This article first appeared in The Edge Financial Daily on April 10, 2020

KUALA LUMPUR: More than half of the 1,120 manufacturers surveyed by the Federation of Malaysian Manufacturers (FMM) expect to incur at least RM500,000 in losses due to the movement control order (MCO).

FMM said the survey showed that 55.4% of these manufacturers estimated losses of RM1 million to RM5 million, particularly among medium-sized industries.

“Small-sized industries estimated losses of RM100,000 to less than RM300,000, followed by RM500,000 to less than RM1 million. Large companies estimated their losses to be RM1 million to RM5 million, followed by above RM5 million.

“Estimated losses comprised mainly salaries, loss of sales, stock inventory and possible contractual penalties from suppliers as well as customers,” FMM said in a statement yesterday.

The survey, which ran between March 21 and April 2, also revealed that regardless of company size, the majority of the manufacturing sector or 71% of the respondents can only tolerate at most four weeks of non-operation.

FMM said the survey respondents formed only a small fraction of the country’s 60,000 manufacturers, and it is estimated that the one-month stoppage in operations could reach about RM130 billion in gross domestic product losses.

“Before the situation is further aggravated with compounding losses of businesses, FMM urges the government to respond swiftly to the above requests and proposals to ensure business viability and continuity and for the survival of the economy,” it added.

Essential goods workers face restrictions, arrest

Meanwhile, FMM said that while operations involving essential goods are allowed for manufacturers with approval to operate, things have been unfavourable for workers on the ground since the second phase of MCO took effect on April 1.

It said workers of companies with the ministry of international trade and industry’s (Miti) approval issued prior to the announcement of the extended MCO have been denied permission to travel to their workplaces.

“There have also been several cases of workers being arrested because the Miti approval attached to the company authorisation letter stated the MCO period from March 18 to 31,” FMM said.

“This is despite workers showing proof of the media statement released by Miti on March 25 on the extension of all approvals in accordance with the extended MCO period. The tightened MCO hours has also affected workers scheduled for shift work for companies with Miti approval,” it added.

FMM said export and import activities are being curtailed with the insistence of Miti approval although the ministry of transport had stated that all export activities can continue with proof of contract or export commitment. This is because exports are vital to ensure that supply chains are not severed and countries that need our exports will be able to continue receiving them.

“Likewise, imports and clearance of cargo from the ports had only two windows of opportunity  —  March 27 to 29 and April 4 to 7. This has resulted in disruption to incoming raw materials and goods to manufacturers,” the federation added.

FMM said there have also been cases where some manufacturing entities that are part of the supply chain of the essential products are not granted the approval to operate as they are deemed non-essential.

This too, it said, has hampered the operations of the manufacturers granted approval to operate.