Ahead of the federal government’s announcement of a comprehensive economic stimulus package on March 27, the Malaysian Association of Tour and Travel Agents (MATTA) has called on the government to allow the private sector to stop mandatory payments to government agencies and support the wage burden for the next six months to help businesses struggling for survival.
The mandatory payments include contributions to the Employees Provident Fund (EPF), the Human Resources Development Fund (HRDF) and other levies such as Social Security Organization (SOCSO), Employment Insurance System (EIS) as well as corporate and individual taxes for 2019 assessment.
In terms of wage support, MATTA has asked for assistance on 60 per cent of employee wages up to a maximum of RM4,000 (US$923) per employee for the next six months from April, which would help companies avoid having to layoff staff.
MATTA president, Tan Kok Liang, said in a press statement: “If such assistance and stimulus are not forthcoming very soon, liquidity issues will force many existing small and mid-sized tourism companies and facilities to cease operations, resulting in a large number of workers losing their jobs.
“The tourism industry in Malaysia employs more than 3.5 million people, or 23.5 per cent of our nation’s total employment, representing nearly a quarter of all jobs in Malaysia. It is expected that two in five people or 40 per cent of the people would lose jobs. Consequently, this will create a ripple effect to other sectors.”
He said EPF contributions by both employers and employees should be suspended from March until end of this year to allow employers to better manage their cash flow and for workers have more cash for living expenses.
For the month of March, MATTA estimated a 90 per cent drop in revenue and expected revenue in April and May to be almost non-existent.
Tan cited countries such as the UK and Denmark that have already started implementing employee retention initiatives and offering to pay up to 80 per cent of wages.
He said: “Other countries such as South Korea, Ireland and Singapore have also implemented similar strategies.”
He stressed: “The key point is to protect jobs! Businesses cannot be expected to keep paying employees when there is little or no income – it’s either close shop or lose jobs. Neither is desirable and a win-win solution would be for the government to help both employer and employee by sharing the burden of paying wages.”
He also called on financial institutions to play their part by expediting special loans while welcoming the move by the Federal Bank to provide a moratorium for the next six months.
He stressed that banks should also allow a waiver to be made on the interest that is accrued and compounded on conventional loans during the moratorium period.
He said: “How can SMEs survive with the accumulated interest due and compounded and payable upon the expiry of the moratorium period? Compounding overdue interest is a double whammy for suffering businesses during this period.”
Meanwhile, the Malaysian Association of Convention & Exhibition Organisers & Suppliers (MACEOS) said their wish list that had recently been presented to the Finance Ministry and the Ministry of Tourism, Arts and Culture included extending the six per cent services tax exemption to the convention and exhibition centres, and waiving company and personal income tax for a period of six months in light of the challenging period.
MACEOS would also like cash flow support for PEOs in the form of venue subsidies and incentives to small and medium-sized enterprises to bid for more international business events to be held in Malaysia.