Extended MCO could lead to more industry losses - FMM

 

The Federation of Malaysian Manufacturers (FMM) has raised concerns that an indefinite extension to Phase 1 of the National Recovery Plan (NRP) would lead to greater losses for industry players.

In a statement, it said the extension until all three indicators to move to Phase 2 have been achieved was met with great disappointment and despair by the business community, in particular, the manufacturing sector.

It expressed fear over more business shutdowns or downsizing due to cash-strapped conditions.

"There is also fear of the damage this prolonged lockdown has on Malaysia’s competitiveness as a key regional manufacturing hub for many industries that are part of global supply chains."

FMM added that a reduced operating capacity for factories in the essential sectors has led to production challenges, as well as restrictions on their supply chain.

Consequently, it said many customers of the affected industries cancelled their orders and diverted the contracts to other regions.

Many local manufacturers also faced mounting legal consequences from foreign customers that had their production stopped as a result of the delay in deliveries, it added.

"FMM has received feedback that some of the existing multinational companies could be making unfavourable decisions on relocating their operations out of Malaysia, given that the global economy is picking up but their Malaysian operations are unable to support the increasing demand.

"It is, therefore, crucial that the government re-evaluate the sectors that are allowed to operate with due consideration given to the export-based sectors [...]," it said, noting how the companies have sustained the local economy through their revenue earnings, employment opportunities as well as a substantial source of direct investments.

FMM said industry players also questioned the government's justification of adopting three indicators - including for a one-week average of below 4,000 cases - before easing restrictions in Phase 2.

"It is important that this threshold is backed scientifically and is data-based as there are concerns that even after a four-week lockdown, the number of cases remains high which indicates that a full lockdown might not be the best solution.

"Instead, the industry proposes that the government considers state or area-specific lockdowns targeted at the highest number of infections to break the chain of infections," it said.

'Factories not the main source of infections'

Since the beginning of the current MCO 3.0, workplace clusters including factories had consistently contributed to the highest number of daily cases.

FMM however said that out of the 662,457 cumulative positive cases reported on June 14, 2021, only 147,040 were from workplace clusters of which 95,156 were from manufacturing.

"The low figure of 14.36 percent (95,156/662,457) shows that factory clusters are not the major source of infections," it said.

FMM further urged the government to focus on reducing a higher percentage of sporadic in-community cases, which could make its way into factories.

"These sources of infections are often not traced back to the community but to the workplace where more workers are tested as a result of one confirmed infection.

"This, in turn, is classified as a workplace cluster by the authorities giving rise to the misconception that the workplace is the primary source of infection.

With the prolonged lockdown, FMM also requested more direct assistance in terms of automatic loan moratorium, enhanced wage subsidy, electricity and energy discounts, reduced or deferred statutory contributions.

Prime Minister Muhyiddin Yassin earlier said the government will announce more comprehensive assistance to all groups of society on Monday or Tuesday. - Mkini