Proposals for Temporary Measures Bill
THERE have been questions about the legality of the government’s economic stimulus packages as they were rolled out without parliamentary authorisation. Some of the earlier measures were gazetted under the relevant laws, effectively rendering them legally and properly implemented. But there are others that are yet to be given a proper legal footing, especially those that involve direct fiscal injections.
Recently, the Finance Minister said most of the direct injections would be raised through domestic borrowings. This will ultimately contribute to public debt, which currently stands at 52% of GDP.
Raising this self-imposed public debt ceiling would require approval from Parliament, and if the fiscal injections come from the Consolidated Fund, any withdrawal must comply with the Federal Constitution.
The government could rectify the situation by including them and also the Short-Term Economic Recovery Plan (Penjana) in the Covid-19 Temporary Measures Bill, which would be tabled in July.
The following measures ought to be included in the Bill as well:
> Temporary relief against non-performance of contractual obligations. In its Covid-19 (Temporary Measures) Act 2020, Singapore put in several measures to support businesses that are threatened by legal action due to non-performance. Parties are not allowed to commence or continue any legal action against the defaulting party. This temporary relief will apply for a period of six months and may be extended.
A similar measure would be most welcomed by Malaysian businesses that are currently struggling to perform their contractual bargains. It is important for this provision to apply retrospectively from when the movement control order was first commenced.
> Declare Covid-19 a force majeure event: A similar approach was adopted in France, Spain and China. A force majeure clause commonly covers various situations in which the performance of a contract is delayed, prevented or hindered. In a force majeure event, parties will be excused from their contractual obligations.
If the government were to designate Covid-19 a force majeure event, more parties may be able to excuse themselves from their contractual obligations, which would prevent impending litigation.
> Relief of directors’ personal liability for wrongful trading: In Australia, legislation was amended to remove a director’s personal liability for trading while insolvent. In Malaysia, Section 539(3) of the Companies Act 2016 provides for personal liability of directors if the company contracted a debt without any reasonable expectation of the company being able to pay the debt. If this liability were to be temporarily removed by law, directors may be more prepared to lead companies out of financial difficulties. To prevent this relief from being abused, there must be clear statutory provisions on the mechanism and in what circumstances it should apply.
> Rental waiver for business tenants: Singapore has extended rental waivers for business tenants for two more months in its recently-passed amendments to its Covid19 regulations. Eligible commercial properties will now be entitled to a total of four months rental waiver while other industrial/office properties will be given a three-month waiver. Two months of this waiver will be funded with government support while the rest will be borne by landlords. It is advisable for the Malaysian government to include a similar provision in the Temporary Measures Bill in order to provide more support for companies to rebuild their businesses.
Although we are in desperate times, it is essential that the Executive continues to uphold the pillars of democracy by allowing Parliament to properly scrutinise the measures taken to mitigate the impact of Covid-19.
The government has not been exactly clear on the sources of funding for the stimulus packages, hence it is crucial for the Bill to not only provide further measures to help revive the economy but to also legalise those that have already been initiated but are yet to be debated and/or gazetted. LEONARD YEOH Tay & Partners Kuala Lumpur