KUALA LUMPUR (March 26): Businesses in Malaysia are expected to record losses of between 40% and 80% during the Movement Control Order (MCO) period, according to a survey by the EU-Malaysia Chamber of Commerce and Industry (EUMCCI).
The survey, carried out to evaluate impact and measures to mitigate the MCO, involved over 100 respondents, 39.2% of which are multinational corporations (MNCs) and the other 60.8% small and medium-sized enterprises (SMEs).
“As a whole, at least 70% of these companies are looking at a loss of 40%-80% of revenue during the MCO period. This will certainly affect cash flow, operating cost and most importantly, the ability to pay employees,” EUMCCI said in a statement.
In light of this, more than half of the respondents suggested a salary distribution incentive from the government would be the most important mitigating factor that will assist them during and after the partial lockdown.
With the prime minister scheduled to announce a new comprehensive economic stimulus package tomorrow, the EUMCCI is proposing several initiatives including a salary distribution incentive to aid companies and their employees, and ensure business continuity.
The proposed initiatives, which EUMCCI said were formulated after evaluating the measures taken by about 15 countries from various regions, are as follows:
- A RM3 million loan for cash flow-affected services and manufacturing companies with turnover of over RM20 million and RM50 million, respectively, with no interest due for the first six months and a government guarantee of 80% on each loan.
- A Covid Corporate Financing Facility (CCFF) which will provide financial assistance in the form of grants to companies facing cash flow disruption as a result of the pandemic, where the government offers to pay 50%-70% of employees’ salaries at a maximum of RM8,000 per month, while the companies pay the remaining 30%-50%.
- A Covid illness benefit of RM500 per week and can be topped up by employers. This will be paid to employees in quarantine due to Covid-19 infection.
- Bantuan Sara Hidup to be expanded to include freelancers and employees required to take unpaid leave during the four-week MCO period.
- Freezing the Employees Provident Fund (EPF) contribution by companies and employees for a period of 1-3 months.
- Cash grants of RM5,000–RM25,000 for struggling SMEs.
- A three-month exemption on corporate income tax, value added tax and labour income tax for all businesses.
- Companies, especially non-essential goods and services providers, should be allowed to consider the second phase of MCO as paid leave. In this context, a salary subsidy as suggested above is recommended.
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Source by The Edge Markets