KUALA LUMPUR (July 20): The Federation of Malaysian Manufacturers (FMM) has called for the loan moratorium for small and medium enterprises (SMEs) and individuals which will end in September 2020, to be extended by a further six months.
In a statement today, the association said this would provide a much-needed breathing space and further ease the tight cash flow that the SMEs and individuals were currently experiencing.
Its president, Tan Sri Soh Thian Lai said the extended moratorium could provide financial relief to those who are currently economically disadvantaged, especially companies that are struggling to sustain their businesses and workers who have been retrenched and have lost their source of income.
"At the same time, to ensure that the economy can quickly recover, the extended moratorium would allow SMEs to tap and benefit from the various initiatives that have been introduced under the PENJANA Short-Term Economic Recovery Plan, without burdening businesses with the cost of servicing their loans/financing and indirectly reduce their cost of business survival," he said.
He noted many businesses, especially those in the non-essential products and services, only commenced operations after the Recovery Movement Order Control Order (RMCO) on June 10, 2020.
Manufacturing companies supporting the construction and hospitality industries were also further impacted as these sectors could only resume operations after the additional conditions and precautionary measures and Standard Operating Procedures (SOPs) being implemented, he said.
"These sectors and the supporting businesses would need a longer period to tide over the COVID-19 disruption and impact on their businesses," he said.
Soh highlighted that the COVID-19 and the MCO had also significantly impacted both domestic and export trade, ranging from complete cessation to significant reduction in business activity resulting in severe challenges on capital and cash flow for these companies and employment for workers.
He viewed that the Wage Subsidy Programme (WSP) which as at July 6, 2020, had benefitted 310,622 employers covering 2.48 million workers, as an indicator that companies were unable to sustain their businesses and had to resort to obtaining aid from the government.
The WSP which has been extended for a further six months, would likely end in September, coinciding with the loan moratorium period, could be a double whammy on businesses that could severely impact their sustainability and initiatives to revive their businesses, he said.
In addition, he said FMM also appealed to the government for further assistance in areas which has a significant cost impact on businesses to provide a reprieve to many who are facing tight cash flow issues.
This includes a six-month moratorium from date of disbursement on all of the PENJANA financing schemes as currently only the RM500 million Bumiputera Relief Financing has provided this relief.
FMM is also asking for stamp duty exemptions which are now granted only for instruments of transfer (partial exemption) and loan agreements (full exemption) for sale and purchase agreements signed between June 1, 2020 and May 31, 2021 to be extended to all loan and financing instruments for a one year period from July 1, 2020 until June 30, 2021.
For stamp duty exemption for SMEs has now been extended on any instrument executed for Mergers & Acquisitions (M&A) between July 1, 2020,and June 30, 2021, he said FMM proposed that the exemption be extended to M&As and partnership agreements agreed or signed prior to the outbreak and were disrupted due to COVID-19 and MCO.
"Some of the documents were signed prior to these events and are only now proceeding but will take a longer time to be implemented given the changes that have taken place over the past few months. As it stands now, these projects will not be able to enjoy the duty exemption," he added.
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