PETALING JAYA: The two-week extension to the current lockdown will have a devastating impact on industries if there are no changes to operating conditions, says the Federation of Malaysian Manufacturers (FMM).
The FMM said that the extension will cripple the manufacturing sector and its contributions to global supply chains as under the current conditions, almost 80% of all businesses fall into non-essential sectors that are not allowed to operate.
It added that with the businesses allowed to operate, only a 60% operational capacity is allowed for the essential sectors.
“With companies in the US and EU starting to operate at full force, it is imperative that Malaysia, as a key manufacturing hub, has to support these markets as part of their global supply chains,” said FMM president Tan Sri Soh Thian Lai (pic).
“It is also feared that the extended FMCO is going to have a profound negative impact on investments, especially foreign direct investments, and also scare foreign investors away, ” he added in a statement on Saturday (June 12).
He said those in the essential sectors are unable to sustain their 60% capacity operations and that they were also “tormented” with almost daily checks and raids by multiple enforcement teams.
Soh added that some of these teams were even accompanied by media personnel and said that such checks and raids disrupted operations.
He said that there were also companies who had approval to operate being ordered to close and with fines being imposed immediately without being given the opportunity to explain and justify their reasons for operating.
“As a result, SMEs with approvals are now also fearful to operate, ” he said, adding that workplace clusters have not been the root of infections.
He said that despite having all the necessary SOPs and precautionary and preventive measures in place at the workplace, they had to bear the outcome and blame arising from the lack of SOP compliance in the community.
“FMM has been consistent in not favouring a total lockdown due to the irreparable damage to the economy and livelihood, ” said Soh.
He said they received feedback that the industry is already facing reduced revenue with close to 90% of 428 respondents from a recent survey on the impact of the lockdown indicating that revenue has dropped.
Soh also said that more than 50% of respondents indicated that their revenue had dropped by up to 30% and 15% had indicated that they experienced a revenue reduction of more than 50%.
He added that close to 40% of the respondents have indicated that they have to undertake certain employment-related cost cutting measures including pay cuts and unpaid leave in order to sustain jobs during this extended lockdown period.
Soh said that while the FMM fully supports the need to protect lives, the extension of the lockdown is unfair to the non-essential sectors including those export-based companies that are part of global supply chains.
He added that companies would lose customers, impose fines for delay in deliveries as well as possible legal proceedings for breach of contracts.
Soh said that he hoped the essential economic and services sectors approved to operate would be extended to include an en-bloc approval of the entire supply chain.
He also called for the Government to pump prime the economy with a RM200 billion Stimulus Package with RM30 billion direct fiscal injection including some of the following forms of assistance to ensure that businesses are able to sustain jobs and operations.