Malaysia is going into a full lockdown starting tomorrow, June 1, to curb an alarming spike in coronavirus infections – a move that will have an adverse effect on many businesses and industries. The automotive sector is one such industry, having been removed from the essential services list.
The Proton Vendors Association (PVA) is highlighting just how serious the impact will be, with most of them already struggling to stay afloat and sustain their operations during the pandemic. Companies that export to other countries are particularly vulnerable, the group said, due to their existing supply obligations and the ringgit’s heightened volatility.
“While it is necessary to contain the present spread of COVID-19 infections, the magnitude and speed of collapse in the economic activity will be very detrimental to the security and sovereignty of our nation,” said president Datuk Wan Mohamed. “This is a crisis like no other. It is hard to predict if a total lockdown would lead to stabilising the pandemic condition. What we do not want is a multiple crises from health to financial.”
“Given the extreme uncertainty of the COVID-19 crisis, if the pandemic does not recede after the proposed total lockdown period, it will lead to longer durations of containment and worsening financial conditions to the majority of the manufacturers/entrepreneurs and self-employed Malaysians,” he added.
The timing of these tightened protocols in the middle of the third movement control order is particularly bad given that carmakers around the world are struggling to meet increased demand, now that global restrictions are easing. A stoppage in operations would trigger a default in the vendors’ current and future supply contracts, said PVA, triggering legal action.
In light of this, the group is urging the government to allow suppliers, particularly those that produce parts for export, to be exempted from the lockdown and continue operating under the strictest protocols. It also fully supported the proposals made by the Federation of Malaysian Manufacturers (FMM) to prevent the economic collapse of the manufacturing sector.
The suggested measures include a three-month loan moratorium, a reinstatement of the Wage Subsidy Programme (WSP) and a six-month extension of the electricity rebate. The FMM also wants the government to suspend or extend the statutory contribution payment date, waive Tenaga Nasional’s Maximum Demand charge for May and suspend Gas Malaysia’s Take or Pay (TOP) in gas off-take agreements for May.
Additionally, the FMM wants the government to allow companies involved in import and export activities such as ports, warehouses and goods transportation services to continue operating, as well as plant maintenance and kilns and furnaces that cannot be switched off – the latter at 20% workforce.
The symbiotic nature of the automotive industry, said PVA, means that it cannot afford a collapse of the ecosystem, as it would take years to build it back into a fully-functioning cycle. Such a restoration would negatively affect the 500,000 employers currently hired in automotive manufacturing, which contributes between 4 and 4.5% of the country’s GDP.
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