by FARA AISYAH / pic by ARIF KARTONO
MANUFACTURERS continue to face recovery challenges in the second half of 2020 (2H20), especially in terms of lower projected domestic and export sales, says the Federation of Malaysian Manufacturers (FMM).
Its president Tan Sri Soh Thian Lai said the impact of the economic disruptions resulting from the Covid-19 pandemic and the movement control orders have weighed heavily on many businesses as Malaysia’s economy is very much dependent on the global recovery which is anticipated to be gradual with the International Monetary Fund projecting global growth at -4.9% in 2020 in the June World Economic Outlook forecast.
“The FMM thanks the government for taking heed of its call for a further three-month extension of the Wage Subsidy Programme until December 2020 and welcomes the announcement by the prime minister under the Kita Prihatin package which sees an extension and additional allocation under the Wage Subsidy Programme 2.0 of RM2.4 billion which is expected to benefit 1.3 million employees.
“Indeed, the further extension would provide the much-needed support for industries in sustaining their business and safeguarding employment,” he said in a statement last week.
Soh added that is well recognised that the stimulus and economic recovery packages have been very instrumental in the initial business recovery process and had assisted businesses especially the small and medium enterprises (SMEs), in particular micro-businesses, to overcome some of the challenges faced in cashflow constraints and in meeting fixed capital cost.
However, he said businesses, especially SMEs, are still very much cash-strapped and any further assistance to help meet their operational costs including raw materials and manpower costs will be welcomed.
It is also encouraging to note that financial institutions have continued to facilitate the requests and applications for the extended moratorium on bank loan repayment under the targeted approach as announced in July 2020.
To provide the much-needed breathing space for businesses with their recovery, FMM appeals to the government and the financial institutions to continue providing moratorium support to the industry in these challenging times for another three months until December 2020.
Last month, the FMM-MIER Business Conditions Survey revealed about 42% of its respondents said they plan to retrench 10%-20% of their staff next year.
As of July 2020, 17% have already reduced their headcount by 10%-30%, while 25% will carry out this exercise in the remainder of this year on up to 30% of their employees.
The survey, which drew 549 respondents nationwide, was conducted from July 2-31, and tracked business confidence via the FMM-MIER Business Conditions Index covering the actual performance in 1H20 and outlook for 2H20.