Ease financial woes of business, urges NCCIM

By Adrian David

April 1, 2020 @ 10:52am

KUALA LUMPUR: The National Chamber of Commerce and Industry of Malaysia (NCCIM) has urged the government to ease the financial woes (cash flows and liquidity) of businesses.

Its president Tan Sri Ter Leong Yap said the government’s immediate intervention was vital to help keep the cash-strapped businesses and companies stay afloat in these hard times, following the unprecedented impact of the Covid-19 outbreak.

“Large businesses, too, need the compassionate support of the government and financial institutions.

“Short-term measures are critical to address immediate issues concerning cash flow and liquidity of businesses,” he said after a meeting with Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz to highlight the plight of the business community, especially SMEs.

Ter said the government ought to review its approach to the Movement Control Order (MCO) with greater coherence, by balancing the macro and micro elements of the business ecosystem.

“This will ensure the best interests of the nation, the survival of businesses, the welfare of workers, and the livelihood of citizens at large.

“While we step up efforts to contain and mitigate the spreading of Covid-19, the economy and business activities must not be compromised.

“Businesses must be backed up and running,” said Ter.

He said the meeting with Tengku Zafrul raised issues and proposals concerning the establishment of a Corporate Debt Restructuring Committee (CDRC); lowering of the Special Relief Fund’s interest rate to 2.0 per cent per annum from the present 3.50 per cent; review the parameters for the approval of industries/companies allowed to operate during the MCO period; the withdrawal of employer’s portion of the the HRDF contribution; the plight of micro and small professional practitioners; the provision of micro credit and a special soft loan.

“Tengku Zafrul has noted our immediate concerns and recommendations and will try his best endeavors to raise these issues with his Cabinet colleagues for further deliberation,” said Ter.

NCCIM, Ter said, had put forward six main issues for the government’s immediate consideration.

The first is for the Ministry of International Trade and Industry’s processing and approval of essential services to expedite the approval of backlog cases, as businesses were severely disrupted with orders waiting to be filled.

He said there were cases of discrimination due to the inconsistency in the interpretation of what was considered essential and non-essential services, although the supply chain was wholly integrated.

Ter said NCCIM wanted the approved industries to operate on 50 per cent of their workers’ capacity, instead of 30 per cent, to meet their business orders.

“We want permission for the manufacturing sector, export-oriented industries, construction, mining and e-Commerce to continue operations.

“This is in view of the domestic services sector being severely impacted by a plunge in tourist arrivals, cautious consumer spending and restricted consumption and travel.

“As the manufacturing sector integrates with the global supply chain, the Movement Control Oder has inflicted disruptions by loss of sales and a collateral damage on a permanent basis.

“Wuhan in China and Singapore did not shut down their production plants during the crisis,” he said.

NCCIM, Ter added, wanted to ensure that industries bore the responsibility to maintain and undertake the necessary health prevention measures at all times against Covid-19.

Enforcement agencies, he said, could conduct sporadic checks to ensure compliance of health prevention and those flouting the law will have their operations closed.

On the employment retention programme and wage subsidy, Ter called for the government to not make it compulsory for employers to pay full salaries during the MCO lockdown.

For instance, Ter said employers, who suffered a declined revenue of more than 50 per cent since Jan 1 this year, were willing to pay only 50 per cent of salaries for foreign workers during the MCO period.

“Similarly, employers should be given flexibility to engage with the employees on unpaid leave, pay adjustment and annual leave offsets.

“We also proposed for an increase in wage subsidy from RM600 to RM1,200 a month (which is at least 50 per cent of the median monthly salary level of RM2,308).

“Also, we want the duration of wage subsidy to be raised to six months from the given three months, as the devastating impact could take longer to stabilise and recover,” said Ter.

He added that NCCIM proposed that for those earning above RM4,000 per month, the employers should be given the flexibility to engage with their employees on the terms of salary payments.

On the employer’s statutory contributions, NCCIM wants a suspension for Socso, EIS and foreign workers’ levy, a 3-4 per cent cut in the EPF contribution rate till the year end.

NCCIM proposed for a special zero-interest payroll loan facility, equivalent to 12 months of an employer’s payroll.

“This is to assist companies in business for at least five years who are facing difficulties in paying salaries and wages, to help preserve jobs and income.

“This will help them to retain their employees for at least a year. The loan facility must be credited directly to the employees’ salary accounts to prevent abuse by the employers,” he said.

NCCIM wanted an extension time for the filing of companies' annual returns, audited accounts and all online or over-the counter lodgement of secretarial statutory documents.

It also wanted a deferment till the year’s end for companies paying tax installments (Form CP204) and for sole-proprietorship and partnership) (Form CP500), without any penalties imposed.

NCCIM also wants an abolishment on the restrictions for the carry-forward of unabsorbed business losses, with immediate effect.

“As for government-linked companies and state economic development corporations, we appeal that they reduce their tenants’ rentals on their buildings and premises.

“The same is expected for private owners of shopping malls, shops and business premises.

“The government can provide a special double-tax deduction on the amount of rental rebate provided during the same period,” he said.

On the property sector, Ter urged the government to consider allowing an extension of time especially for ongoing housing development schemes.

Alternatively, he suggested for a waiver of Liquidated Ascertained Damages arising from the delay of works-at-site caused by the MCO and other Covid-19 supply chain issues.

“NCCIM is deeply concerned as the property sector is expected to stay sluggish for a longer period now, given the sharp economic downturn.

“The stubborn overhang in the property sector will have a reverberating effect on the economy given that property is an important sub-sector of the construction sector.

“A protracted consolidation and over-adjustment in the property sector would drag down the overall construction sector,” said Ter.

With the construction sector supporting the growth of around 140 other downstream industries, a sustained weak growth would have ripple effects on the economy, Ter warned.

He called for the Real Property Gains Tax (RPGT) to be rated back to zero per cent for the disposal of properties held for more than five years and a special waiver on RPGT (upon eventual sale by the buyer) for all properties bought this year until March 31 next year.

“We want foreigners to be allowed to purchase any Malaysian property (excluding affordable housing schemes) while the Home Ownership Campaign should be extended for another year until Dec 31 next year, with stamp duty exemptions, to further encourage home ownership and help reduce the number of unsold houses,” he said.

Utility companies like Indah Water Konsortium Sdn Bhd (IWK), Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), Telekom Malaysia Bhd (TM) and Tenaga Nasional Bhd (TNB) were urged to reduce capital contribution charges by 50 per cent since developers were already mandated to lay infrastructure at development projects.

Ter said the developers provided the utility companies with new customers whenever they have new developments.

“This also helps to reduce the cost of doing business and the savings can be passed on to house buyers in the form of more affordable houses.

“Furthermore, the Housing and Local Government Ministry should expedite the Approval of HDA Account (Regulation 9) Excess Money Release in less than one month, instead of the two to four months presently.

“Also, the government’s loan department should expedite payment to developers in less than two weeks, instead of three to five weeks presently,” he said.