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Malaysia: Avoiding severe business collapse
PETALING JAYA: After months of business disruptions and operating at reduced capacity, businesses in Malaysia are finding it harder to stay afloat if Covid-19 restrictions are prolonged.
Industry groups are appealing to the government to allow all businesses, regardless of the states they are based in, to operate at full or increased capacity if a high percentage of their workforce have been fully vaccinated.
The industry players are also asking for further government stimulus and non-monetary assistance to help all affected businesses to reopen and ramp up their production capacity.
The urgent call for help came following the warning from the Entrepreneur Development and Cooperatives Ministry late last month that some 580,000 businesses, or 49% of the micro, small and medium enterprises (MSMEs), are at risk of failing by October, if they are not allowed to open up their operations by then.
On Aug 8, Prime Minister Tan Sri Muhyiddin Yassin announced the relaxation of some Covid-19 restrictions beginning from yesterday.
However, the relaxations were mostly skewed towards the social sector in states that are already in phase two, three and four of the National Recovery Plan (NRP).
Speaking with Starbiz, Kuala Lumpur and Selangor Indian Chamber of Commerce and Industry (KLSICCI) president Datuk R. Ramanathan (pic, below)) said the announcement by the Prime Minister was not well received by the industry.
“The majority of business sectors are based in the Greater Klang Valley, which is still seeing daily cases above 10,000 and currently categorised as in phase one.
“The announcement means no significant impact to the businesses at this point of time,” he said.
Ramanathan urged the government to immediately allow non-essential businesses to start operating “before it is too late”.
“The MSMEs nationwide are ready and willing to impose strict standard operating procedures and give good support towards the national vaccination target of 90% by the end of September,” he added.
On the other hand, Federation of Malaysian Manufacturers (FMM) president Tan Sri Soh Thian Lai, who welcomed the easing of restrictions for individuals who have been fully vaccinated, said the business sector also looks forward to further relaxations.
Muhyiddin in his latest televised speech said the easing of restrictions for the economic sectors will be announced very soon.
“FMM is advocating for those sectors that are currently classified as non-essential in phase one and two of the NRP to be allowed to resume operations based on the percentage of employees who have been fully vaccinated, instead of continuing to restrict their operations by their NRP status.
“This is because the prolonged closure is killing many industries and increasing unemployment as many have not been in operations for close to three months now.
“In addition, all other sectors should also be allowed to have a higher manpower capacity based on the fully vaccinated rate at the company level,” according to Soh.
Soh expressed confidence that the Klang Valley will transition to phase two of the NRP “very soon”, driven by the ongoing “Operation Surge Capacity” to ramp up vaccinations in the populous Klang Valley.
“Although we welcome the easing of restrictions on fully vaccinated people, we would like to also highlight our concern on the permission given to Malaysians, permanent residents and Malaysia My Second Home individuals who return from abroad to be self-quarantined at home.
“It is still best to be quarantined at a government or private quarantine centre for prevention of any latest Covid-19 mutations,” he said.
Malaysia Semiconductor Industry Association (MSIA) president Datuk Seri Wong Siew Hai (pic, below) also called for companies to be allowed to operate at higher capacities based on the full vaccination rates.
“Currently, companies in the Klang Valley can only operate at maximum capacity of 60%, while in phase two states like Penang, they can operate at 80% capacity.
“Regardless of the NPR phases they are in, the government should allow companies to increase capacity if a high percentage of their workforce are fully vaccinated.
“For example, if a company is in the Klang Valley but more than 80% of its workforce are fully vaccinated, let the company run at 100% capacity,” he said.
In the case of MSIA, he highlighted that 50% of its members’ workforce have already received the first dose of vaccine, and about 26% are fully inoculated.
Wong pointed out that while semiconductor as well as electrical and electronics (E&E) companies are seeing strong demand, especially from abroad, the industry players could not meet demand due to domestic business disruptions following the Covid-19 restrictions.
“Hence, some companies had to transfer production for some orders to their sister sites or factories in other countries to meet demand,” he said.
Wong called the E&E sector the “golden goose” of the Malaysian economy, especially in current times of macroeconomic weakness.
“The government should nurture the sector by allowing it to operate at maximum capacity.
“Another issue faced by the sector is labour shortage as orders pile up and companies need to expand. This must also be addressed by the government,” he said.
In assisting businesses to reopen, following prolonged business closures, Wong urged the government to extend additional help to all industry players, regardless of their sizes.
“Providing stimulus is just the short-term solution. The long-term solution is to allow reopening and this can only be achieved through vaccinations,” he added.
Meanwhile, FMM’s Soh also agreed that further stimulus in the form of additional funding and financial incentives need to be provided, apart from the wage subsidy programme and automatic loan moratorium, should the restrictions on business operations continue.
KLSICCI’s Ramanathan pointed out that the previous stimulus packages totalling RM530bil only supported less than 20% of MSMEs’ liabilities and losses during the movement restriction period.
“When the market reopens after a hiatus, demand becomes higher with limited supply, thus causing higher inflation and cost of living to the people,” he said.
However, contrary to the industry players, Centre for Market Education (CME) chief executive officer Dr Carmelo Ferlito said additional fiscal injections will only further sharpen the dichotomy between the financial economy and the real economy.
“We already have excess liquidity despite a depressed economy. We risk too much from the inflation side.
“If we stop the lockdown and implement a sounder strategy for handling the pandemic (as advocated in a recent paper by CME), we can have the economy restarting without liquidity injections,” he said.
Ferlito believes that the strategy to simply reopen economic activities based on the trust in the vaccines could backfire.
“We can even open wider and faster if we have a proper plan in place, which is not just trusting vaccines that were designed before the Delta variant came into existence,” he told StarBiz.
He suggested weekly tests to be done at workplaces and schools for early detection and greater investments to be made for the healthcare system while pharmaceutical research needs to be boosted.
Source: https://www.thestar.com.my/business/business-news/2021/08/11/avoiding-severe-business-collapse