PUTRAJAYA’S RM250 billion economic stimulus package to mitigate the impact of the Covid-19 pandemic fails to address businesses that are cash strapped and earning little or zero revenue, said a major business body.

The package must go beyond providing immediate relief and cover post-pandemic recovery, said the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM), which met the ministers of finance, transport and economy (Prime Minister’s Department) recently.

At the meeting, ACCCIM raised six key issues it wants the government to consider.

It recapped these issues in a letter dated March 30 addressed to Minister in the Prime Minister’s Department (Economy) Mustapa Mohamed:

* approvals and processes for essential services by the Ministry of International Trade and Industry (Miti);

* the employment retention programme and wage subsidy;

* employers’ statutory contributions;

* the special payroll loan facility;

* taxes; and,

* the property sector.

The letter signed by ACCCIM president Ter Leong Yap and sighted by The Malaysian Insight said “businesses were generally disappointed” with the financial relief meant to ease cash flow and to subsidise wages under the employment retention programme.

“The financial assistance package must be further enhanced to provide the much-needed relief to businesses struggling to survive as many are facing severe cash flows, no revenue or a sharp dip in revenue, and high overhead expenses.

“The government’s enhanced financial assistance and relief are much needed not only for now but also for post Covid-19 recovery.

“This is a worldwide virus attack and it is likely to take at least six-12 months from containment, stabilisation and recovery before people and businesses return to normalcy,” the letter said.

On Miti’s processing and approvals of essential services, ACCCIM said the backlog of cases must be expedited as businesses have been disrupted severely and there are still orders to be fulfilled.

“In the approval process, there were cases of discrimination due to the inconsistency in the interpretation of what is considered essential and non-essential services. It must be noted that the supply chain is wholly integrated.”

While Miti’s directive under the movement-control order (MCO) is for approved industries to operate on 50% workers’ capacity, in reality some were given about 30% workforce, ACCCIM said.

The manufacturing sector and export-oriented industries, construction, mining and e-commerce should be allowed to continue operations while taking the necessary health prevention measures against Covid-19.

“It is vital to keep the manufacturing, construction and mining sectors running to help hold up the economy.

“Given that Malaysia’s manufacturing sector integrates with global supply chains, the MCO-inflicted disruptions not only cause loss of sales… but also ‘collateral damage’ on a permanent basis,” ACCCIM said, adding that Wuhan in China and Singapore did not shut down their production plants.

On the employment retention programme (ERP) and wage subsidy, ACCCIM said Putrajaya should only encourage and not make it compulsory for employers to pay full salaries.

Employers, especially small and medium enterprises (SMEs), should be given flexibility to decide on wages and to decide on unpaid leave, pay adjustment or offsetting annual leave.

The government’s wage subsidy of RM600 per employee should also be raised to RM1,200, a this is at least 50% of the median salary level of RM2,308 per month, ACCCIM said.

It also seeks an extension of the wage subsidy from the three months to six to cushion the impact of the pandemic, which is anticipated to take a longer time to stabilise.

Also, no conditions should be imposed on the employer in order to receive the wage subsidy. The government said employers shall not retrench employees nor force them to take unpaid leave, nor cut their existing salaries to receive the subsidy.

ACCCIM also urged Putrajaya to remove the condition that only employers who suffered a drop in revenue of more than 50% since January to qualify for the wage subsidy.

On statutory contributions, the association wants the suspension of Sosco, employment insurance sstem (EIS) and the foreign workers’ levy till year-end, complete exemption or a 3%-4% cut in EPF contribution rate till year-end, and a gradual resumption after six months.

Under the package, the government only offered businesses’ engagement with EPF to discuss possible restructuring, deferral of payments or rescheduling of employers’ contributions.

On the special payroll loan facility, ACCCIM called for simpler and less stringent credit risk assessment.

“Companies can provide proof to banks of their payroll statement for past six months and be given an immediate loan facility at 0% interest rate per annum for an amount equivalent to 12 months payroll. This will help them to retain their employees for at least next one year.

“This loan facility to be drawn down solely to pay salaries and wages and be credited directly to the employees’ salary account opening with the respective banks.

“This is to ensure that no company/employer will abuse this special facility,” ACCCIM said.

On taxes, the association wants an extension for companies to file their annual returns, audited accounts and all online or over-the-counter filings of secretarial statutory documents.

Companies and individuals (sole-proprietorships and partnerships), tax instalments for 2020 assessment should be waived, it added.

No fines or penalties should be imposed for deferred tax submissions and audits after April 30 until December 31.

Rental for tenants in buildings owned by government-linked companies and state economic development corporations should also be reduced, while for malls and shop owners, a special double tax deduction on the amount of rental rebate should be given as incentive.

Lastly, on the property sector, ACCCIM wants the government to allow for an extension or waiver of liquidated-ascertained damages (LADs) arising from the delay of works at site caused by the MCO or other Covid-19 supply chain issues.

Utility companies should reduce capital contribution charges by 50% since developers are already mandated to lay infrastructure at development projects, it added.

The real property gains tax (RPGT) rate can be reverted to 0% from 5% and 10% for the disposal of properties held for more than five years by Malaysian citizens, permanent residents and foreigners respectively, while a special waiver on RPGT (upon eventual sale by the buyer) should be granted to all properties bought in 2020 up to March 31, 2021.

Foreigners should be allowed to purchase any Malaysian property (excluding affordable housing schemes) to help the sector recover, while the government-backed home ownership campaign should be extended for another year until December 31, 2021 with stamp-duty exemption.

The Ministry of Housing and Local Government should expedite the approval of HDA account (regulation 9) excess money release in less than one month and not two to four months presently.

ACCCIM also requested other measures, such as speedier release of government payments to developers.

These six measures would help save many businesses from the brink of bankruptcy, which could eventually lead to massive layoffs and job cuts, ACCCIM said. – April 1, 2020.