ACCCIM Press Releases

16 Feb 2020

ACCCIM’S Proposed Short-And Medium-Term Economic Stablisation And Revitalisation Measures

Given that China is the world’s second largest economy and is deeply connected through trade and investment flows, production hub and global supply chains, the Covid-19 outbreak is expected to have knock-on effects on both the world economy and China, particularly in 1H 2020, before a staggering rebound in 2H 2020.

As China remains an important trade, economic and investment partner of Malaysia, it is inevitable that the Malaysian economy will suffer a temporary economic setback, at least in the first quarter of 2020, as inflicted by the negative spillover effects from China’s Covid-19 outbreak through trade and services channels.

ACCCIM has conducted a Quick-Take Survey during 12-14 February to gauge some preliminary impact of the Covid-19 on industries anticipated by our member businesses. A total of 331 responses from a wide range of industries, comprising 53.5% of total respondents in tourism-related services business, 20.6% in manufacturing sector and 25.8% in primary sector and other services sector, including construction have responded to the survey.

  • Overall, 82.1% of respondents have anticipated that the Covid-19 outbreak will dent their sales in Jan-Mar 2020 with 4% of respondents expect their sales will drop by more than 20%Tourism-related services business will be hardest hit, with more than half (55.2%) of businesses expect sales to plunge by more than 20%, of which 22.4% expect sales to drop by more than 30%, owing to the cancellation of tours and hotels’ reservations. 20.7% of total respondents expect sales to drop by 11%-20%.
  • For the manufacturing sector, 17.9% of respondents expect sales to decline by more than 30% while 4% expect sales to drop by between 11% and 30% due to slowing demand amid the supply chains disruption and face the shortage of raw materials.
  • A prolonged Covid-19 outbreak to say, six months as mirrored about nine months duration of Severe Acute Respiratory Syndrome (SARS) outbreak in 2003, will significantly dampen sales as indicated by 84.5% of respondents. Of the total, 4% of respondents expect sales to plunge by more than 30%; followed by 35.2% expect sales to down by between 11% and 30%47.7% of respondents in tourism-related services business expect a sharp decline in sales by more than 30%; 16.7% expect sales to drop by 21%-30%; and 15.5% expect sales to decline by 11%-20%.
  • It is clear in the survey that businesses and manufacturers expect to face major supply chains disruption as indicated by 46.3% of respondents while 37.3% of respondents expect no impact for now. The balance 16.4% of total respondents indicated that they will be sourcing their supplies from elsewhere.


On a separate development, our think-tank, Socio-Economic Research Centre (SERC) is in the midst of compiling and analyzing ACCCIM’s Malaysia’s Business and Economic Conditions Survey (M-BECS), covering the second half-year of 2019 (2H19: Jul-Dec 2019) and prospects for the first half-year of 2020 (Jan-Jun 2020). The survey was closed for submission on 14 February 2020. The survey report will be released in March 2020.

Proposed Economic and Financial Measures to Mitigate the Impact of Covid-19

Seen in this light, the negative transmission effects from the Covid-19 outbreak in China is a test to Malaysia’s economic endurance.

With increasing anxieties and wariness about the extent and duration of economic and business disruptions on domestic economy, investors’ confidence and consumer sentiment, Malaysian businesses and households must remain vigilant and be prepared to brace for economic fallout from the Covid-19 outbreak.

More importantly, the Government must have the capacity and policy space to safeguard our economy against temporary disruptions while continuing to strengthen and reboot Malaysia’s competitiveness and comparative advantages in global market place. This is deemed vital to ensure that Malaysia continues to achieve a sustainable growth path but also to support our businesses and industries as well as workforce for the future.

We believe that Malaysia’s economic and financial fundamentals are resilient to withstand external shocks and Government is much more prepared to manage and contain the Covid-19 compared to the SARS in 2003.

ACCCIM has submitted a comprehensive package of economic and financial measures and initiatives to mitigate the impact of Covid-19. These cover health safety preventive measures, financial assistance and industry support as well as sustaining consumer resilience.

Bank Negara Malaysia (BNM)’s combined 50 basis points reduction in interest rates in May last year and January this year to 2.75% would provide insurance to protect domestic’s economic growth. We believe that BNM would continue to make timely assessment it deemed appropriate and necessary to provide additional monetary stimulus.

The Government must speed up the implementation of fiscal spending and identify some quick gain and turbocharged projects for fast track implementation. A larger deficit than 2020 Budget deficit’s target of 3.2% GDP is conceivable to counteract the short-term shock.

(A)    Enhancing Health Safety Measures and Ensuring Adequate Supply of Medical Kits

  • The Government should give full, accurate and timely information to build public awareness of the infection and prevent of the spread of disease.
  • Step up cleaning and disinfection at all transportation hubs. Full screening of all arriving passengers from areas with recent transmission of Covid-19 to ensure an effective control of virus transmission, and put in place quarantine procedure and minimise community spread of the virus.
  • To ensure that there are adequate stockpiles of protective medical equipment such as masks, medical gloves, and sanitisers as well as other medical products, and be available at all pharmacies at reasonable prices.
  • Step up enforcement measures to ensure that there is no hoarding of and excessive profiteering of food and basic necessities as well as medical supplies.


(B)  Financial Assistance and Relief to Tourism-related services sectors

  • Set up a Tourism Relief Fund to assist tourism players affected by the Covid-19 outbreak. These include helping to cover health preventive and cleaning costs of hotels and restaurants as well as places of interests.
  • Provide tax relief and allowance for the hospitality sector, especially SMEs, including tour operators and agencies. This includes to raise the budget hotel’s revenue threshold subjecting to SST from RM500,000 to RM1.5 million, similar to food and beverage businesses to ease their operating cost burden.
  • Set up a Business Disruption Relief Fund to assist the affected SME businesses to obtain financing at a concessionary rate from any commercial bank, Islamic bank and development financial institutions regulated by Bank Negara Malaysia (BNM). BNM will provide 60% guarantee on the financing obtained through Credit Guarantee Corp Malaysia Bhd (CGC) and the tenure of the financing is up to five years, with a grace period of six months on financing repayments. More importantly, the approval process must be fast and be made simpler to expedite the disbursement of loans and funds.
  • The banks’ provision of 6-month moratorium on loan payments options, include loan rescheduling and restructuring, is a welcome move and in line with our proposal to provide debt servicing relief to the hospitality sector, including tour operators and agencies as well as affected SMEs. Such financial relief will greatly help to ease their financial cashflows. It is proposed that to allow a longer grace period for debt servicing or loan restructuring during this hardship period. All tenure of loans be extended and have been faithfully services should automatically be extended on the same terms.
  • Provide one-year exemption on tourism tax, service tax on accommodation and departure levy.
  • Waiver of road tax for tour bus operators, taxis and grab operators.
  • MITI and relevant agencies to monitor closely the external trade sector and to assist companies, especially SMEs if they face the problems of supply chains disruption. The customs department and other government agencies to facilitate the ease of importing raw materials from elsewhere if there are supply disruptions from China.
  • Consider to lower foreign workers’ levy, especially for SMEs. It is also proposed to suspend for a 12-mth period, the contribution to HRDF, SOCSO and EIS as these funds are already in surplus.
  • To support businesses, especially the affected SMEs by allowing a special double deduction relief for rental expenses incurred during this critical six-month period.
  • CP204 Monthly Tax instalments payment. To ease the cashflow of businesses by delaying Monthly Tax instalments for a period of six months i.e. stop payment from Mar/Apr 2020 to Aug/Sep 2020, thereafter monthly tax payment resumes in Sep/Oct 2020.
  • The Ministry of Home Affairs and relevant agencies must ease the employment of foreign workers for companies to meet the production of medical protection products such as face masks to meet the unexpected surge in demand.


(C)  Encouraging Inbound Tourism

With the anticipated lower foreign tourist arrivals, we should encourage more domestic inbound tourism. Domestic tourism continues to be a key contributor to the economy promoted through travel fairs, travel marts and smart partnerships. The number of domestic visitors had increased by 7.8% pa to 221.2 million trips in 2018 from 131.0 million persons in 2011, generating a double-digit growth of 11.8% pa in domestic tourism expenditure to RM92.6 billion in 2018 from RM42.3 billion in 2011.

  • In efforts to promote “Cuti-cuti Malaysia”, state governments and private operators of theme parks, places of interests, hotels and public transportation should be encouraged to offer price discounts for local residents during the festive celebrations, public and school holidays.
  • Ministry of Tourism and states’ tourism promotion board to partner with the malls and tour operators to encourage inbound tourism, family outing and shopping on weekends and public holidays. This can be done by giving out tourism voucher or group discounts. The affected industry players such as airlines and companies owning tourist spots to introduce promotional packages to attract tourists.


(D)  Enhancing Consumer Spending

Domestic demand, especially private consumption has been the prime mover of the economy amid continued subdued private investment and moderate exports. Hence, it is vital to sustain the momentum of consumer spending to support domestic demand.  The 18% reduction in toll rates and lowering of petrol prices as well as the payment of Cost of Living Aid (BSH) comes in handy.

  • Top-up the e-wallet to encourage the migration towards cashless society while help to boost spending.
  • A voluntary 2% reduction in EPF’s employee contribution rate.
  • To help affected companies to retain staff and prevent lay-offs, a double-deduction on employees’ salary expenses should be provided to assist employers through this difficult period.
  • Expedite the implementation of The Malaysians@Work initiative, which is aimed at creating better employment opportunities for youth and women through providing wage incentives to workers and hiring incentives for employers.


(E)  Revitalizing Property Sector

The property sector has been experiencing a challenging time over a couple of years, particularly the residential property segment, mainly due to stricter lending policies, trying macroeconomic conditions and cautious consumer sentiment. Overhang in all property segments continued to persist.

Growth in Malaysia’s House Price Index (HPI), which had moderated for six consecutive years, from 13.4% in 2012 to 3.3% in 2018 (6.5% in 2017), continued to ease to increase by an annual rate of 0.4% in 3Q 2019.  The outstanding housing loans growth continues to moderate from 8.4% at end-Dec 2018 to 7.3% at end-Dec 2019.

The property industry is an essential sector of overall economy and also an important sub-sector of the construction sector. A protracted consolidation and subdued growth in the property sector would drag down overall construction sector, which supports the growth of around 140 other downstream industries.

Therefore, it is crucial to keep an eye on the state of property market to prevent it from declining in terms of prices while undergoing the overhang adjustment. We propose the following policy intervention measures to reinvigorate the sector.

  • To consider reverting the Real Property Gains Tax (RPGT) rate back to zero percent from 5% and 10% for the disposal of properties held for more than five years by Malaysian citizens, permanent residents and foreigners respectively.
  • RPGT should be imposed only on the third and subsequent property disposed of as most home owners have two houses in their lifetime for owner-occupied and long-term investment. In other words, there will be no RPGT for Malaysian home buyers on the first two properties.
  • In the absence of property speculation and also to help clearing the overhang, the perpetual 10% RPGT penalty on foreigners should be abolished to encourage foreign purchases. The RPGT regime can be reviewed and reinstated when the property market recovers and there is active speculative investment.
  • The government-backed Home Ownership Campaign (HOC) for the period Jan-Dec 2019 has been successful in boosting sales and offering incentives. It is proposed that to extend it for another year until 31 December 2020 to further encourage the increase in the level of home ownership and help reducing the number of unsold houses.
  • The Government to ensure stable prices of cement and other building materials so as to ease the cost of construction. It is propsed that a review of SST and import duties on essential building materials.
  • The use of industrial building system (IBS) technology will not only help meet the government’s target to build affordable public housing but also will reduce dependency on foreign workers. It is proposed that to provide more incentives to developers and contractors as well as suppliers to ease their investment cost into the IBS technology. In addition, some form of tax relief and allowance should be given to encourage the buiding of sustainable and eco-green as well as smart homes.


Medium-and Long-term Strategies for Powering Economic Growth

ACCCIM has always been very supportive and will continue to play an important role in our nation’s economic development. We continue to actively participate in public-private sector’s engagements and consultations pertaining to various issues and challenges confronting the economy and business community.

ACCCIM’s think tank – The Socio-Economic Research Centre (SERC) in collaboration with Universiti Tunku Abdul Rahman (UTAR) have completed a report entitled Economic Revitalisation Plan.

In order to ensure a more sustainable and dynamic growth path, our nation have to manage resources effectively, leveraging on our competitive advantage in the resource-based industries and be bold enough to overcome weaknesses and shortcomings.

In light of the unbalanced growth drivers, Malaysia needs to continue increasing trade and high value added and technology-based exports through wider market access and newer products development, enhancement of production capacity as well as provide better trade facilitation support to rebalance and reduce over-reliance on domestic demand as the engine of economic growth.

Skills development is an important part of capacity building and is a key element of competitiveness. Developing skills not only is a way to strengthen absorptive capacity of domestic economy, but it also helps local firms, especially SMEs in deepening their participation in global value-chains (GVCs) and accelerating industry and economic upgrading.

Exports are an important economic growth and investment engine for Malaysia, and Malaysia’s move towards a sustainable and inclusive high-income nation will require further boosting of trade and exports competitiveness. Faced with a small domestic market, trade expansion can contribute to economic growth and investment.

There is a need for more focused and concerted efforts in increasing the competitiveness of Malaysia’s export sector, focusing on niche products and competitive industries. New approaches and policies are needed to boost trade and exports competitiveness. Malaysia not only needs to increase the export volume of goods but also services through capturing a greater slice of knowledge-intensive activities in production process, integrate domestic firms, especially SMEs deeper into global value chains and to expand trade in services.

The Economic Revitalisation Plan is aimed to identity the drivers and opportunities of exports, challenges and barriers of international trade and provide policy recommendations and strategies to regain the dynamism of Malaysian exports and increase its contribution to overall economic growth.

Specific industry focus on (i) Electronics and electrical (E&E) products, being the backbone of manufacturing sector; (ii) Selected resource-based industries (wood-based and furniture, rubber gloves) – leverage on our endowment of resources and comparative advantage to move up the value chains and generate more downstream products; (iii) Agriculture and food-based processing industry – encourage food production investment for export markets, targeting at rising consumer spending power in China, India, and ASEAN countries; (iv) Halal industry – whereby Malaysia is championing with a high international accredited certification; and (v) Tourism industry – an immense potential of exporting services to earn large foreign exchange earnings.

The dimensions of investment and trade development strategies cover the following aspects:

(i)         Institutional Capacity;

(ii)        Industrial Policies and Incentives;

(iii)       Trade Facilitation;

(iv)       SMEs’ Capacity Development;

(v)        Human Capital and Skills;

(vi)       Sustainable Products; and

(vii)      Specific Industry Focus

ACCCIM will be submitting copies of the report to YAB Prime Minister, YB Minister of Finance, YB Minister of Economic Affairs and YB Minister of International Trade and Industry for their kind consideration.

We express our confidence in Government’s ability to deal with the Covid-19 and would provide unrelenting support in whatever form to counteract the temporary economic disruptions. As always, we would continue to engage with the Ministries and relevant agencies towards ensuring a steady economic growth and business expansion ahead.

The challenges ahead for the Malaysian economy over the next five years may be more structural and difficult to navigate. Greater structural reforms are required to enhance medium-term living standards and improve opportunities for all Malaysians.

More importantly, political stability is a variable of great importance in building a coherent and continuous path for sustainable development. The uncertainty associated with an unstable political environment may undermine investors’ confidence, reduce investment and hinder the pace of economic development.

Political leaders should put the country’s and people’s interests ahead of those of the party while the government and technocrats should focus addressing on long-term issues, not just “here and now”.

Setting clear policy and economic direction. The year 2020 marks an important milestone in setting and navigating New Malaysia’s future direction. Investors and businesses want 3Cs (Clarity, Consistency and Continuity) whilst maintaining a competitive and business friendly environment. Avoid the slowness and bureaucracy of public delivery services, although efficient government-linked companies can certainly compete. The government agencies must be responsive to radical changes and coming up with new solutions to make Malaysia a progressive and competitive nation.

The Eleventh Malaysia Plan (2016-2020) is entering into the last lap and the Twelfth Malaysia Plan (2021-2025), which premises on the Shared Prosperity Vision (SPV) 2030, will be unveiled in August. The New Industrial Master Plan (2021-2030) will be rolled out to shape, structure and direct Malaysia’s industrial development in an era of digitalisation, advanced and smart technologies. We hope that all strategies and initiatives outlined in these plans will be executed effectively and successfully to deliver optimal outcomes.

Bersatu Teguh, Bercerai Roboh

Selamat Maju Jaya Malaysia

ACCCIM President Tan Sri Datuk Ter Leong Yap (front row, 6th from right) said that the ACCCIM will be submitting a proposal on Measures to Mitigate the Impact of Covid-19 and Economic Revitalisation Plan medium-and long-term strategies for powering economic growth to the government after the ACCCIM National Council Meeting held in Wisma Chinese Chamber on Saturday


6th Floor, Wisma Chinese Chamber, 258, Jalan Ampang, 50450 Kuala Lumpur, Malaysia.


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