PUTRAJAYA should provide more incentives for companies struggling with cash flow to help sustain them, said business leaders.

They told The Malaysian Insight the incentive is to keep businesses afloat, not increase sales.

Though the Covid-19 vaccination programmes have started and various industries are gradually resuming operations, the business community is still cautious with prospects which are described as “generally growing yet unstable”.

Acknowledging the help already given under the economic stimulus packages, they said 2021 is a matter of survival in order to meet the government’s economic recovery growth goals.

Shamsuddin Bardan, executive director of the Malaysian Employers’ Federation (MEF), said if Putrajaya wants to revitalise the economy, it should continue to provide incentives and support to employers.

The wage-subsidy programmes helped in 2020 but for this year, there is only a month’s subsidy under the Malaysian economic and rakyat’s protection assistance package (Permai).

“The tourism industry, the hotel industry and the retail industry all received three months of assistance, but they are not the only ones who are suffering.

“In fact, all sectors of the industry are suffering during the pandemic. If they are to continue to retain employees, they all need help.”

He suggests that Putrajaya reconsider the one-month limit for other industries under the Permai scheme and extend it to three months.

Prime Minister Muhyiddin Yassin, who earlier this year announced the Permai package, which contains the third round of wage subsidies, said it would be open to all employees with a salary of less than RM4,000 in areas under the movement-control order (MCO).

The maximum application limit for each company is 500 employees and the subsidy is RM600 per person.

Shamsuddin also said the employment incentives are vital to encourage companies to continue recruitment and create more job opportunities.

The main constraint on the employment incentives announced by the government is that the employees must be hired for a minimum of one year.

“It’s very challenging for companies to hire someone for a year because we don’t even know whether we will exist in six months.”

The government should be more flexible in this regard and include incentives for shorter-term employment contracts.

“The important thing now is to let people get job opportunities.”

Dire cash flow

According to the national economic recovery plan (Penjana) announced in June 2020, those hiring employees under the age of 40 will receive a monthly incentive of RM800 and employees between 40 and 60 years old can receive RM1,000. The incentive for the vulnerable is also RM1,000, up to six months.

Shamsudin said the current business prospects are still challenging and the government should not increase the pressure and obligation on enterprises but should help increase their cash flow instead.

For example, the government can also consider a suspension of employers’ contributions to the Human Resources Fund (HRDF) or a temporary reduction of the income tax rate.

Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) SME committee chairman Koong Lin Loong said although the Covid-19 vaccine has been launched, SMEs should not be overly optimistic.

“SMEs still have to take care of their own situation and business. Since the restrictions were imposed in March 2020, has their business improved? Is the cash flow looser? Or is it getting tighter?”

He believes that SMEs should reflect on whether their products and services are still in demand and also their marketing and delivery approach, as the impact of the pandemic on businesses is ultimately low traffic and accessibility due to movement restrictions.

For the country to reach the goal of vaccinating 80% of the population by the first quarter of 2022, it will take one more year to see results, Koong said.

“We can’t be vaccinated today and fully open next month, or even within six months. Therefore, in the next six months, we will continue to operate and adopt a survival strategy.”

Koong agrees that the most effective help so far has been the salary assistance. He proposes the government also consider implementing the moratorium on bank loan repayments again or provide more low-interest loans to SMEs.

However, he believes that the next focus of assistance is to specifically assist enterprises in need.

“What the government should help during this period is to keep the business running, not to help sell more.”

He believes that the government should let businesses take the next nine months for recovery and survival.

According to Muhyiddin’s announcement in January, banks can still offer repayment assistance and grant a moratorium extension.

Under Permai, the HRDF will exempt the employer levy for companies unable to operate during the MCO and conditional MCO periods.

According to the World Bank’s estimates, the global economy will grow 4% this year, while the Malaysian economy is expected to grow 6.7%. – March 7, 2021.