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ACCCIM Press Releases

10 Nov 2020

ACCCIM’s PRESS STATEMENT ON THE EXTENSION OF CMCO IN PENINSULAR MALAYSIA

ACCCIM’s PRESS STATEMENT ON THE EXTENSION OF CMCO IN PENINSULAR MALAYSIA (EXCEPT PERLIS, PAHANG & KELANTAN), 9 NOVEMBER – 6 DECEMBER 2020

The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) views with concern about the impact of further extension of CMCO on the economy and businesses, especially the travel, tourism, hospital and retail sectors.

The ACCCIM’s recent quick-take survey indicated that more than 40% of respondents expect their revenue to drop by more than 20% in 4Q 2020 and 1Q 2021, with almost 48% of businesses operating in Selangor, Kuala Lumpur and Sabah expect their revenue to decline by between 21% and more than 50%. Our channel checks also indicated footfall in the shopping malls have collapsed to 15-30% from 80-90% previously while retail sales have declined sharply since the occurrence of a third wave of virus.

Tan Sri Datuk Ter Leong Yap, President of the ACCCIM reiterates that it is highly critical to ensure that the measures and initiatives as well as spending programs budgeted at RM322.5 billion or 20.6% of GDP in 2021, including RM69.0 billion of development expenditure are implemented quickly and effectively in getting businesses and industry back to a normal economic cycle. The planned public infrastructure projects and programs must be quick to implement effectively and feed through to the economy, households and businesses. Project implementation delay can stifle the economic recovery.

In follow-up to the National Budget 2021, our quick take survey indicates that 84% of total 486 respondents feel that the Budget measures do not help SMEs. 45% of businesses would face cash flow problems; 39% envisage sales/demand to drop and 19% citing lack of financing support or facing difficulty to get financing. The survey shows that loan moratorium, wage subsidy and utilities’ discount as well as financial support (loans, relaxation of terms and conditions etc) were listed as amongst the key measures needed to assist them through this extreme difficult time.

Tan Sri Datuk Ter says that the ACCCIM will continue to proactively engage with the Government and relevant Ministries to discuss the feedback and suggestions received.

With the further extension of CMCO almost nationwide, we are deeply concerned that businesses, especially SMEs would continue to struggle with cash flows, cost and credit problems. Hence, we hope that the Government can consider to 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.

A.   EASING 3Cs (CASH FLOW, COST AND CREDIT)

  1. 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.
  2. Extend electricity tariff discounts for all other users in the commercial, industrial, and agriculture categories as well as domestic users.
  3. Extend e-CAP, which allows for a deferment and restructuring of the employer’s share of EPF contributions by six months in 2021.
  4. Extend the exemption payment for Human Resources Development Fund (HRDF) levy for all sectors by another six months effective 1 January 2021. In 2021 Budget, the exemption will cover the tourism sector and companies affected by the COVID-19 crisis.
  5. 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.

 

B.   ENHANCEMENT OF LOAN FACILITIES AND GRANT

The 2021 Budget has provided a number of funds and financial facilities to assist SMEs and specific sectors, which amongst others include RM1.0 billion Investment Incentives Package for high value-added technology in supporting R&D investment in aerospace as well as electronic clusters; RM2.0 billion Targeted Assistance and Rehabilitation Facility (TRRF) under Bank Negara Malaysia, which offers a concessionary rate of up to 3.5% with guarantee coverage by Syarikat Jaminan Pembiayaan Perniagaan (SJPP) and Credit Guarantee Corporation (CGC); and RM500m to High Technology Fund by Bank Negara Malaysia (BNM) to support high technology and innovative companies. This is in addition to various loan schemes and grant for digitalisation and automation as well as tourism provided under PENJANA.

Tan Sri Datuk Ter urges the SMEs to apply for the various fiscal support funds and financial facilities to help them through this extreme difficult time. It is observed that some of the loan schemes under PENJANA with the exception of SRF (100% utilisation rate) have low utilisation rate. We propose to ease the access to loan facilities as well as enhance the terms and conditions.

  1. 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.
  2. 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.
  3. Enhancement of the existing funds. 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.
  4. Targeted repayment assistance must be greatly facilitated. Following the implementation of CMCO/EMCO, we hope that the banks can continue to give priority on their reaching out the borrowers and give more compassionate consideration in facilitating loan repayment flexibility assistance. ACCCIM also urges business borrowers, especially SMEs to proactively engaging with bankers to work out a flexible repayment scheme.

 

C.   REVIEW OF THE TAXATION POLICY FOR EASE COST OF DOING BUSINESS AND INVESTMENT

The 2021 Budget proposed that the existing tax incentives, due to end this year, will be extended until 2022, pending the study of tax incentives review. The extension includes tax incentives for maintenance, repair, overhaul (MRO) activities for aerospace, building and repair of ships, bio nexus status and economic corridor developments.

In the meanwhile, we propose to consider the following tax measures to ease businesses’ operating cash flow.

  1. Payment of balance of tax for YA 2020 and 2021 in 3 monthly instalments.
  2. Propose to remove the ceiling of 85%. Monthly tax payment, CP204 tax estimation. At present, the current year tax estimate should not be lesser than 85% of tax payable for the immediate preceding year of assessment.
  3. 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.
  4. 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.
  5. 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.

 

D.   MALAYSIA MY SECOND HOME (MM2H) PROGRAM

The Budget 2021 and Penjana have rolled out measures to resuscitate the real estate sector, which has been in doldrum for many years. Faced with the persistent glut of unsold properties, we propose a review of Malaysia My Second Home (MM2H) program).

Malaysia My Second Home (MM2H) is a program that allows foreigners and their family to live in Malaysia on a long-stay visa for 10 years and is renewable by another 10 years, bringing the total to 20 years. This program not only to incentivize foreigners to live long-term in the country but also helps to promote our leisure and tourism sector. It is proposed that:

  1. Lift the suspension of MM2H program. The program was temporary suspended since August 2020 for a comprehensive review and re-evaluate the program and also in line with the Government’s decision not to allow foreigners to entre Malaysia following the outbreak of COVID-19 pandemic;
  2. Extend the period of long-stay visa from the current 10 years to 15 years, bringing the allowable period to 30 years (=15+15) to attract more foreigners to stay longer in Malaysia, and hence, entice them to consider buying more properties; and
  3. Residential properties investment will be considered for application for a Permanent Resident. A foreigner can be considered for a PR status if he or she invests at least US$2 million in aggregate. This is to attract and anchor foreign talent in Malaysia.

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