FOUR more foreign business councils have urged the Perikatan Nasional government to reassess its movement-control order standard operating procedure (SOP) and its effects on multinational companies (MNCs) operating in the industrial states of Selangor and Johor.

The letters from the Japanese Chamber of Trade & Industry Malaysia (Jactim) and Japan External Trade Organization (Jetro), and American Malaysian Chamber of Commerce (Amcham) and Malaysian Dutch Business Council (MDBC) followed an earlier one sent by Malaysian-German Chamber of Commerce and Industry (MGCC). 

All the three letters complaining about Putrajaya’s SOPs came within days of each other. 

Jactim and Jetro’s letter was dated July 6, MGCC’s on July 8, and Amcham and MDBC’s on July 10.

Addressed to Prime Minister Muhyiddin Yassin, Jactim and Jetro said many Japanese MNCs have had to stop operations following the imposition of EMCO. 

“Out of the 1,500 Japanese companies in Malaysia, 40% or 650 companies are based in Selangor and they are severely affected by the enhanced movement-control order (in most of Selangor and Kuala Lumpur),” they said. 

The Japanese business councils said many of these companies have had to completely stop their production lines due to the SOP.

“However, once an operation is halted, it requires a long time to restart these production lines, and in some cases, the production might not be able to resume at all. This would bring huge damages to these companies,” said Jactim president Daiji Kojima and Jetro managing director Mai Onozawa.

As such, the two urged the government to allow all industries to operate at 10% workforce, like in MCO 1.0 last year. 

They also urged the government to redirect its vaccination programmes in Selangor, which generates a quarter (24.2%) of Malaysia’s gross domestic product.

They said the Jactim Foundation will contribute 50 specialised cooling boxes and 10 deep freezers to the vaccination programme. 

Further, they also urged the government to allow the automotive and iron and steel industries to resume full operations.

“They are currently operating with just 10% workforce for more than a month while their inventory will only last 1.5 months,” they said. 

Jactim and Jetro said these industries supply both domestic and foreign markets and, hence, urged the government to allow them to resume operations.

“As we have emphasised since the beginning, the operation of the manufacturing industry cannot take place unless its supply chain and other manufacturing-related services operate as well,” they said.

“It is also impossible to continuously store manufactured products and parts in a warehouse without allowing sales and export activities.

“Hence, it is essential to let the supply chain and manufacturing-related services resume.

“We strongly request the government to properly evaluate the effects and impacts brought by the current restrictions in place and to promptly implement the measures that we have proposed.”

MNCs mull Johor pullout

While the Japanese were more diplomatic, the American and Dutch investors’ groups warned that continued lockdowns that are not based on science will cause more MNCs to flee Malaysia.

“We urge you to consider using data and adopt a targeted approach. Invest Johor, IRDA (Iskandar Regional Development Authority), Mida (Malaysian Investment Development Authority), Matrade (Malaysia External Trade Development Corporation) and Miti (International Trade and Industry Ministry) have worked too hard for the past 20 years, to only have it undone in this manner,” said Amcham chief executive officer Siobhan Das and MDBC executive director Marco Winter. 

“We call on you to help stop the flight of investors that have trusted Johor with their investments. We urge you to be more precise and targeted in action, using data not as a sentiment but as a guide.”  

The letter was addressed to Johor’s Perikatan Nasional Menteri Besar Hasni Mohammad, although the EMCO and its SOP are set by the federal government and led by Muhyiddin. 

To illustrate the seriousness of the matter, Das and Winter said at least three companies have decided to relocate or stop expanding in Malaysia due to the lockdowns. 

“Samtec Asia Pacific (M) Sdn Bhd, which supplies connectors for medical devices such as CT and MRI scanners globally, has calculated its risk exposure and has moved its manufacturing capacity from Malaysia to Vietnam (10% of total global manufacturing hours).”

Besides Samtec, O&G supplier Van Leeuwen Pipe & Tube (M) Sdn Bhd is currently holding back its plans to move its regional headquarters to Malaysia while HQ Pack Sdn Bhd is considering cancelling expansion in Malaysia and completely pulling out if another shutdown or capacity reduction is imposed, said Das and Winter.

These MNCs are currently operating in Johor’s industrial areas (Indahpura Industrial Park and seven locations in Senai Industrial Park). 

The councils also said companies that have passed Covid-19 safety protocols should be allowed to operate.

They said the MNCs have set up strict Covid-19 protocols and are willing to undergo frequent checks by the authorities. 

But a blanket lockdown has disrupted “compliant” companies, they argued.

“As such, we appeal to the state government to review available data from the Johor health department to identify compliant companies that were audited previously,” they said.

“Companies that are in compliance should be allowed to operate as they have comprehensive safety protocols in place since the start of the pandemic in March 2020.

“The disruption that many companies have experienced in the last year has resulted in loss of new business opportunities, revenue and contracts. Many of these losses cannot be recovered.” 

Amcham and MDBC said it is important for the government to allow compliant companies to continue uninterrupted operations.

“This will go a long way to rebuild confidence in Johor and lay the foundations for a rapid recovery,” they said.

“Instability and continued disruption are detrimental to the Johor and Malaysian economy and undermines the confidence of future investments.” 

Both letters were sighted by The Malaysian Insight.

Letter from Malaysian-German trade group

Yesterday, a similar letter by MGCC to Muhyiddin was sighted by The Malaysian Insight.

In the July 8 letter, the group warned the government that its poorly thought-out public health orders and inconsistent enforcement could cause MNCs to move their operations elsewhere. 

MGCC complained that unclear SOP and erratic enforcement have disrupted manufacturing operations.

It said the latest EMCO enforced on July 3 for large portions of the Klang Valley has added to the confusion for German MNCs in Malaysia.

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

“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.” – July 11, 2021.