Protect productive assets of industries – FSI
KOTA KINABALU: The Federation of Sabah Industries (FSI) said that it is equally important for the government to protect the productive assets (both human and capital) of the industries to keep the economy going during the Movement Control Order (MCO) period.
Its president, Datuk Ir Chong Hon Len, said FSI would appeal and propose for the consideration of the State Government through the Ministry of Trade and Industries in the implementation of MCO and related policies.
“Even though the contribution of the manufacturing sector to the State GDP is less than 8%, nevertheless we like to point out that the sector remains as the significant contributor to employment and act as an important multiplier to the overall economy of the State,” he said.
FSI proposes to allow employers to adjust compensation to employees based on productivity and attendance.
“The small number of companies in the industry sector indicates that manufacturing is not a very profitable business in the State. Many of them will not be able to sustain the imposition of 50% production and full payment to workers on compulsory leave for more than a month,” said Chong in a statement.
He added FSI also proposed that the government consider bearing 50% of the compensation to employees on compulsory leave based on need basis not just the B40 group as workers earning over RM4,000 also have commitments which are not adjustable immediately.
He said the government should allow employer and employee to work on mutual settlement on redeployment, suspension and retrenchment, and to extend the moratorium on payment of principal and interest to loan by hire purchase company.
Many SMEs obtained loans at high interest rate from hire purchase companies which is not included in the financial moratorium package announced by the government, he said.
“We propose the State Government to allocate RM100 million cost free to agency originally set up to help the development of the industry in Sabah such as Borneo Development Corporation to tie over this difficult period and for future growth,” said Chong.
FSI’s other suggestion is to reduce electricity and water charges for the productive (manufacturing) sector.
According to Chong, the discount for the electricity and water tariff which is limited by quantum given is insignificant and counterproductive to manufacturers. While an increasing tariff may be good in discouraging household consumers to reduce wastage, the same does not apply to industry. The state government should consider adopting a lower and reducing tariffs to encourage the manufacturer to produce more.
In addition, electricity distribution company operating at industrial park which were given big discount by Sabah Electricity Sdn Bhd (SESB) should pass on the benefit to industrial users to enhance the competitiveness of the manufacturing sector and the State’s economy as a whole.
Chong said the government should also suspend EPF and HRDF Fund contribution for six months to ease cash flow for firms to operate and abolish Sales and Service Tax (SST) to make the manufacturing sector more competitive. SST is a single point tax collection for goods produced by manufacturers and it is cost loaded onto the most important sector of the economy rending that nation productive sector uncompetitive, he said.
Chong suggested that the government should also reduce corporate tax to below 15% for SMEs and 20% for company with Federal Manufacturing Licence (FML) to ease their cash flow for the time being and to make local industry more competitive in the region.
Waive all port charges, especially storage charge caused by the slow movement of goods due to the Movement Control Order, he said, adding the government should also ensure effective and efficient disbursement of all aids.