The Federation of Malaysian Manufacturers (FMM) has called on the government to expedite the launch of its planned economic stimulus package, to minimise the impact of the COVID-19 outbreak on Malaysia’s growth.
FMM president Tan Sri Soh Thian Lai said in a statement, urged the government to bring forward its stimulus packages planned to address the US-China trade war risks if the COVID-19 outbreak further worsens the economic situation. He added that this would help to minimise the impact on sectors, including manufacturing, tourism and construction and support overall economic growth. This, he added, is in view of China being Malaysia’s largest trading partner, and expectations that manufacturers that are export-oriented and rely heavily on Chinese demand, as well as those that import their raw materials from China, are expected to be significantly affected.
In its statement, the FMM also suggested several measures it hopes the government would include as part of the stimulus package, including expediting local infrastructure and development projects such as the East Coast Rail Link and Pan Borneo Highway. This, he said, can be the first wave of economic stimulus to release more cash flow to businesses and to shore up short-term domestic demand. “Full implementation of all these construction-related projects will have a profound multiplier effect on more than 100 industries in all other sectors, especially the manufacturing sector,” he said.
The FMM also called on Bank Negara Malaysia (BNM), to cut another 50bps to cushion any anticipated moderation in economic activities. It further suggested a reduction in employees’ contribution to the Employees Provident Fund by three percentage points to increase consumer spending which can further stimulate the economy.
Other measures suggested by the FMM include intensifying the promotion of Buy Made-in-Malaysia products, reinstate the brand promotion grant to develop and promote Malaysian-owned brand names overseas and the RM300,000 ceiling on market development grant to encourage more Malaysian small and medium enterprises to participate in international export promotion activities and explore more markets.
The FMM also suggested that the sales and services tax be reduced by 2% for a 12-month period to boost business conditions and give exemptions or relief of sales tax on all inputs for the manufacture of non-taxable goods.
Tan Sri Soh said the government should set up a Budget Implementation Committee to ensure that all the proposed and approved initiatives and projects outlined in Budget 2020 are implemented as planned, and, where possible, expedited to give a more sustained and further boost to keep the economy going.