THE headline reads “FMM against proposal to increase employers’ EPF contribution”. It added, government’s focus should be on providing a conducive environment for businesses to increase their profits and improve their cash flow.

I couldn’t agree more.

Putting on my thinking cap, I look up a few articles and publications.

FMM Business Conditions Index projected a slowdown in capacity utilisation, capital investment, hiring and a relatively tame outlook on production for the first half of this year (1H2023). 

However, it noted that 30% of the respondents planned to step up their production volume soon while 26% planned on increasing their capacities in 1H2023. The survey showed 32% are contemplating increasing their capital expenditure and 28% of the respondents planned to recruit more workers soon.

It is not that bad after all.

We know that the Federation of Malaysian Manufacturers (FMM) has consistently led Malaysian manufacturers in spearheading the nation’s growth and modernisation, making Malaysian industries globally competitive with total commitment to service excellence and quality.

FMM also highlighted higher contribution rate would be detrimental to employers, especially for the small and medium enterprises (SMEs) that make up 97% of businesses. I applaud it for backing up the SMEs but let us hear from them.

The Small and Medium Enterprises Association of Malaysia (Samenta) said it is not only counter-productive, but could be more harmful to the people.

Samenta insists the government to focus on creating higher-value jobs, help businesses and workers to be more productive, encourage Malaysians to save more, and protect SMEs at all costs. It added that SMEs continue to trail larger firms. Latest available data for 2021 showed that SMEs only grew by 1%, compared to 4.4% for larger firms. 

FMM and Samenta may have overlooked the billions withdrawn during the Covid pandemic. 

Employers, do you know the minimum wage is below the poverty line, yet you want to count the few extra ringgit to help your employees? For without them, you would not be where you are today.

It is easy to say, create more higher-value jobs and help businesses and workers to be more productive. 

But what have you done to assist? We still hear cries for cheap foreign labour, the slow progress for automation and energy efficiency measures. How much training was provided to upgrade worker skills and how about to be internationally competitive?

What happened to the costs saved and was it declared as profit to the Inland Revenue Board?

How to save more when the employees pay is already below the poverty line? People with higher incomes tend to generate income through different sources and is it acceptable to increase taxes for the top income brackets?

How would the government be able to put more money in their pockets and to improve employees purchasing power if tax collection is low?

The 20% contribution is only a suggestion and is up for discussion. 

During the discussion, you can lay down your “actual” numbers to support your case. Depending on the numbers, negotiate for a lower quantum and tie it to those earning below a certain level only.

Meantime, do a cost-benefit-analysis on organising more overseas exhibitions and forums to facilitate dialogues and business matching and collaborate further with the relevant government agencies.

In Malaysia, the relative income gap has declined but the absolute gap in income has increased. Across the Asean region, the income inequality in Malaysia is relatively high.

The top five investments to boost competitiveness include new product development, automation, upskilling and retraining of existing workers, export market expansion, and adoption of green technology/energy efficiency measures.

FMM and Samenta is strongly urged to create more awareness and benefits amongst its members on the Regional Comprehensive Economic Partnership and Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Some 77% of FMM members are still not into it yet.

True, government must engage with the employers before making policy decisions.

On the government’s part, assist in equipping Employees’ Provident Fund members with knowledge on financial literacy and caution parties pushing for more blanket withdrawals.

In a study by the Statistics Department in 2020, the department estimated that 20% of M40 households had fallen into the B40 income group and 12.8% of the T20 category shifted down to the M40.

Apart from the government, what is the role of employers?

What say you… – May 4, 2023.

* Saleh Mohammed reads The Malaysian Insight.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.