Posted on 22 Jan 2009
The Government’s proposed second stimulus package must focus on the manufacturing and construction sectors to avert more retrenchments, said the Associated Chinese Chambers of Commerce & Industry of Malaysia (ACCCIM).
President Tan Sri William Cheng said yesterday the stimulus plan should be implemented quickly as these two sectors would be the most affected by the global financial crisis during the first half of this year.
“The number of factories likely to shut down this year is expected to increase significantly as the decline in global sales affects business performance.
“The ACCCIM expects the unemployment rate to exceed 4% this year, compared with 3% last year,” he said at the media briefing on the ACCCIM survey on economic situation of
The second economic plan is part of the Government’s move to avert retrenchment and ensure viable companies are able to continue to operate.
The first stimulus package of RM7bil is being rolled in stages in the first quarter to alleviate the threat of recession.
Economists said the second plan should focus on keeping viable industries open, jobs creation and retraining. They said the Government had to ensure credit lines to companies, including the small and medium industries, remained opened.
RAM Ratings Services Bhd chief economist Dr Yeah Kim Leng said the second stimulus plan should focus on areas to assist companies most affected by the slowdown.
“These companies would require direct funding to help them keep their staff and to explore new markets,” he said.
Yeah said funding could be via credit lines to affected firms and increasing funds allocated to agencies like SMIDEC which would then channel out the funds to member companies.
He said the Government could also cut tariffs and taxes to lower the cost of doing business.
Malaysian Rating Corp Bhd chief economist Nor Zahidi Alias said the Government had the capacity to provide additional stimulus package especially at a time when the deceleration in global economic growth was gaining momentum.
However, he said the federal government’s revenue remained strong last year, growing by 23.8% in the first nine months, compared with 13.2% for the whole of 2007.
“We are of the opinion that the emphasis will still be on boosting private consumption (consumer spending). This is due to the fact that private consumption remains a major pillar for the growth, accounting for about 52% of gross domestic product in the third quarter,” he added
Meanwhile, the ACCCIM has prepared a six-point plan to revitalise the local economy,
Cheng said employers, instead of retrenching workers, should have an option to reduce the workers’ workload by 20% and cut their salaries by 10% to 15%.
Many manufacturers were operating below the optimal capacity due to the cutback in export orders and this had caused operating costs to increase.
“We urge the Government to take prompt action to reduce the price of natural gas and electricity tariff to their original levels before the price increases in January and July last year in line with the plunge in oil prices as well as other measures to boost the economy.
“This is urgent as many factories are now operating at 30% to 40% capacity and some may stop after Chinese New Year,” he said.
The ACCCIM said the Government should implement infrastructure projects as the construction industry had a multiplier effect on 120 other related and supporting industries that were locally owned.
To stimulate the property sector, it urged the Government to provide exemption from stamp duty and property taxes, reduction in quit rent and special interest rates.
Between RM5bil and RM8bil in proposed foreign direct investments had been put on hold due to the lack of gas supply.
“We encourage industries to operate during off-peak period so that electricity generation during the peak period can be reduced by about 1,000MW to meet the requirements by industries and new investments,” he said.
To reduce business costs, the ACCCIM proposed employers’ contribution to the Employees Provident Fund be reduced from 12% to 9%.
The ACCCIM also wanted the Government to provide one-year intensive English course to local graduates whose command of the language was below par.
It urged the federal government to encourage the states to provide land for the pulp and paper industry. It said the country had the resources to support five mills, each with a capacity of 800,000 tonnes and investment of US$1.1bil.
