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Allow private sector to stop mandatory EPF contributions, calls MATTA

27th March, 2020


KOTA KINABALU: The Malaysian Association of Tour and Travel Agents (MATTA) has called on the government to allow private sector to stop mandatory contributions to the Employees Provident Fund (EPF) and other levies.

This included the Human Resources Development Fund (HRDF), SOCSO, EIS, and the immediate deferment of corporate and individual taxes for year of assessment 2019.

President Datuk Tan Kok Liang said the government should in turn help businesses pay 60 per cent of employee wages up to a maximum of RM4,000 per employee for the next six months to avoid mass layoffs due to the extreme economic challenges faced by businesses following the COVID-19 outbreak.

If such assistance and stimulus are not forthcoming soon, he said liquidity issues will force existing SME tourism companies to cease operations, resulting in a large number of employees losing their jobs.

He underlined that 3.5 million people (23.5 per cent of the nation’s total employment) are employed in the tourism industry, representing nearly a quarter of jobs in Malaysia.

Two in five people, or 40 per cent, are expected to lose their jobs, consequently creating a ripple effect to other sectors.

“The first measure the government should announce is to allow the private sector to stop mandatory contributions to EPF, HRDF, and other levies.

“EPF contributions by both employers and employees should be suspended from March 2020 until end of the year to allow employers to better manage their cash flow and for workers to have more cash for living expenses.

“Secondly, the government should further assist tourism and related companies by absorbing 60 per cent of its staff salaries up to RM4,000 per month for each staff for six months, effective April to Sept 2020.

“For this month, we have an estimated 90 per cent drop in revenue and expect the revenue from April to May to be practically nil.

“This request may seem unreasonable, but we are now under extraordinary circumstances,” he said in a statement. He noted that several countries have implemented employee retention initiatives with countries like UK and Denmark offering to pay up to 80 per cent of wages.

South Korea, Ireland, and Singapore have also implemented similar strategies.

“The key point here 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 said.

Tan added that financial institutions must also play their part by expediting special loans as they are guaranteed 80 per cent by Syarikat Jaminan Pembiayaan Perniagaan (SJPP) to help tourism and SMEs stay afloat.

He asserted that the industry needs to know how much of the SRF RM2 billion funds have been disbursed to SME tourism companies as of today.

“On the recent intervention by Bank Negara Malaysia requesting the financial institutions to provide a moratorium for the next six months, MATTA welcomes the move.

“However, the banks should take a more responsible approach and go beyond their call of duty by allowing waiver to be made on the interest that is accrued and compounded on conventional loans during the moratorium period.

“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,” he said. He added that they anticipate a more comprehensive stimulus package this coming Friday.

Compared to the RM20 billion package announced by then Prime Minister Tun Dr Mahathir on Feb 27, he said MATTA has earlier called for an Economic Stimulus Package bigger than the RM60 billion announced during the financial crisis in 2009.

“We urge the government to provide more direct funding to protect jobs, boost consumption, and stabilise the economy,” he said.

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