KUALA LUMPUR (July 20): The Federation of Malaysian Manufacturers (FMM), representing the manufacturing industry, has called on the government to grant a further six-month extension of the automatic moratorium on the repayment and payment of loans and financing which will end in September.
FMM said an extension would be particularly welcomed by small and medium enterprises (SMEs) and individuals as it would provide much-needed breathing space and further ease the tight cash flow that they are currently experiencing as a result of the Covid-19 pandemic.
“The extended moratorium can provide the financial relief to those who are currently economically disadvantaged, especially companies that are struggling to sustain their businesses and workers who have been retrenched and have lost their source of income,” the body said in a statement.
“At the same time, to ensure that the economy can quickly recover, the extended moratorium would allow SMEs including entrepreneurs to tap and benefit from the various initiatives that have been introduced under the Penjana Short-Term Economic Recovery Plan to assist with business recovery without further burdening businesses with the cost of servicing their loans or financing and indirectly reduce their cost of business survival,” it added.
FMM said the Movement Control Orders (MCOs) have resulted in businesses experiencing a big drop in revenue, suffering financial losses and facing severe trade challenges which have impacted business sustainability, employment and productivity.
“While the essential sectors were allowed to operate in stages during the MCO period, they were still impacted by disruptions to their supply chains and ability to meet their trade obligations especially export orders given that they were only operating at half their capacity.
“Many businesses, especially those in the non-essential products and services, only commenced operations after the Recovery Movement Order Control Order on June 10,” FMM said.
FMM added that manufacturing companies supporting the construction and hospitality industries were further impacted as these sectors have only just started to resume operations given the additional conditions and precautionary measures and Standard Operating Procedures (SOPs) to be implemented before business could resume.
“These sectors and the supporting businesses would be most impacted and would need a longer period to tide over the Covid-19 disruptions and impact on their businesses,” the federation said, adding that the Covid-19 and the MCO had significantly impacted both domestic and export trade for some, resulting in severe challenges on capital and cash flow for these companies and employment for workers.
FMM, in reference to claims made by 310,622 employers covering 2.48 million workers under the Wage Subsidy Programme (WSP) as of July 6, said companies are unable to sustain their businesses and have had to resort to obtain aid from the government to sustain their employment costs.
“The majority of these companies would have applied for assistance from April while trying to manage their employment cost. Companies are not allowed to terminate the services of these employees covered by under the WSP for a further three months after the end of the WSP payment period.
“The WSP, which has been extended for a further six months, would likely end in September. This would coincide with the end of the current loan moratorium period and would be a double cost whammy on businesses which could severely impact their sustainability and initiatives to revive their businesses,” FMM said.
Additionally, FMM has appealed to the government for further assistance, including a six-month moratorium on all Penjana financing schemes, one-year stamp duty exemptions on all loan and financing instruments starting July 1 and the extension of mergers and acquisitions (M&As) one-year stamp duty exemptions to M&As and partnership agreements signed prior to Covid-19 that have faced disruption due to the pandemic and MCO.