Foo Ngee Kee
KOTA KINABALU: Small Medium Enterprise Association of Sabah (SME SABAH) appreciates Prime Minister Tan Sri Muhyiddin Yassin’s announcement of the PEMERKASA Plus aid package of RM40 billion.
Its President, Foo Ngee Kee, said in this difficult times, relief aids like the wage subsidies, electricity bills discount of 10% for three months, extension of tax deductions for rental discounts granted by Landlords to December 31, 2021, sales and service tax exemption extension to December 31, 2021, moratorium for three months or reduction in loan repayment of 50% for six months, will be helpful to SMEs survival.
He said the Sabah State Government is to be lauded in allowing more of the economic sectors in Sabah to be opened while the Federal Government is stricter due to the high daily Covid-19 cases in West Malaysia.
By allowing these economic sectors to open, he said SMEs are given a chance to gather some sales revenue (valuable cash flows) to help partially pay wages, loans and other operating expenses.
He said the three objectives of enhancing the capacity of the Public Health, providing relief aids to the people and supporting the continuity of businesses are all positive steps.
However, he said, the wage subsidies (WS) and exemption of the Human Resources Development Fund (HRDF) levy for one month is too short and should be for all sectors.
“During the full-scale Movement Control Order (FMCO) (lockdown) all economic sectors are affected by the restriction on consumer movement.
“Both WS and HRDF levy should be granted for three months from June to August this year, if not six months, just like the 10% discount for the electricity bills for three months.
“The WS is only helping SMEs to pay a small portion (<30%) of their employees’ wages and contributions. This WS allows SMEs to retain their existing staff instead of terminating them and hiring new staff a few months later when the business returns.
“When hiring new staff, SMEs will be given an incentive of 40% of the staffs’ wages for six months. We request that the Government channel some of this PENJANA Place and Train funds to the much-needed WS if necessary,” he said in a statement Wednesday.
The FMCO lockdown from June 1 is over three phases with gradual relaxation of the SOPs and opening of the economic sectors. After the two week lockdown period ends on June 14, if not extended, will be followed by phase 2 gradual relaxation of the SOPs over another four weeks and, if not extended,
Foo said business will not recover immediately, as it will take more than six months to recover, and there the wage subsidies for at least three months, if not six months, will be very much needed for SMEs to retain their staff or remain open.
“Providing more bank loans to Micros, Small and Medium Enterprises (MSME)s can be helpful but will increase their debt burden. Many MSMEs are already finding it difficult to get their loan applications approved…unless the banks can relax their standard credit approval criteria, it will not benefit the MSMEs,” he said.
Foo said the MSMEs are hoping to get some bank interest rebates to lighten their interest burden.
“Malaysian banks continue to be strong and profitable, according to Moody’s Investor Service” (NST March 25, 2021). Banks can afford to give interest rebates to their borrowers, just like the landlords who have been urged by the Government to give rental rebates.
“I hope the Government can speak to the banks to grant interest rebates to their borrowers, and also give the same tax deduction to banks that grant interest rebates of 30% or more.
“So far, banks merely allow delays in repayment through Moratorium or Repayment Assistance (MRA) by way of reduction of the repayment amount of loan instalments.
MRA, when compared with the interest rebates, is only providing a temporary relief in the cash outflows but does not reduce the fixed interest expense at all.
“Also, banks are still slow in the processing of requests for MRA and that is not helping MSMEs that need a timely decision from their bankers in order to have certainty in their finances. Without getting timely decisions from their bankers, MSMEs are under stress and anxiety.
“Bankers, by communicating their decisions early, say one to two weeks from receiving the applications, to their borrowers, would give them some mental relief.
“Borrowers receiving the bank’s decision, whether approved in full or partial or even if rejected, would be in a position to know where they stand going forward. They would then be better able to plan for their much-needed cash flows to stay alive,” he said.