TAX deduction and wage subsidy have been the preferred government aid for manufacturers to overcome the tough economic impact caused by Covid-19 outrbreak, said the Federation of Malaysian Manufacturers (FMM).

In an FMM-Mier Business Conditions Survey that was carried out in July, 30.4% of manufacturers said they were likely to use the tax deduction/allowance for Covid-19 expenses as outlined in the Short-Term Economic Recovery Plan (Penjana) announced by Putrajaya on June 5.

Another 63.9% said the incentive was useful as they incur more expenses during the movement control order.

“Another 41.2% of manufacturers said they will take up the wage subsidy scheme (until September) while 55.9% said it is a useful initiative,” said FMM president Soh Thian Lai at a press briefing in Kuala Lumpur today.

Soh was presenting key findings of the survey that covered topics such as business conditions, sales, capital investment, production volume and employment.

Interviews were done with 549 respondents from 16 industry sub-sectors such as chemical products (14.9%), food, beverage and tobacco (14.6%), electrical and electronics (10.4%), plastic products (9.5%), fabricated metal products (8.4%) and others.

Other initiatives that got thumbs-up from manufacturers are the special reinvestment allowance (15.7% likely to take up) and tax deduction for flexible work arrangements (18.8%).

But 57.7% of the manufacturers said they will not use the Penjana initiatives as they are not the target group while another 25.3% said they do not meet the criteria.

Another 20.2% said the assistance is inadequate.

Soh said some of the respondents commented that there is no assistance provided to the mid-tier, and large and multinational companies, and missing or unclear guidelines for Penjana, and how the processing and disbursement of funds are slow.

“Most respondents suggested a reduction or waiver in the corporate tax rate and provision of higher energy discounts for industries.

“Other proposals include a reduction in business costs, additional tax incentives, further extension of the wage subsidy programme and exemptions from the sales and services tax.” – August 19, 2020.