After 50 years in the business, garment giant Esquel Malaysia (EGM) will shut down its operations in Penang and Kelantan by June 12, affecting more than 2,000 workers.
This was confirmed by Penang chief minister's special investment officer, Lee Kah Choon, and the Federations of Malaysian Manufacturers (FMM).
According to a company source, EGM employees have been informed of the closure by general manager Edward Ho, via a letter dated April 15.
The Penang and Kelantan factories are expected to resume operation after the movement control order (MCO) ends on April 28, and will shut down by June 12, the source added.
The letter stated that EGM's main clients are in the US which has shut down the retail business. The company said that it does not have enough upcoming orders to continue the business.
Established in 1966 in China, and known as the world’s top producer of branded cotton shirts such as Hugo Boss, Burberry, Lacoste, Tommy Hilfiger and Nautica, EGM reinvested in Penang in 2017 after an eight-year absence.
They have 500 local and 900 foreign employees in Penang, while in Kelantan, there are 800 employees, all locals.
When contacted, FMM's Penang branch chairperson Ooi Eng Hock said the situation in the industry is not "encouraging" due to the impact of the Covid-19 pandemic.
He said EGM is one of the first companies to have been hit badly by the current situation.
The manufacturing sector needs to be prepared for the worrying condition brought about by the MCO, which has put a stop to many services, including those related or supportive of the industry, Ooi added.
Since the situation may take a turn for the worst in a few month's time, he urged both the state and federal governments to launch an additional stimulus package which would stimulate the economy further and restore confidence in investors, he said.
Closure of companies is imminent, Ooi added, as orders are deferred or cancelled, which bring eventual huge losses to the manufacturing line.
"The Finance Ministry and International Trade and Industry Ministry’s (Miti) have to do more to assist companies and their employees during these trying times," he told Malaysiakini.
"We hope there would be an additional stimulus package which can help companies overcome the second phase of the MCO, including maintaining their employees.
"For Penang, we have submitted our proposals to Chief Minister Chow Kon Yeow with the hope that more can be done to prepare the manufacturing sector for this unprecedented pandemic," he added.
On April 6, Prime Minister Muhyiddin Yassin announced an RM10 billion stimulus package aimed at small and medium enterprises (SMEs) to soften the blow of a prolonged MCO.
According to Muhyiddin, SMEs and micro-businesses made up two-thirds of the workforce of the country and contributed 40 percent of the country’s economy.
Penang also launched its state-centric stimulus package worth RM75 million, while RM30 million was to help SMEs thrive.
Miti had earlier granted permission to 2,732 companies to operate as usual during the MCO, and has extended this approval for the third phase lasting from today to April 28.
Meanwhile, Penang Deputy Chief Minister II P Ramasamy, who oversees the state economic planning portfolio, said despite the EGM situation, Penang is yet to see a trend of factory closures due to the MCO.
Ramasamy said the state is sympathetic to both companies and employees as they are equally impacted by the pandemic.
"At the moment, there is a mixed trend. While we see the closure of long-standing companies like EGM, others in our manufacturing sector are trying to cope with the situation by mitigating the impact, depending on their financial situation," he said.
"We are here to assist whenever necessary as managements negotiate with their employees for a more sustainable situation for both sides," he added. - Mkini
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