Special stimulus package needed – Huazong

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T.C Goh

KUALA LUMPUR: Huazong president Tan Sri T.C Goh has urged the government to set up a special committee to urgently formulate and introduce a special stimulus package to better assist the business sector.

He stressed that this is necessary, so as to prevent the business sector from collapsing in the event of a worsening Covid-19 situation in the country, and further extension of the ongoing Movement Control Order (MCO).

He noted that while the Prihatin Rakyat Economic Stimulus Package unveiled on Friday has rolled out a host of cash aids and benefits to cover the finance sector, the government-linked companies (GLCs), public service, in contrary, the private business sector including the majority of the small-and-medium enterprises (SMEs), limited companies, public listed companies and their subsidiaries do not really benefit from it, and are currently in a dire situation of unprecedented magnitude with many on the brink of collapsing.

“Seriously speaking, what the business sector received from the government is just a series of ‘top-gap measures’ and not an ‘aid measures’ which are really helpful for them,” he pointed out in a statement yesterday.

Among the assistances rolled out by the government in the said stimulus package included extension for payments of corporate taxes, exclusion of levy payments to Human Resource Development Fund for all sectors for six months beginning April, and allowing both the employers and employees to defer and to restructure the Employees Provident Fund (EPF) contributions.

As for the concessions provided by the Bank Negara through the financial institutions, they included additional loan facilities at low-interest rates besides extension or restructuring of loan repayment.

And the business sector is only given extension or restructuring of payments of government taxes like the quit rent, house assessment, EPF and Socso contributions, and bank loans, none of these items is exempted.

“Besides this, the business operators and enterprises are incurring monthly overheads like rental for business premises, insurance, electricity and water bills etc, which are definitely a huge burden for them who are facing “zero income” situation amid the ongoing Movement Control Order.

“While it was commendable for the government to take care of the people of all walks of life, by giving out cash aids, and to continue to pay full salary and provide allowances for the civil servants, on other hand, the government disallowed employers to lay off workers or deduct their wages.

“This certainly does not help the business sector to overcome the dreadful situation. When the employers themselves are in a helpless situation, how then could they help the others?” Goh pointed out.

He thus opined that all sectors, including the government-linked investment companies (GLICs) and government-linked companies (GLCs), the retired civil servants, the frontliners are well covered by the RM250 billion stimulus package, except for the private business sector, as they did not really receive the much-needed assistance.

Goh said Huazong’s call for an urgent special stimulus package to better assist the business sector was following numerous complaints and feedback received from its affiliate members and the various business sectors over the Prihatin Rakyat Economic Stimulus Package unveiled by the prime minister on Friday.

They unanimously opined that there’s an urgent need for the government to introduce a truly comprehensive-and-effective stimulus package to better assist the private sector, and not just a stop-gap measure which only allows them to buy some time, but not really helping them to solve the pressing problems affecting them.

He said based on the feedback gathered from various quarters, Huazong has thus come out with a 10-point proposal for the government to consider, as follows:

1. Government to establish a special committee consisting of the Ministry of Finance, Ministry of International Trade and Industry (MITI), the Economic Planning Unit (EPU), Ministry of Transport, National Economic Action Council, Bank Negara, the private sector, representatives of trade and industry, to quickly conduct a brainstorm session to roll out a special stimulus package for the private sector, to assist businesses to pull through this difficult time.

2. Government must strive to assist and to protect the business sector from collapsing, and for it to continue to have steady growth, in the event of further extension of the MCO amid worsening Covid-19 situation. Otherwise, it would trigger a massive wave of retrenchment and unemployment, which would in return have a far-reaching impact on the national economic growth and negative impacts on the people’s wellbeing.

3. Based on the preliminary calculation, while the government takes a good care of the 1.7 million civil servants in the country, as well as the 10 million employees of the private sector (66% of the National Total Employment of 15.2 million), 1.8 million or 90 per cent of the business entities in the SME, if the SME sector failed to pull through this MCO extension period, it would trigger the first retrenchment wave of 30% to 40% of employees and, this is something which the government take serious note of.

4. Furthermore, even if the situation improves and the MCO is lifted and businesses and production lines are back to normal, it would take at least several months to one year (depending on the type of businesses) to fully recover. Hence, there’s a need for the government to formulate and introduce effective post-pandemic measures to better assist the various industries and sectors.

5. While it is commendable for the government to introduce the ‘Wage Subsidy Program’, where RM600 will be channeled to each employee with a salary of less than RM4,000 per month for a period of three months, to help employers retain their employees and prevent the loss of jobs and livelihoods, it should nonetheless waive the requirement requiring the employers to show proof of 50 per cent drop in income since Jan 1. Such assistance should be given to all employers regardless of whether they are making a loss or not, as long as they are not laying off workers.

6. Clarification is needed on whether under the ‘Wage Subsidy Program’ the employer is required to pay full salary to employees earning less than RM4,000 monthly or, to deduct the RM600 subsidy given by the government from the monthly salary.

7. And, under the Wage Subsidy Program are those employees earning more than RM4,000 a month entitled to other subsidies, such as the one-off cash payment of RM1,000 for middle-income families with monthly earnings of between RM4,000 and RM8,000.

8. Government should consider further reducing interest rates for bank loans which are guaranteed by the Bank Negara, during this grace period. Similar consideration should also be extended to loan facilities given to the SMEs under the additional RM4.5 billion allocated for this sector, besides relaxing the conditions of the application, to better assist the SME sector to get through the current situation.

9. Government should also consider temporary halting the employees’ EPF contribution for a period of 12 months, to replace the earlier announced measure of allowing them to withdraw RM500 from the second account, every month. This is in order to safeguard their savings and its interest.

10. To temporary cancel the Sales and Services Tax (SST) for one year, at least.