Malaysia-China Chamber of Commerce Support measures for SMEs

Malaysia-China Chamber of Commerce (MCCC) believes that the government must have a better prepared strategy to ensure the economic recovery of the country after the epidemic, in addition to addressing the problem of halting the spread of the epidemic and providing a safety net for people's lives.

The MCCC appreciates and welcome the Government's efforts to cope with the epidemic by supporting the affected population especially B40, and combating the epidemic. In addition to ensuring the effective implementation of the economic stimulus package, the reviving of economic development in the aftermath of the epidemic will be an extremely challenging task for our country.

Malaysia's SMEs account for 98.5% of the total number of business establishments. In 2018, SMEs contributed 38.3% of our country GDP, and the service sector accounting for 62.4% of the total number of SMEs in our country.

At present, SMEs provide 70% (about 5.7 million people) of the country's workforce. According to the study by Malaysian Institute of Economic Research (MIER) the estimated number of unemployed workers may reach 2.4 million after the epidemic, of whom 67% are non-professional workers.

Datuk Tan Yew Sing, President of Malaysia-China Chamber of Commerce viewing of this serious potential unemployment scenario, said that the government should, besides the various anti-epidemic measures already implemented by the relevant authorities, to adopt the following four emergency measures to ensure social harmony and reduce unemployment rate. It is vital also to secure the continuous operation and sustainability of enterprises especially SMEs in order to control the unemployment rate!

 (1) To introduce direct financial support to SMEs:

(a)	low-interest loan with no collateral to bridge cash flow gap and support daily operations of SMEs
(b)	to grant extra funding to banks to spur SMEs loans, to ensure that the capital flows of enterprises can cope with the next six months of operations and reducing the time required for banks to provide loan/credit approval
(c)	to exempt various license fees for the next six months, such as factory machines, business licenses, and road taxes for factories and commercial goods vehicles.
(d)	Investment incentives- MIDA to reduce the investment incentives which allow tax holidays given to large foreign enterprises such as Forest City in Johor Bahru and lower the approval criteria of such incentives to allow more local SMEs to be eligible.
(e)	to subsidize the Employment Retention Programme: (i) subsidize at least 25% of SMEs staff salaries, without having proof of a 50% drop in business income. (ii) exemption on employers’ EPF contribution from April until December 2020 (iii) reduction on 2020 corporate income tax for SMEs that affected by the pandemic and MCO. (iv) pay at least half the wage subsidy to the dismissed or unemployed staffs for a period of six months, or during the pandemic period, if the enterprises close down. (v) set up an unemployment fund to help employees who may have laid off after the MCO, in addition for unemployment benefits from SOCSO.
(f)	Rental waiver for SMEs at standard factories/premises owned by GLCs: (i) to provide 2-3 years rental waiver for the existing SMEs set up at standard factories/premises owned by GLCs such as Port Klang Free Zone and other industrial parks, and also for SMEs that wish to relocate to the GLC owned premises due to the inability to continue paying rental for the current business premises.

(2) Medical and protective supplies:

(a)	where local production is possible, the Government should organize all manufacturers (and relevant businesses that can convert some of their operation to augment production), to maximize production and coordinate distribution at one common price.
(b)	port clearance and delivery of essential supplies such as personnel protective equipment, sanitizer, detergents and medical equipment should be fast-tracked with minimum hindrances and red tape.
(c)	for facemasks and other supplies sought by ordinary citizens, the government should fix an affordable price (with subsidies to absorb the difference from cost price when necessary) and restricting purchase limit to consumers using national IDs to stop hoarding.
(d)	tests should be expanded to all high-risk groups, regardless of symptoms, and must be free for all citizens. Only absolutely necessary, non-citizens can be charged a minimal co-pay. Migrant and refugee organizations must be involved.
(e)	facemasks, soaps and sanitizers should be provided free for marginalized households and certain sectors (like homeless, foreign workers and refugees) to ensure some minimal protection and reduce the risk of transmission.
(f)	one Ministry should be put in charge of coordination, operating using a list of required end products provided by the Health Ministry.
(g)	suspend the planned SIRIM-DOSH certification requirement of PPE used in the country which is scheduled to go into effect in June 2020.

(3) To avoid panic buying which will fail the MCO

(a)	a clear identification of what constitutes essential services and their supply chains, which may be adjusted over time based on demand and supply.
(b)	a close and centralized monitoring of stocks to decide when the MCO may be eased for specific sector.
(c)	instead of a rigid 50% production, production should be adjusted based on demand and supply, with strict enforcement of hygiene measures backed by hefty penalties. Import, distribution and production of essential supplies such as food, PPE, sanitizer, soap should not be limited in capacity but instead allowed to even go beyond the current capacity to create strategic stockpiles.
(d)	exemption of non-essential services on finance and employment grounds must not be entertained. Exemption for one will lead to more requests.
(e)	one Ministry should coordinate.
(f)	the ministries should instead define essential services dynamically and quantitatively based on demand, inventory level and production cycle/travel time for imported materials.
(g)	the government must rise to meet the challenge by collecting and using big data to decide which industries need to partially resume operation to ensure no disruption of essentials, while keeping most of workforce at home to flatten the curve.
(h)	the permission to operate/deliver should be communicated to factory owners, workers, lorry drivers, etc. electorally via a secure app so that it can be updated on daily basis, rather than in paper format which is not possible for immediate and constant adjustment.

(4) Social safety net

(a)	sufficient support for daily income earners including foreign workers to ensure social order and no eruption of crimes.
(b)	welfare transfer for retirees instead of asking them to withdraw from their EPF’s second account.
(c)	withdrawal of 11% employee’ contribution for the past 6 months for all EPF contributors.
(d)	waiving/reduction of rates and fees charged by government for all SMEs and larger businesses that refrain from lay-off.