Allow private sector to stop EPF contributions to avoid retrenchment - Matta

CORONAVIRUS | The Malaysian Association of Tour and Travel Agents (Matta) has called on the government to allow the private sector to stop mandatory contributions to the Employees Provident Fund (EPF), Human Resource Development Fund (HRDF) and other levies such as the Social Security Organisation (Socso) and Employment Insurance System (EIS).

Its president, Tan Kok Liang said EPF contributions by both employers and employees should be suspended from March until the end of the year to allow employers to better manage their cash flow and for workers to have more cash for living expenses.

In addition, he said the association also called on the government to put an immediate deferment of corporate and individual taxes for the year of assessment 2019 as well as help businesses pay 60 percent of employee wages up to a maximum of RM4,000 per employee for the next six months to avoid massive layoffs due to the extreme economic challenges faced by businesses caused by the Covid-19.

He said the tourism industry employs more than 3.5 million people (23.5 percent of Malaysia’s total employment), representing nearly a quarter of all jobs in Malaysia.

“It is expected that two in five people or 40 percent of the people would lose jobs, consequently this will create a ripple effect on other sectors.

“If such assistance and stimulus are not forthcoming very soon, liquidity issues will force many existing SMEs tourism companies and facilities to cease operations resulting in a large number of workers losing their jobs,” he said in a statement today.

The movement control order (MCO) enforced on March 18 has been extended for another two weeks to April 14, to curb the spread of the outbreak.

“For this month, we have an estimated 90 percent drop in revenue and we expect the revenue from April to May to be practically nil. This request may seem 'unreasonable', but we are now under extraordinary circumstances," Tan (below) added.

Several countries have already started implementing "employee retention" initiatives with countries like the UK and Denmark offering to pay up to 80 percent of wages while other countries who have also implemented similar strategies include South Korea, Ireland and Singapore.

Further to the immediate help from the government, Tan also emphasised that financial institutions must also play their part by expediting special loans since these were guaranteed 80 percent by Syarikat Jaminan Pembiayaan Perniagaan (SJPP) to tourism and SMEs companies to help them stay afloat during this challenging period.

On the recent intervention by Bank Negara Malaysia requesting the financial institutions to provide a moratorium for the next six months, he said Matta welcomed the move.

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

- Bernama