Factories running out of supplies, warns business chamber

The Malaysian International Chamber of Commerce and Industry has called for measures to keep manufacturers’ supply chains working.

GEORGE TOWN: A trade group today urged the government to train their eyes on flailing businesses amid a full-blown Covid-19 crisis, saying doing so would ensure people would be able to keep their jobs while weathering the current economic downturn.

The Malaysian International Chamber of Commerce and Industry said while cash aid to the deserving and the RM250 billion economic stimulus was good, economic resilience was key for the country to keep itself from going under water.

“Cash handouts could be better utilised by purchasing more test kits and spent on aggressive country-wide universal screening that will certainly shorten the MCO and thus an earlier economic bounce back.

“The rakyat needs continuous and secured employment as well as income beyond three months. Deferment of loans and financial obligations of the rakyat is merely delaying the inevitable.

“We urge the government to protect the goose that lays the eggs, feed it to ensure it continues to lay eggs. Giving out eggs is fine but don’t forget to feed the goose otherwise the goose may die and everyone will be left behind,” its president Tan Cheng Kiat said in a statement.

He said the policymakers must consider few of its proposals. He said suppliers must be allowed to operate as usual during the movement control order, so as to allow larger factories to get their parts.

Tan said currently, many factories are running out of supplies from second and third tier vendors, as they were not allowed to operate.

“This includes clear transporter guidelines for the authorities manning the roadblocks, as there have been inconsistencies,” he said.

Another issue was the current limited workforce due to the MCO. Tan said the government should allow replacement workers to relieve those who are absent or when there is a change in production plans.

He said the wage subsidy should apply to those earning beyond RM4,000, too, saying subsidising those earning below that amount would not sustain a business.

“Other countries are subsidizing from 75% to 100% without such caps. We recommend at least 75% of payroll without any caps,” he said.

Tan said government subsidy of RM600 should not just apply to companies suffering from more than 50% drop in income. He said if a company is already suffering such a drop, it was likely to close shop in three months.

He said after the MCO, the government should hasten the outstanding GST refunds and other government procurement payments outstanding.

Tan said an exemption of tax, full or partial, cuts beyond 50% based on last year’s taxable income should be in order. He said low-interest business loans pegged to payroll costs, not deferred borrowings should be considered, too.

He said it was better to have companies paying off loans rather than seeing companies go bankrupt through non-performing loans.

Tan said big government-linked bodies with large cash reserves such as the Employees’ Provident Fund, Social Security Organisation, Human Resources Development Fund, Tenaga Nasional and TM should waive costs for the next six months rather than defer contributions or payments.