The Malaysian Insider, Malaysia
FMM: Restart US FTA talks
By Lee Wei Lian
29 January 2009
KUALA LUMPUR/Datuk Mustafa Mansur, president of Federation of Malaysian Manufacturers (FMM) wants the Free Trade Agreement (FTA) discussions with the United States to be restarted to strengthen market access. “The FTA with the US will open up a big market for us,” says Mustafa.
He also wants the FTA with India to be expedited as part of export initiatives to help the local manufacturing sector weather the economic storm.
Other suggestions from FMM to the government on how to tackle the economic slowdown include:
Reform government procurement to ensure transparency and award projects to capable companies;
Practice advance payments for government purchases RM5,000 and above;
Reduce and/or exempt sales tax and import duties;
Lower corporate taxes;
Suspend or reduce monthly tax payments;
Remove constraint on estimation of tax payable. Presently, tax payable cannot be less than 85 per cent of the revised tax payable of the preceding year;
Restructure loans with lower fixed repayments over a longer period;
Have a moratorium on interest for the purchase of machinery and equipment;
Extend credit period for trade papers; and
Offer export tax rebates.
FMM also conducted a survey from November to December and collected responses from 138 of its 2,300 member companies.
Key findings from the survey are:
55.6 per cent said the current crisis is worse than the 1998 Asian financial crisis. However, 31.1 per cent had yet to feel any adverse impact from the economic slowdown;
4.3 per cent of respondents plan to cease operations if economic conditions deteriorate;
77 per cent experienced a slowdown in exports, domestic sales and new orders in the fourth quarter of last year;
81 per cent feel that the outlook for 2009 will be worse;
The most affected industries are chemical, fertiliser, plastics, petroleum based, basic metal and electrical and electronics;
71 per cent did not face any difficulties in securing credit facilities which means banks are still lending; and
67 per cent expect employment to be affected and 60 per cent plan to put expansion on hold.
FMM also wants HRDF (Human Resources Development Fund) and SOCSO (Social Security Organisation) contributions for all employers to be suspended for 24 months.
FMM estimates that RM3.6 billion in cash could be released back to businesses with the exemption. The additional cash flow would help reduce operating costs and have a multiplier effect as businesses would have more funds to continue operations, sustain marketing efforts and employ workers.
Datuk Mustafa Mansur, president of FMM denies that there will be any negative side effects on employees from the exemption. “These funds are under-utilised and flush with cash,” he says.
Data provided by FMM shows that in 2006 SOCSO had RM4.2 billion in liquid assets and its consolidated assets stood at RM14.14 billion. It collected RM1.5 billion in contributions and disbursed RM970 million.
HRDF collected RM311 million in 2007 and disbursed 260 million. It also had RM600 million in fixed deposits.