The Federation of Malaysian Business Associations (FMBA) today urged the government to impose a complete lockdown across the country to break the chain of Covid-19 infection, adding however that this should be accompanied by a post-Covid economic recovery stimulus package.
Its protem chairman Abdul Malik Abdullah said case numbers and mortality figures had been at an unprecedented high for the past few days, adding that the country was “on the verge of a catastrophic health crisis”.
“Extreme moments like this call for extreme actions,” he said in a letter addressed to Prime Minister Muhyiddin Yassin.
“We can rebuild our economy, our financial institutions, our social standing – but we cannot afford to lose our lives.”
He said the FMBA, which represents over 260 business associations with a total membership strength of over 950,000 businesses and a workforce of over seven million, was “ready to bite the bullet” but acknowledged the possibility that a nationwide lockdown would not have the desired outcome.
“Then our economy will be in free fall, and the nation’s health resources exhausted – landing us in a perfect economic and health catastrophe like that seen in India.”
He proposed several measures to mitigate the economic risk of another lockdown, including a moratorium with an opt-out programme for businesses and individuals, financial support, a wage subsidy programme, statutory exemptions, utility subsidies, as well as proactive and inclusive actions on SOPs.
He suggested a zero-interest moratorium period until the end of the year that applies to anyone who got the facility before March last year and businesses, excluding sectors that were fully operational during the past year. This time, he said, the moratorium should also include credit and leasing companies.
“The effective restructured financing rate must be lowered. The central bank has maintained the overnight policy rate at 1.75%, the lowest level since it was implemented in 2004.
“However, the base lending rate and base financing rate and the effective rates to the consumer and business loans do not seem to reflect the prevailing low interest rate environment.
“We seek for the banks to lower the effective financing rate to the consumer, as the cost of funds has dropped so much for the government,” he said.
He added that another moratorium would likely cost RM6.4 billion, which he said is only 7% of the three-year annual profits for the country’s top eight local banks.
For financial support, he urged that an special-purpose vehicle for all financial relief packages be formed.
“It should be run as a public-private partnership model, following the same successful Danajamin Danaharta model,” he added.
For the wage subsidy programme, he said there should be 70% support for those earning below RM4,000 and 30% for those earning above RM4,000, with a maximum subsidy amount of RM3,000 until the end of the year.
He also urged the government to maximise the use of MySejahtera and Hotspots Identification for Dynamic Engagement or HIDE, adding however that the latter should be made more transparent.
Muhyiddin said on May 10 that the movement control order enforced in parts of Selangor and other states would be extended across the country with tighter SOPs in place until June 7.
The economic sector was allowed to remain open, although the ban on inter-district and interstate travel was maintained.