The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) views with deep concern about the recent spike in new infection cases nationwide, particularly in some areas and districts in Kedah, Sabah, and Selangor.

Tan Sri Datuk Ter Leong Yap, President of the ACCCIM reiterated that the chamber has forewarned that any negligence in the compliance of SOP, in the absence of an effective vaccine against the COVID-19, will be costly and cause more harm to the economy and businesses if the new wave occurs. It is imperative that the Government and relevant enforcement agencies cannot compromise on the enforcement and compliance of SOP under the Recovery MCO, CMCO and EMCO, regardless of race, religion, politics or socio-economic status.

Protecting people health and livelihoods needs to be finely balanced. Tan Sri Datuk Ter says that ACCCIM’s think tank, Socio-Economic Research Centre (SERC) has obtained feedback and suggestions from its members concerning the immediate issues faced by businesses in revitalising their business in coping with this third wave of virus development.

ACCCIM has submitted a list of proposed measures and initiatives to the Government for consideration to mitigate the anticipated larger economic and social impacts from a prolonged outbreak of the third wave of virus infection. These cover easing the cost of doing business; taxation; continued provision of credit and financial facilities; enhancing consumer spending; accelerating the adoption of digitalisation; creating jobs, reskilling and upskilling of manpower; reviving tourism and enhancing exports.

ACCCIM hopes that the tabling of 2021 Budget on 6 November 2020 would focus on the provision of relieve assistance and tax break as well as initiatives to ease business cash flow, cost and credit, protect jobs and enhance consumer spending while help businesses and workers develop new capabilities and set the stage for long-term growth.

A. THE CONTAINMENT OF VIRUS AND PRECAUTIONARY MEASURES

1. Balancing between protecting lives and saving livelihoods. It is critically dependent on the effectiveness of the government’s policies to revitalise the economy, and unwavering cooperation of all Malaysians in full compliance with SOP to flatten the epidemic curve, even when out of movement restrictions.
2. The precautionary measures need to be clearly communicated and disseminated to avoid public confusion and also constantly reviewed to determine strictest compliance and enforcement with social distancing requirements.
3. The targeted approach of implementing Conditional/Enhanced Movement Control Order (CMCO/EMCO) in areas and districts with high infection rates is deemed as necessary and appropriate to break the new chains and contain the virus spread.
4. Maintaining confidence in the future path of virus development and the availability of vaccines are needed for a full recovery.

B. EASING 3Cs (CASH FLOW, COST AND CREDIT); REVIVING PRIVATE INVESTMENT

1. Provide continued support for businesses on 3Cs (Cash flow, Cost and Credit) to help them get back on feet firmly amid lingering uncertainty about the pace and strength of economic recovery as well as anxiety over an occurrence of a third wave of virus.
2. Targeted repayment assistance must be greatly facilitated. We hope that the banks can continue to give priority on their reaching out the borrowers in the targeted CMCO and EMCO’s areas and districts and give more compassionate consideration in facilitating loan repayment flexibility assistance.
3. The extension of Wage Subsidy Program (WSP) for another six months. It takes a longer for the unemployment rate (4.7% in July) returning to pre-pandemic levels of (unemployment rate of 3.3% or an average of 500,000 persons). Hence, we see the continued need of supporting firms in retaining and paying their workers to help businesses on cash flow.
4. Foreign worker levy waiver and rebate. As for support to businesses on costs, the Government can consider to give a waiver on foreign workers levy in 2021 OR a 50% reduction in foreign levy.
5. Extend electricity tariff discounts for all other users in the commercial, industrial, and agriculture categories as well as domestic users.
6. Review the industry (natural gas) price to reflect the decline in global fuel prices. To waive the Take-or-Pay (TOP) penalty clause given a prolonged impact of COVID-19 on businesses to help lower business costs and sustain operations. Gas Malaysia Energy Services (GMES) Sdn Bhd can consider to defer its decision to impose excess gas charges until the economy recovers.
7. Extend e-CAP, which allows for a deferment and restructuring of the employer’s share of EPF contributions by six months in 2021.
8. Extend the exemption payment for Human Resources Development Fund (HRDF) levy for all sectors by another six months from November 2020 until April 2021.
9. Rental payment. It is proposed that: (a) Extend the special tax deduction on reduction of rental for another 9 months from Oct 2020 to end-Jun 2021. This tax rental deduction should be eligible for rental payment reduction given to large companies’ tenant; and (b) Extend rental relief for government tenants.
10. Review of company income tax rate: (a) Reduce company income tax rate to 22% from 24% for corporates in YA 2021 and further to 20% for YA 2022; (b) Reduce company tax rate to 15% from 17% for SMEs in YA 2021; (c) Provide tax rebate of 25% on corporate income tax payable for SMEs up to RM30,000 for YA 2020-2021.
11. Design a “Reconstruct, Resilience, Reimagine Package” for micro and SMEs. The package comprises fiscal, monetary, financial, marketing, technology, digitalisation and automation, technical advisory, product and market development as well as human capital development.
12. Focusing on investing in “new smart infrastructure” used for high-tech, digitalisation and sustainable purposes (renewable energy, climate change, eco-green). These include Big data centres, 5G infrastructure, and charging stations for new energy vehicles (NEVs), solar energy, healthcare, smart cities etc.
13. Review of Reinvestment Allowance (RA). It is proposed to extend RA by another five years to 20 years from 15 years previously OR An automatic extension of Special RA by another five years for all sectors that have exhausted either RA or Special RA. The Special RA will expire in YA 2022.

C. INCREASE FUNDING OF EXISTING LOAN SCHEMES; ENHANCEMENT OF LOAN FACILITIES AND GRANT

1. We propose to increase the amount of funding; ease the access to loan facilities as well as enhance the terms and conditions. It is observed that some of the loan schemes have low utilisation rate.
2. Increase the size and amount of loan of some existing loan schemes, especially for micro-enterprises. A fast approval procedure, and shorten the number of working days required to approval the loan applications.
3. Easing of accessibility, terms and conditions. It is proposed that to lower the interest rate (cost of borrowing) for some loan schemes in tandem with the reduction in Bank Negara Malaysia’s overnight policy rate.
4. Enhancement of existing fund. The RM2.0 billion PENJANA SME FINANCING and RM1.0 billion Tourism Financing can be enhanced to increase its utilisation as follows: (i) Zero-interest loans or 2.5% interest rate with no collateral to SMEs for the borrowing amount of up to RM500,000 for a period of 12-24 months; and (ii) SMEs facing more than 30% decrease in sales can claim compensation of interests and can borrow without collateral.
5. Danajamin PRIHATIN Guarantee Scheme (DPGS). We propose to (a) Expedite the approval process and a quick disbursement of loan guarantees as time is an essence for businesses facing cash flows. The evaluation process of loan guarantees can be expedited; (b) Extend the deadline of application from end-December 2020 to end-December 2021; (c) The working capital used for the trade facilities/lines be allowed to renew for more than a year; and (d) Lower the 2% SJPP guarantee fee.

D. REVIEW OF THE TAXATION POLICY

1. The timing of introducing new taxes and sequencing of tax reforms must be implemented in line with the state of economic and business conditions and economic structure.
2. Payment of balance of tax for YA 2020 and 2021 in 3 monthly instalments.
3. Not to set the tax estimation CP204 for YA 2021 to a maximum reduction of 85% of last year’s tax.
4. Abolish the seven years’ condition and allow the company to carry forward the unabsorbed business losses and unutilised reinvestment allowance indefinitely, especially businesses will suffer losses against the COVID-19.
5. For Accelerated Capital Allowance (ACA) for automation equipment of 100%, it is proposed to standardise and increase the amount of qualifying expenditure for Category 1 (rubber, plastic, wood and textile products) and Category 2 (Industries other Category1) to RM10 million from RM4 million and RM2 million respectively. In addition, to extend the claimable period for another 2 years. The expiry date is YA 2018-2020.

E. ENHANCING CONSUMER SPENDING

1. The extension of a voluntary reduction in EPF’s employee contribution rate for 2021; EPF i-Lestari withdrawal of RM500/month from Apr – Dec 2021.
2. Tax free holiday for individuals (chargeable income between RM100K and RM150k below); OR Reduction in personal income tax rate and widen the tax band for middle-income earners.
3. Personal Special Relief of RM3,000 to all taxpayers for YA 2020 and 2021.
4. Payment of balance of tax for YA 2020 and 2021 in 3 monthly instalments.
5. RM100 e-wallet spending voucher for an annual income below RM100,000. The on-line stores and participating merchants to provide a match in a form of discount vouchers, that have to be spent in a stipulated time.
6. The extension of RM30 public transport subsidy for another year to December 2021.
7. Allow personal relief of RM1,000 for the cost incurred to purchase PPE (mask, sanitiser, etc.).
8. Increase lifestyle tax relief from RM2,500 to RM4,000 for YA 2021 and also raise child relief to RM3,000 from RM2,000.
9. Personal relief of RM10,000 for housing loan interest for YA 2020 and 2021.
10. House rental payment to be given a personal tax relief of up to RM4,000 annually for M40 households.
11. To extend the income tax deduction of RM3,000 on contribution to Private Retirement Scheme (PRS) by another 5 years, which will be ended by 2021.

F. TELEWORKING, DIGITALISATION AND AUTOMATION

1. Expedite the implementation of RM21.6 billion National Fiberisation and Connectivity Plan (NFCP) to improve broadband quality and coverage, reduce broadband prices and provide Internet access across all spectrums of society.
2. Launch “Digital Connect Networking” initiative consists of companies in the digitisation industry and offers digital services to SMEs free of charge for at least six months. This helps SMEs to switch to mobile working.
3. Introduce Digital Trading Online Voucher scheme by which micro-enterprises with up to 10 employees, can get a financial assistance of RM3,000-RM5,000 with co-funding of 10% from the business along with training and advice to help your business trade online.
4. Provide double tax deductions for investment in upskilling and reskilling of employees in ICT.
5. Provide 100% capital allowance on purchase information and technology (ICT) equipment for YA 2020 and 2021.
6. Extend the Accelerated Capital Allowance and Automation Equipment Allowance provided on the first RM10 million, which is fully claimable within 2 years of assessment for another 2 years. The expiry date is YA 2018-2020.
7. Provide a double-tax deduction on developing e-commerce’s website or mobile apps.
8. Soft grants for digital marketing and training services online; incentives for employers to conduct online learning and e-learning.
9. For Point-of-Sale terminal: (a) No charge for the first 1,000 transactions; (b) Lower the merchant Discount Rate (MDR) to 0.1%; and (c) Market Development Fund to fund the deployment of Point-of-Sale terminals.
10. Lower MDR rates charged by e-wallet.
11. Provide Productivity Solutions Grant to help SMEs adopt new business practices and digital technologies such as IT solutions and equipment as well as implementing business continuity measures.

G. CREATING JOBS AND SKILL SET ENHANCEMENT

1. Extend reskilling and upskilling programmes to end-Dec 2021.
2. Extend hiring and training as well as assistance for business to end-Dec 2021.
3. Provide double tax deductions for human capital investment in upskilling and reskilling of employees to capitalize the opportunities in digital economy or technology transformation.
4. Promote job search and screening of applicants through both public and private sectors’ jobs portal.
5. Encourage youth involvement in agro-food industry and agriculture through high subsidy on agriculture loans and credit facilities; technical support on agricultural production.
6. Measures to support starts-up: (a) A special guarantee procedure to secure bank loans to qualified start-ups up to RM1 million per start-up company; (b) Loan schemes with subsidised interest rates for start-ups.

H. REVIVING TOURISM AND HOSPITALITY SECTOR

1. Extend the period for application of incentives for new 4- and 5-star hotels, which will expire on 31 December 2020, by another 2 years;
2. Extend the period of tax incentives for tour operating companies, which will expire on 31 December 2020, by another 2 years;
3. Further extension of tax incentives for the tourism sector: (a) Tourism tax and service tax exemption from 1 July 2020 to 30 June 2021 to another one year from July 2021 to June 2022; (b) Increase income tax relief to RM2,000 from RM1,000 for tourism expenses and extend the period of relief from 31 December 2021 to June 2022; and (c) Extend the period of deferment of tax instalment payment from 31 December 2020 to 31 December 2021;
4. Assist the industry operators and tours agencies to adopt digital technologies and digital solutions to create ‘live remote’ tourism and/or virtual tourism experiences;
5. Continue to explore the implementation of the “Travel Bubbles” and identify green zones in the region to help revive the return of international tourists;
6. Getting the industry prepared for the eventual border re-opening. Travellers will need to be reassured on the safety of travelling to restore travellers’ confidence and stimulating demand; and
7. Collaborate with the private sector to put in place new standards in terms of safety, hygiene, testing, and procedures.

I. ENHANCING EXPORTS

1. Remove RM300,000 ceiling on Market Development Grant (MDG) as this will encourage more domestic SMEs to participate in international export promotion activities and explore more markets.
2. Reinstate Brand Promotion Grant, which was launched in 2003 to develop and promote Malaysian owned brand names in overseas market but was suspended.
3. Grant exemption or relief of Sales Tax on all inputs for the manufactured of non-taxable goods. This will assist companies to lower the cost of production and remain competitive with their competitors importing these items.
4. Grant automatic relief of Service Tax or automatic exemption on any taxable services rendered to sales tax licensed manufacturers – Advertisement costs, consultancy, accounting, engineering, security, IT services, Customs agent, freight forwarding services, etc. used by a licensed manufacturer.
5. The Digital Free Trade Zone (DFTZ) to ease entry of imports as the change in the de minimis threshold favours imports over exports. This increases competitive threats to local SMEs, which are already facing declining comparative advantages vis-à-vis China, especially in consumer goods.
6. Review export allowance incentive. (i) The company engages in inter-company purchases is eligible for export allowance incentive as long as it is for export purpose; (ii) Revise the criteria of eligibility by lowering an increase in export value; and (iii) Special export allowance of 5 years with a 100% statutory business income exemption for promoted activity/products such as agricultural products (coffee, tea, etc), aqua products (vacuum cooked fishes, etc) and manufacturing products.