Govt Can Dip into RM400B National Reserve to Help Malaysians

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The government can dip into more than RM400 billion of national reserve funds to help Malaysians and businesses during the Covid-19 crisis, the Malaysian Employers Federation (MEF) said.

MEF executive director Datuk Shamsuddin Bardan said the reserves can partially be used to help employers pay staff wages.

Shamsuddin said the directive that employers pay full wages and allowances during the movement control order (MCO) had added a lot of financial constraints on employers and coupled with the current economic climate, could lead to businesses going bust.

“For example, retailers have almost zero business during the MCO, yet the government directed such businesses to pay full salaries and allowances to employees and on top of that, pay the landlords rental plus suppliers would also want their payment on due dates,” he said when contacted.

Besides servicing bank loans during the tough period, he explained that employers must also pay the full statutory contributions such as EPF, SOCSO, HRDF and EIS.

Shamsuddin said it is also important that both individual and corporate taxpayers be given some reliefs.

MEF proposed that both individual and corporate tax rate for 2020 be reviewed to a maximum of 18 percent.

It also proposed that the government declare the Covid-19 pandemic as equivalent to Force Majeure Clauses.

Shamsuddin said such declaration would allow businesses to claim consequential loss from insurance companies.

“Did the Ministry of Human Resources and the government ever think where the employers are going to get the fund to make all the above payment?” he asked.

Employers, he said, were the hardest hit during the MCO but received very little help from the government thus far.

He stressed that if the policies of placing all the burden squarely on the employers continue, and no policies of co-sharing the burden are introduced, many of them may be forced to close shop soon.

To address the cash-flow problem and avoid retrenchment, MEF also proposed that the contribution rate of 12-13 percent by employers be reduced to five percent.

“The reduction in employers’ EPF contributions should be implemented with immediate effect for at least eight months from the MCO shut down,” he said.

The EPF reduction, based on MEF’s calculation, is expected to assist the cash flow of employers by about RM2.2 billion per month. – NST