LETTER | Following the recent announcement of movement control order by Prime Minister Muhyiddin Yassin, the head of 100 members of NGOs, entrepreneurs and business owners of SME gathered today to plead and appeal to the government to roll out the second stimulus package that will cover essentially the larger segment prioritising SMEs, self-employed entrepreneurs and the workforce that has been laid off.
The Covid-19 health issues that have affected the global business today and the secretariat request for support towards the MICE sector. The establishment of the Economic Stimulus Implementation & Coordination Unit Between National Agencies (Laksana) under the Finance Ministry to monitor the implementation of Malaysia’s 2020 economic stimulus package amounting to RM20 billion.
Compared to the stimulus packages announced by other countries, Singapore - US$4.6 billion, Indonesia – US$742 million, Malaysia’s RM20billion package is sizeable. However, the RM20 billion package is rolled out to ensure that these funds were provided to sustain the rakyat's day-to-day expenditure. The loan funds of RM3.5 billion provided mainly for SMEs isn’t sufficient.
During the global financial crisis in 2009, Malaysia unveiled a stimulus package of approximately RM60 billion (over two years). At that time, the budget deficit increased from 4.8 percent to 7.6 percent. In comparison, the 2020 stimulus package is expected to increase the fiscal deficit by only 0.2 percentage point, to 3.4 percent. The current economic measures taken - The Economic Action Council (EAC) - announce at least two economic measures weekly after its meeting every Monday in light of the economic fallout.
The Secretariat seeks for the following:
1. Blanket non-preferential treatment cutting across all segments and all customers – without preferential treatment to credit scoring/risk
Banks to give their immediate support for the next six months deferment on repayment of all banking loans, housing loans, hire purchase, OD and other business-related loans and facilities.
Immediate deferment of the loan principal payment, so that the company has sufficient cash flow to sail through this Covid-19 outbreak period.
Banks should not discredit company who applied for the deferment of loan principal payment by lowering their credit rating. This will assist to reduce the possibility of an increase in retrenchment that may eventually lead to the overall increase in the unemployment rate in the country and to help the most vulnerable to survive and provide support to a company that serve those populations.
2. Deferment on statutory obligation payments for a minimum of six months and waiver of utility bills
Minimum six months deferment on all statutory obligation payments like EPF, Socso and other related payments. The current stimulus package proposal of four percent deduction in EPF contribution by employees from April to December 2020, similarly the percentage of contribution from employers should also be reduced.
Waiver on utility bills across the board for all industry and 50 percent waiver for all households;
3. Roll out on soft loan
Quick soft loan with no collateral to roll out immediately under the stimulus package introduced by the government. Loan up to 20 percent of the annual turnover with minimal interest (three percent per annum) rate to be given.
4. Exemption of sales and services tax (SST)
Exemption of the sales and services tax (SST) for all sectors until December 2020 and to directly affected sectors for the whole of 2020.
5. Special incentives for businesses using digital technology
Ramp up digital connectivity and encourage new business models based and digital economic landscape – companies operating using shared economy and circular economy business models must be given special incentives or grants to small and medium retail, MICE, Food and Beverage and other businesses who are opting to use digital technology.
6. Waive tourism and entertainment tax
The tourism tax and theme park, family playland entertainment tax should be waived immediately (to encourage local travel and promote cuti-cuti Malaysia. This should be activated once the active containment phase of Covid-19 is over and free movement of people is established).
7. Lower of corporate tax rate
Lower the corporate tax rate for the directly affected industry, like Tourism, F&B, MICE, and other related industries ie 24 percent to 16 percent, defer the tax instalments.
8. Double tax deduction for companies paid for salary to the B40 group
Double tax deduction to a company for salary paid to the B40 group, additional tax deduction for salary paid to local workers, to encourage the continued employment of the local workers and reduce the possibility of jobs retrenchment.
We hope that Human Resources Ministry will provide the necessary funding support to the company and/or the employees, when in the extreme case where the company has no other option but to ask the employees to take unpaid leaves during the critical period;
9. Postponement of Visit Malaysia Year 2020 and other low impact projects
To postpone the Visit Malaysia Year 2020 and other low impact projects with immediate effect and to channel those funds to all those affected entrepreneurs, SMEs and SMIs by giving direct cash handout.
10. Landlords to ease rental rates for a period of six months
Government to encourage mall/commercial landlords to ease rental rates down by a minimum of 50 percent for a period of six months to mitigate the businesses.
The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.