THE Malaysian-German Chamber of Commerce and Industry (MGCC) has warned the Malaysian government that its poorly thought-out public health orders and inconsistent enforcement could cause multinational companies (MNCs) to move their operations elsewhere. 

In a July 8 letter to Prime Minister Muhyiddin Yassin, sighted by The Malaysian Insight, MGCC complained that unclear SOPs and erratic enforcement had disrupted manufacturing operations. 

MGCC said the latest EMCOs issued on July 3 for large portions of the Klang Valley had added to the confusion for German MNCs in Malaysia.

“The EMCO is not yet reflected in the Ministry of International Trade and Industry (Miti) CIMS 3.0 system but manufacturing companies depend on Miti exemption letters to operate and allow their staff to travel.

“In one case, an essential classification (example: fragrances which are necessary for soaps and sanitisers) was revoked overnight without any notification or explanation. In other cases, the police have insisted on MITI exemption letters although the companies do not fall under Miti’s purview,” the letter read.

In another example, MGCC said that Schattdecor Sdn Bhd, which specialises in surface solutions, had received Miti approval to operate as an essential service.

“However, the police only allowed the company to handle logistics and maintenance but not warehousing or deliveries,” said MGCC.

The disruption, said MGCC, had led to Weidmuller (M) Sdn Bhd contemplating relocating part of its operations to Spain.

“Weidmuller is located in Johor’s Senai I-Park, which is now under EMCO (July 9-22). The company just set up its production in Malaysia last year and supplies worldwide.

“It does not have any Covid-19 cases until today and complies with all SOPs. The company is not aware of any clusters in neighbouring companies but it appears that there are problems in the collective accommodation of foreign workers. 

“The company will have to relocate parts of the production to Spain if they cannot meet their client’s demands. A relocation will lead to job losses in Malaysia and potentially the closure of the plant. Weidmuller hopes for a more targeted approach which does not punish the complete industry,” said MGCC.

MGCC is the second foreign trade group to complain about the SOPs after the American Malaysian Chamber of Commerce last week urgied the government to adopt a more balanced approach to its Covid-19 pandemic response. 

Supply chain collapse

The biggest concern for German MNCs, said the business guild, was the disruption to the supply chain case by the government allowing only certain sectors to open.

“If certain sectors are allowed to operate, but suppliers of packaging, raw materials, parts and components as well as logistics cannot work or can only operate on very minimal capacity, the supply chain will be disrupted and eventually break down which will have dire effects for Malaysia,” warned MGCC.

For instance, it said Schaefer Kalk (Malaysia) Sdn Bhd was allowed to open its lime factory in Kedah but not its limestone quarry.

“The stock is almost exhausted and the factory will have to shut down soon without adequate supply. 

“Once shut down, it will take several weeks to restart production and thus, this will impact all essential industries and Malaysia’s water supply. The company has written to MITI with supporting letters from SPAN but did not get a response.”

MGCC also complained about the difficulty expatriates faced getting pass stickers as counters at the Immigration Department in several states had been closed since June 1.

As such, many other Immigration-related services were also unavilable, it said.

“In some cases, expatriates employed at member companies have been waiting since February 2021 for an appointment to endorse their pass sticker. 

“They are highly worried of raids and fines because they have approval letters but no valid pass stickers in their passports. Without the pass sticker in the passport, new expatriates cannot be registered under an employer’s payroll, and cannot work legally,” said MGCC.

MGCC had eight suggestions to the government to resolve the problems.

It said the government must come out with clear SOPs and streamline its enforcement and increase enforcement with clear directives. It also urged the government to beef up controls at manufacturing facilities, particularly those with dormitory facilities. 

The government must also improve vaccination and open private vaccination programs, said MGCC. It also called on the government to reopen counter services at Immigration and ESD in all states for expatriates and their families.

“We urge you to coordinate a targeted approach which allows companies to protect their investments, keep their staff and plan ahead. 

“Most importantly, consistent and clear communication is necessary, so that enforcement, publication of SOPs and recovery plans are well aligned. We suggest to execute strictest controls at manufacturing facilities and related dormitories rather than closing down all facilities and harm the entire economy. 

“If companies in certain sectors are allowed to operate, all related industries have to operate as well because otherwise the supply chain will collapse,” said MGCC.

The letter was addressed to Muhyiddin and copied to Deputy Prime Minister Ismail Sabri Yaakob, Selangor Mentri Besar Amiruddin Shari, Foreign Minister Hishammuddin Hussein, MITI minister Mohamed Azmin Ali, Finance Minister Tengku Zafrul Tengku Abdul Aziz, Economic Affairs Minister Mustapha Mohamed and Home Minister Hamzah Zainudin. – July 11, 2021.