Prolonged MCO really hits middle-scale manufacturers hard, says association

KUCHING: The Sarawak Manufacturers Association (SMA) views the RM250-billion Prihatin Rakyat Economic Stimulus Package as ‘having missed the point with regard to helping the small and medium enterprise (SME) sector, specifically the employers’.

In highlighting this, SMA secretary-general Stephen Hii said Sarawak SME manufacturers would still have to pay full salaries to their employees, even if the factories were not in operation.

In this situation, he said the employers were the ones in need of the emergency working capital.

“How would these factories, with annual revenue of about RM200,000 and monthly expenses of RM100,000 only for the payroll, sustain the business for the whole year?

“The Movement Control Order (MCO) has been extended to April 14 – this would impact the middle-scale manufacturers, which comprise up to 60 per cent of Sarawak’s industrial sector.

“They are the ones who would need help,” he said in a statement yesterday.

Hii added that manufacturers had been facing problems such as the Ministry of International Trade and Industry not providing sufficient online permits; the confusion of what were considered essential items; shortage of funds; difficulty in sustaining cash payroll for a few months; wages subsidy; the fixed costs still incurred despite factories not in operation; as well as the shortage and price fluctuations of face masks, hand sanitisers and thermometers.

Hii believed that to rectify these issues, the government should carry out plans such as allowing SMA to issue temporary le ers to Sarawak manufacturers that would enable them to run minimum operations until April 14, or to identify and clarify the definition of essential items so as to avoid conflicts between businesses and the authorities on the ground.

“The government should also find ways to provide a quicker cash flow for them such as releasing the outstanding GST (Goods and Services Tax) refunds, outstanding government procurement payments, cheaper bank interests pegged to payroll costs without deferring loans which would be repaid later, or subsidising SME manufacturers, some of which are familyoperated.

“We are also suggesting that contributions to EPF (Employees Provident Fund) and payments of utility bills be waived for at least six months, rather than deferring the contributions or payment.

“The government should also ensure that there is a sufficient supply of face masks, test kits, hand sanitisers and thermometers in Sarawak, with proper price control; and to provide tax deduction for costs incurred in providing protective personal equipment and sanitising the working environment,” he added.