial Relations Courts should clarify the situation via a statement about such dissident employees.
UniKL Business School Assoc Prof Dr Aimi Zulhazmi Abdul Rashid said the overall strategy is to assess all economic sectors, identifying key areas that need to be solved within three to six months.
“The increased number of unemployment must be handled head on with salary insurance backup that could put money in the pockets.
“Training programmes under various government agencies are needed to provide upgrading of skills, reskilling, retraining into new growing areas as per immediate demand due to the pandemic. Among the areas include e-commerce, logistics, consumer goods, medical and pharmaceutical,” he told TMR.
OCBC Bank economist Wellian Wiranto said a further extension of various schemes — such as ramping-up of healthcare spending, cash transfers to most directly affected sectors such as tourism and aviation, and wage
subsidy schemes especially to small and medium enterprises — could be initiated to help the economy recover.
Wiranto said as the country prepares for the “new abnormal” in a post-Covid-19 world, the government might as well offer more incentives for corporations and individuals alike to retrain and acquire new skills, especially with a more intensive digitalisation of the global economy in mind.
“The incremental size of any new package might be relatively limited, however, given the lack of fiscal manoeuvre room. The market is unlikely to be surprised to see some special dividend from Petroliam Nasional Bhd to help shoulder the burden.
“We do not expect to see a reintroduction of GST (Goods and Services Tax) at this stage, given the political costs involved as well as the challenged state of domestic consumption in the coming months.”