Businesses are forced to close down without any sales or cash flow
Many SMEs are left to wonder what is to become of their business now that the Movement Control Order (MCO) has been extended to the 14th of April 2020. McMillan Woods, a global association of accounting and advisory firms, based in Kuala Lumpur, appeals to the Government of Malaysia to help SMEs that have been affected by the Covid-19 crisis. McMillan Woods claims that although the stimulus of rescheduled loans announced by the Prime Minister on 25th March 2020 was a good step, it is inadequate for businesses to sustain themselves since there will be no sales and no cashflow for about a month.
The Movement Control Order has forced businesses to stop operating
The Government has yet to provide a viable solution for the SMEs and should be addressed immediately or it may cause many businesses to closedown resulting in massive unemployment and a potential increase in crime rates. McMillan Woods wishes for additional proactive measures to be granted and appeals to the Government for Malaysia to provide the following mandates:
Dato’ Seri Raymond Liew, Founder and President of McMillan Woods
1. EPF contribution waiver effective March 2020
What the SMEs need right now is for the government to waive EPF contributions for at least 6 to 12 months effective March 2020, with no cost to the government.
2. Subsidies for wages and salaries costs
In addition to the waiver of EPF contributions for a limited time period, some forms of subsidies towards wages and salaries costs would be welcomed as SMEs currently do not have any trading activities hence no-sales no-cash flows dire financial situation. Subsidies in cash form of a proposed 50% contribution towards the actual costs incurred with supporting comparison to the previous month of the previous year’s cost incurred on a month-by-month basis would be a welcoming breather. A heavy fine can be imposed for any SMEs who submit fraudulent claims as a deterrent to those who are not genuine.
Alternatively, allow employers to offer a pay-cut to their employees in order to keep their jobs at a rate of between 30% to 50% and/or mutually agreed upon reduction between them. Under this crucial time, each and everyone needs to play a part to make sacrifices.
3. Income Tax
Reduce income tax rate by at least 30% for Year of Assessment 2019 & Year of Assessment 2020 immediately to allow for the past one year’s profits to assist with cash flows, not that many of the SMEs are making profits during the COViD-19 crisis.
Allow revision of CP204 to whatever the reduced tax amount instead of the maximum revision of no less than 85% of the previous year’s tax.
4. HRDF Contributions
Allow SMEs to at least temporarily stop all contributions to HRDF immediately.
5. Mall rental
Issue a directive to all mall owners to reduce their rental and/or at least temporarily waive all rental during the MCO periods and thereafter perhaps a reduced rental until business recovery.
6. Government financial cash aid is urgently needed
Increase Budget deficit to help the SMEs with the intention to boost the economy. Cash is very much needed now.
McMillan Woods is concerned about the economy of the country and the welfare of the citizens of Malaysia. Many daily-waged workers were forced to endure hunger during the outbreak. McMillan Woods suggests that DBKL employs a “task force” with small registered food vendors to distribute food packages for our front-liners and the underprivileged communities including the abandoned workers.