Help SMEs to help workers – Chan
KOTA KINABALU: The economic stimulus package announced by Prime Minister Tan Sri Muhyiddin Yassin recently was not enough and would not be able to effectively stimulate and improve the economic downturn caused by the Covid-19 outbreak, said Kota Kinabalu member of parliament, Chan Foong Hin.
Chan pointed out that the actual direct government expenditure was only RM25 billion, adding that around RM205 billion out of the RM250 billion announced was in fact merely deferments or loan guarantees.
Upon careful scrutiny, one can find no direct assistance whatsoever for Small and Medium Enterprises (SME), entrepreneurs, traders, merchants, and all those people who organize and operate a business or businesses, said Chan in a statement on Wednesday.
This, he stressed, was despite them taking on greater than normal financial risks in order to run a business in the first place, such as taking business loans and giving credits.
“These people are also employers and make up the biggest job market in the private sector and provide the most work to the ordinary people, and yet they have been neglected by the federal government. How are they even expected to survive having near to zero income?” asked Chan.
“Today I read the new report of a survey conducted by the SME Association of Malaysia with utmost concern.
The survey which was done amongst 15,627 SME respondents, found that 33 percent of respondents have just enough cash flow for them to pull through in March, while 37.8 percent can only sustain themselves until April 2020.
“It can be seen that their biggest worry now is cash flow problem. SMEs are afraid that they have too much to bear and many won’t take more loans as many of them already have existing loans, and on top of that, they are expected to pay salaries and rentals in full along with other statutory payments,” Chan pointed out.
Other than cash flow problem, he opined that the next main concern was the job security of their workforce.
Chan said in the same survey above, 25.6 percent said they had decided to retrench their employees or cut total employment, while 43.8 percent said they would try to persuade their employees to take annual leave voluntarily.
According to Bizsphere, SMEs employ 70 percent of the 10 million-strong workforce in Malaysia.
“Based on the same numbers, a job slash of up to 25.6 percent can potentially see up to 2.56 million people being jobless. This is very, very worrying and deserves the attention of the government,” Chan stressed.
“In my opinion, the long term solution is to increase job security whereby the government must provide financial assistance to Malaysian businesses and to make sure after the end of the MCO, the people can go back to work as usual without having fear that their job no longer exists. Help SMEs to help workers. Sustainability of jobs is very important at this stage,” Chan opined.
According to him, in the United Kingdom, the government announced a “Self-employed Income Support Scheme” where the government would pay out to each and every self-employed person (including businesses) 80 percent of their average profits over the past three years up to £2,500 (RM12,500.00) per month.
“Now that is real help from the government to sustain a business, and I hope that the Malaysian federal government will emulate the UK government’s spirit in helping and encouraging such entrepreneurs and businesses.
“Otherwise, closer to home, Singapore has also done something very admirable. The Singapore government announced that it would offset 25 percent of wages for every local worker in employment.
“Harder hit sectors like those in the food services sector will be 50 per cent co-funded, while those in the tourism and aviation sectors will receive 75 percent. This is the kind of injection needed to help entrepreneurs and businesses,” he said.
In Malaysia, the Prime Minister had announced a paltry RM600 per month per worker wage subsidy.
“This wage subsidy is only claimable by employees earning less than RM4,000 and employers experiencing a 50 percent decrease in income since 1 January 2020,” Chan pointed out.
According to him, by restricting this RM600 to only employers who are able to prove that they have experienced a 50 percent decrease in income since 1 January 2020, reflects that the government is insincere in helping.
“To me, any employers who suffer a decrease in income starting from March 2020 regardless of the profit in January and February should qualify without any questions asked.
“In any event, the sum of RM600 is utterly inadequate to mitigate the impact of the crisis. I would echo the Pakatan Harapan Presidential Council’s suggestion that the wage subsidy be increased to at least RM1,200 per month per worker, which is at least at the level of minimum wages. Workers in sectors like tourism, hotel and aviation deserve to be subsidized even more as they are harder hit,” he said.
Chan also said that employers in Sabah have a statutory duty to pay employees whose pay does not exceed RM2,000 and such responsibilities are non-delegable and non-negotiable under the Sabah Labour Ordinance.
“However, I understand that even if it is mandatory, they are having a hard time complying. As such, the government has a moral duty to intervene in helping these employers by subsidizing at least RM1,200 per month per worker,” he stressed.
In Sabah, Chan said, the Sabah United Chinese Chambers of Commerce (SUCCC) president Tan Sri Andrew Liew Sui Fatt suggested and hoped that the Government could give a 50percent discount to all taxpayers so that everyone could enjoy the benefit during these difficult times.
“I totally agree with SUCCC’s statement that the federal government should reduce taxes and refund all withholding taxes paid in the shortest possible time. I also agree with the suggestion that utility bills be reduced by 50 percent.
“On top of this, the government should accelerate the processing and approval of essential services, and allow the continuous operation of manufacturing, export-oriented enterprises, e-commerce, engineering, construction, mining and legal services.
Construction companies should be exempted from being required to pay compensation for the delay in completing their constructions.
“I would like to urge the government to minimise all red tape and not require the people to make applications after applications to receive the assistance announced. Please remove the requirements to prove 50 percent loss starting from January 2020. It defeats the purpose of helping the people if the process is too stringent,” said Chan.