Stop EPF And Pay 60% Of Employee Wages To Avoid Retrenchment Says MATTA

KUALA LUMPUR, 26 March 2020 – The Malaysian Association of Tour and Travel Agents (MATTA) is calling on the government to allow the private sector to stop mandatory contributions to the Employees Provident Fund (EPF), the Human Resources Development Fund (HRDF) and other levies such as SOCSO, EIS and immediate deferment of corporate and individual taxes for year of assessment 2019 as well as help businesses pay 60% of employee wages up to a maximum of RM 4,000 per employee for the next six months to avoid mass layoffs due to the extreme economic challenges faced by businesses caused by the Covid-19 pandemic.

“If such assistance and stimulus are not forthcoming very soon, liquidity issues will force many existing SMEs tourism companies and facilities to cease operations resulting in a large number of workers losing their jobs”, said MATTA President Datuk Tan Kok Liang.

“The tourism industry employs more than 3.5 million people (23.5% of our nation’s total employment), representing nearly a quarter of all jobs in Malaysia. It is expected that two in five people or 40% of the people would lose jobs, consequently this will create a ripple effect to other sectors.”

“The first measure the Government should announce is to allow the private sector to stop mandatory contributions to the Employees Provident Fund (EPF), the Human Resources Development Fund and other levies. EPF contributions by both employers and employees should be suspended from March 2020 until end of the year to allow employers to better manage their cash flow and for workers have more cash for living expenses.”

"Secondly the Government should further assist tourism and related companies by absorbing 60% of staff salaries up to RM 4,000 per month for each staff for six months effective April to September 2020. For this month, we have an estimated 90 percent drop in revenue and we expect the revenue from April to May to be practically nil. This request may seem “unreasonable”, but we are now under extraordinary circumstances.”

Several countries have already started implementing ‘employee retention’ initiatives with countries like the UK and Denmark offering to pay up to 80% of wages. Other countries who have also implemented similar strategies include South Korea, Ireland and Singapore.

“The key point here is to protect jobs! Businesses cannot be expected to keep paying employees when there is little or no income – it’s either close shop or lose jobs. Neither is desirable and a win-win solution would be for the government to help both employer and employee by sharing the burden of paying wages”, said MATTA President Datuk Tan Kok Liang.

"Further to the immediate help from the Government, financial institutions must also play their part by expediting special loans since these are guaranteed 80 percent by Syarikat Jaminan Pembiayaan Perniagaan (SJPP) to tourism and SMEs companies to help them stay afloat during this challenging period. The industry needs to know how much of the “SRF RM 2 billion” funds have been disbursed to the SMEs tourism companies as of today.”

“On the recent intervention by Bank Negara Malaysia requesting the financial institutions to provide a moratorium for the next six months, MATTA welcomes the move. However, the banks should take a more responsible approach and go beyond their call of duty by allowing waiver to be made on the interest that is accrued and compounded on conventional loans during the moratorium period. How can the SMEs survive with the accumulated interest due and compounded and payable upon the expiry of the moratorium period? Compounding overdue interest is a double whammy for suffering businesses during this period.”

“On Feb 5, MATTA issued a statement calling for an Economic Stimulus Package bigger than the RM60 billion announced in 2009 during the financial crisis then. On Feb 27, the then Prime Minister Tun Dr Mahathir Mohamad announced only a RM20 billion economic stimulus package to cushion the impact of Covid-19. We are now waiting for a more comprehensive package to be announced this coming Friday.”

“We urge the government to provide more direct funding to protect jobs, boost consumption and stabilise the economy”, concluded Tan.

President MATTA
Term 2019 – 2021

For further information, contact:
MATTA Communications Department, or 03-9222 1155