PETALING JAYA: Reducing EPF and Sosco contributions as well as cutting the mandatory minimum wage are among proposals submitted by business chambers for the government when it drafts the Temporary Measures Bill to mitigate the impact of the Covid-19 pandemic.
The proposals comprised issues such as legal action for non-fulfilment of contractual obligations, temporary relief for financially distressed individuals and businesses, reduction of Employees Provident Fund and Social Security Organisation contribution, besides reduction in corporate tax.
The Bill is expected to be tabled in Parliament next month.
Malaysian Employers Federation (MEF) executive director Datuk Shamsuddin Bardan said the organisation had submitted a proposal with 13 points to the government and had proposed some provisions to several current Acts that were already in place.
A main concern is the threat of legal action for non-fulfilment of contractual obligations.
“Employers need comprehensive legal protection coverage from the unintended non-performance of contracts due to the movement control order and the conditional MCO.
“Such contracts include commercial and industrial property leases, construction and supply contracts, events and tourism-related contracts, certain secured loan facilities, hire-purchase and conditional sales agreement, ” he said.
The MEF had proposed that a provision under the Insolvency Act 1967 be tweaked so that bankruptcy petition should not be filed against the debtor due to failure to fulfil obligations.
This, it said, was due to restrictions imposed by the government during the MCO and conditional MCO periods.
“Covid-19 was a misfortune... It is not the fault of the government, employers nor the employees.
“Urgent critical measures to protect employers against non-performance of contract due to the Covid-19 are needed to resuscitate the national economy as well as to preserve and create jobs, ” added Shamsuddin.
MEF had also proposed for temporary relief for financially distressed individuals and businesses by raising the monetary threshold for bankruptcy to be increased from RM50,000 to RM150,000, while for corporate insolvency, to be raised from RM10,000 to RM150,000.
Shamsuddin said businesses should be provided with a safety net to ensure that they were able to resume normal business operations after the crisis had passed.
“It is important to remove the threat of actions that could unnecessarily cause them to be insolvent and cause the closure of businesses.
“To be fully effective, there should be a temporary restrain to legal proceedings for the recovery of debts against individuals and companies, ” he said.
Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) Legal action committee chairman Michael Chai Woon Chew said it was crucial to have the law before the expiry of the current MCO.
“When the MCO was first imposed, a lot of people were focused on staying healthy while businesses had to deal with cash flow to survive.
“Now that we are in the recovery MCO, many businesses have began opening again but they still face issues owing to contractual obligations.
“We need laws to provide temporary relief for businesses affected by non-contractual performances, ” he said yesterday.
Chai said the government was aware of the matter and was drafting laws similar to what United Kingdom and Singapore had done in anticipation the legal implications affecting business during the post Covid-19 period.
“The law will be focused on non performance of contracts covering several sectors and industries.
“If the law does not come out quickly, businesses will be bogged down in legal tussles and negotiations resulting in more businesses being force to close, ” he added.
Chai said the government was looking at putting the law in place before the end of the current recovery MCO period.
The Malaysian Associated Indian Chambers of Commerce and Industry secretary-general Datuk Dr A. T. Kumararajah said the MAICCI had submitted about eight proposals to the government.
Among them is to suspend the employers’ contribution to EPF for a period of 12 months or to lower the employers’ contribution rate by 3% to 4%.
“The government should also consider refunding the statutory contributions for the past two years to Human Resources Development Fund (HRDF) and Employment Insurance System (EIS) to companies facing cash flow problems, ” he said.
Others include further reducing the foreign workers’ levy or a total suspension of its payment for a year, starting April this year.
Other proposals include the reduce in minimum wages for local and foreign staff to be reduced to RM1,000 a month for the next four months.
He also said entrepreneurs should be given personal loans based on their business needs with an interest rate of 1% and be given a grace period of six months to start paying back the loans.
“Even though there are Tekun and other loans available, their criteria needs to be a bit flexible for them to apply, ” he said.
He added that entrepreneurs might not be able to secure the loans with stringent criteria.
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