http://my.gelife.co/scholarship `
SOCIAL media has been abuzz on the new minimum wage policy of RM1,500 announced by the government, which is slated to come into effect on May 1. `
For politicians, regardless of which camp one belongs to, there appears to be a consensus towards this policy’s implementation. It is after all a populist policy, hence to voice out vocally against it would be a public relations nightmare. `
Supporters for higher minimum wages can be seen to be largely employees and advocates of labour welfare. `
The key proponents against the new minimum wage policy was on the other hand largely from the business associations, manufacturers and small medium enterprise owners. In short, the employers. `
What is rather interesting from my observation is the high octane emotions expressed on social media, be it those for or against.
Supporters of the new wage policy were completely aghast when proponents against it provided justifications to delay the implementation. Many resorted to name calling, where some were branded as capitalists, profiteers or bourgeoisie. `
There was even a viral social media posting on twitter with Tan Sri Soh Thian Lai’s remuneration as chairman of YKGI Holdings Bhd shared to depict the wealth disparity. He was in my view, unfairly targeted simply because he voiced out the views of the members within The Federation of Malaysian Manufacturers (FMM) in his capacity as the president of the association. Somehow, no reasons given were deemed acceptable by advocates of higher minimum wage. ` Low wage growth in Malaysia ` It is important to note that Malaysia has been caught in the middle income trap for the longest time. When former Prime Minister Tun Dr Mahathir conceptualised “Vision 2020”, it was our countries’ aspiration to achieve a high income nation status. ` Of course, the year 2020 came and left with my memory of it largely being watershed, much less anything remotely related to high income. So, the crux of our economy indeed has always been low wage and especially painful wage growth in the last decade. `
We need not look far, the past five years' statistics of our country’s mean and median monthly wages is sufficient to show a rather demoralising trend as per the attached chart.
World Bank’s definition of a high-income nation for 2020 was a gross national income (GNI) per capita of US$12,696 (RM 53,532). Our country’s GNI last year stood at US$10,111 (RM42,503), which was an estimated 20% below the minimum threshold of the World Bank. While 20% apart may not seem like the Grand Canyon, however, we must understand there is a disparity of wealth gap between the high T20 and the B40. This is further exacerbated by the pandemic and slump in the economy for the past two years. `
As a former employee who worked for various corporate organisations, I can deeply sympathise with the predicament of entry-level and low-income employees. `
With access to remuneration information of the company, I notice the large income and employee benefits disparity between the senior management and the junior workers. `
There was once during a town hall meeting with senior leaders of the management, I raised a question anonymously, “How is it equitable that the more senior one is along the corporate hierarchy, apart from higher salary, one still gets much better employee benefits such as mobile, healthcare, petrol and others allowances, when in fact, it is the more junior employees with low income that are desperately in need of better benefits to supplement the income gap?” The human resource head of the company skipped my question. ` Is minimum wage the solution? `
On Jan 1, 2020, the minimum wage of RM1,200 came into force. This was right before the country was hit by the pandemic. Two and a half years later, in spite of the pandemic and series of lockdowns decimating many small-medium enterprises and businesses, the minimum wage would soon be raised to RM1,500. With a history of being vocal about employees’ welfare throughout my corporate tenure, I cannot help but feel that the situation at this point in time is not conducive for such a drastic jump. `
Although we did see a recovery of Malaysia’s gross domestic product performance in 2021 with a 3.1% increase compared to a contraction of 5.6% in 2020, it is necessary to understand that many businesses went out of business and the unemployment rate has increased significantly. `
In addition, the country’s borders, which is allowed to open on April 1 may provide a fresh catalyst for the economy recovery, the impact has yet to be felt by businesses as a whole. If 2022 is to be a recovery year, then business friendly policies need to supersede populist policies in the near term in order to provide some breathing room to recoup past losses. `
Furthermore, increasing business costs will add to the worsening domestic inflationary pressure resulting from global factors such as geopolitical tensions, supply chain disruption and loose monetary policies. Increasing cost without expanding the economy pool is simply discouraging reinvestment by the business enterprise, which is crucial towards growing the country’s economy. The multiplier effect of investment activity outweighs the effects of consumer spending. This is economy 101. ` Koi’s Law `
In season two of Dr Romantic, a popular Korean drama, a scene specifically mentioned an interesting theory known as ’Koi’s Law’. `
This theory provides that a Koi fish (which is a type of carp), grows in size subject to its environment. If you put it in a fish bowl, the Koi would be small fitting to the size of the fish bowl. If you put it in the pond, the Koi would grow much larger. This relates to people’s ability to change proportionally to the environment. If we give people the opportunity to grow, they will be able to expand on their respective ability. Wage is an important factor in determining such an outcome. `
Therefore, I do agree that wage growth should be commensurate with talent in order to retain the best minds which are crucial towards nation building. By having the best talent in the respective fields, our country would advance and naturally, this would help to further improve the quality of lives of the people. `
It is a cycle. I definitely do not disagree with reviewing and raising the minimum wage but it ought to be gradual and at a pace where the business owners and employers are given the equal opportunity to recover from damages suffered. Populist agendas should never have a place in formulating economic policies otherwise long term advantages will always take a backseat to short term gains. ` NG ZHU HANN By Ng Zhu Hann, the CEO of Tradeview Capital. He is also a lawyer and the author of “Once Upon A Time In Bursa”.The views expressed here are the writer’s own.
Countries since independence with a young history (less than 500 years) tend to have a vast number of naturalised citizens. The United States, Australia, Singapore and Malaysia are just some of the countries that gain independence from the colonial master at that time, Great Britain. Citizens by law have sworn allegiance to the country that hey live in and they have to abide by the laws of the
country.
IN the blink of an eye, I turned 60 last year. I was born in 1960, just three years after Merdeka. I have been a Malaysian citizen from birth whereas my brother, who was born eight years earlier, had to go through a naturalisation process, from a red identity card to blue identity card to finally a naturalised citizen of Malaysia.
My father went through the same process even though he emigrated from China to Malaya in the 1930s. My mother was born in Jasin, Melaka, in the late 1920s and she too had to go through the process to become a naturalised citizen.
Countries since independence with a young history (less than 500 years) tend to have a vast number of naturalised citizens. The United States, Australia, Singapore and Malaysia are just some of the countries that gain independence from the colonial master at that time, Great Britain.
Nobody can force a citizen to leave the country but citizens can make personal choices should they decide to leave and emigrate to another country. Citizens leave because of economic or political reasons, and to escape domestic civil wars.
As a country that embraces democracy, Malaysian citizens above 18 years old have the right to vote.
One citizen, one vote. Voting trends in Malaysia since independence have been by race, for example, a Malay candidate for a Malay majority constituency and so forth.
If this voting trend continues, we will continue to see the same composition of politicians by race in our Parliament in the future.
Due to slower growth rate and naturalisation policies, the minority Chinese and Indians have, by percentage to population, been on a reducing trajectory – the Chinese from 37% in 1957 to 22% in 2020 and to 18% by 2040.
It is inevitable that there will be a diminishing Chinese voice in Parliament.
With a diminishing influence in the decision making of government policies, minority communities will face diminishing share of economic and educational opportunities in this country.
What then can the diminishing minority communities do to ensure a fair share of economic and educational opportunities for the next 60 years?
As a Malaysian Chinese going into my twilight years, I have no answer to this dilemma.
Perhaps the Chinese community, especially the younger generation, would like to start a conversation on this topic.
My only advice is that the conversation tone must be positive and reconciliatory and not confrontational. It must be a win-win strategy, never a zero-sum game.
The conversation should be centered on self help within the community if no help is seen coming. The dialogue must be about the Malaysian Chinese investing their loyalty into this country in the hope of a brighter future.
The discussion must focus on helping the poor of all races and to bridge the gap between rich and poor Malaysians. Only then will we have a stable and just society.
Lending a helping hand
Most immigrants from China in the early 1900s were housed, fed and given a job by their clansman upon arriving at the shores of Malaya. They were identified by their village, district, province and by their spoken dialects.
As such, in Malaya then and Malaysia until the 1990s, you can still identify the dialects with the trade and concentrated communities of the same province in particular towns.
Till today, the older generation of the same dialects share a special friendship-bond as it was with their forefathers
These individual communities then set up associations by dialect, first in townships and then grew into a national association. Leaders of the association were normally business and academic leaders of the community.
The associations helped their members (mostly uneducated) to deal with government matters, for example land matters, and offered scholarships to bright students as well as financial and welfare assistance to the poor and the elderly.
The various associations and the local rich donated to build schools and temples.
Like all associations and societies, sustainability over the long term depends on new membership enrollments.
But the younger generation has no interest in joining and now the association’s role in the community is diminishing as well.
How can these associations reinvent themselves to play the community leader role again, especially in this pandemic recession? Offering refuge to their clansman or the poor Chinese community at large like before?
Many unemployed families are having reduced or no income and have problems putting food on the the tables and paying rent for a roof over their heads.
Can the association and the immediate community distribute foodstuff to these families like the Foodbank model in the US? These people have no place to turn to.
The Chinese community leaders can play a bigger role in protecting the welfare of the Chinese community.
When no help is forthcoming, the leaders must step up, the younger generation must participate and contribute in whatever ways they can to help the community and that no clansman goes hungry and is left behind.
In my next article, I would like to discuss about education and career choices for the new generation of Chinese youth.
I would like to start a conversation about our Chinese SMEs who are suffering in silence and in clear desperation of financial assistance.
I welcome all positive recommendations and ideas and you can write to starbiz@thestar.com.my.
In the meantime, help your community by buying from your local SMEs and hawkers. Help the elderly and the poor by whatever means possible. Let us build a caring and supportive community.
That will be a good start. One small step towards the next 60-year journey.
by Tan Thiam Hock is an entrepreneur. Views expressed here are the writer’s own.
80% of financial help will be additional wage subsidies for employees
PETALING JAYA: Small and medium enterprises (SMEs) and their employees will benefit from a RM10bil financial lifeline.
This is the second stimulus package that the government has announced within 10 days.
The first addresses the plight of the underprivileged and the middle class caught in dire straits due to the coronavirus pandemic.
The latest package of measures, dubbed the Additional Prihatin, is aimed at assisting SMEs in riding out the Covid-19 storm.
Of the RM10bil, almost 80% will be for additional wage subsidies for those drawing RM4,000 and below monthly.
This is in response to the pleas from many businesses and commerce groups who asked for more financial help.
This is an addition to the RM5.9bil wage subsidy in the RM250bil Prihatin package announced on March 27.
The remaining RM2.1bil in the second package will be in the form of special grants for eligible micro SMEs, with 700,000 of them expected to each receive RM3,000.
Prime Minister Tan Sri Muhyiddin Yassin (pic) hoped that the additional RM10bil would assist in easing the financial burden of the SMEs and ensure that all their workers remain employed.
“SMEs are the backbone of Malaysia’s economy and the sector accounts for more than two-thirds of the number of jobs in the country and close to 40% of the economy.
“It is therefore vital for us to ensure that SMEs continue to be resilient and sustainable in facing the economic stress and challenges that we all experiencing now,” he said in a televised address yesterday.
The wage subsidy is expected to benefit about 4.8 million SME workers who earn up to RM4,000 a month.
Companies with more than 200 employees will be eligible for a RM600 wage subsidy for each worker, while those that have between 76 and 200 employees will receive the RM800 subsidy.
Companies that employ between one and 75 employees will receive RM1,200 for every worker.
The wage subsidy is for three months and is meant for employers whose companies have registered with the Companies Commission of Malaysia (CCM) or the local authorities before Jan 1 and are registered with the Social Security Organisation (Socso).
It also comes with a condition that employers must retain their staff for at least six months – the three months during which the subsidy is paid and the three months after that.
The government has also abolished the 2% interest under the RM500mil microcredit schemes offered by Bank Simpanan Nasional.
The easy loan scheme for micro-companies is extended to Tekun Nasional with a maximum loan limit of RM10,000 per company at 0%. A funding of RM200mil has been prepared for this purpose.
Businesses can only apply for either one.
Muhyiddin also announced that landlords of private premises who reduce their rental rates by at least 30% from April to June this year will qualify for tax deductions.
He made a plea to landlords to reduce their rental rates during the period and for three months after it ends.
The tax deductions are equivalent to the amount of rent they reduce for three months, subject to the condition that the reductions are at least 30% during the period.
Muhyiddin added that SMEs in premises owned by government-linked companies (GLCs) will have their rental waived or they will enjoy discounts on the rental.
He thanked GLCs such as Mara, Petronas, Permodalan Nasional Bhd, PLUS, UDA and several state-owned companies that have agreed to give these concessions.
“We are also allowing a 25% reduction in the foreign worker levy to all companies whose worker permits end between April 1 and Dec 31. However, this is not applicable for domestic helpers,” he said.
Muhyiddin also urged licensed moneylenders to emulate banks by offering a moratorium for SME instalment payments for six months beginning April.
In another win-win measure, the government is encouraging consultations to be held between employers and employees on employment terms, including the options of pay cuts and unpaid leave during the enhanced movement control order (MCO) period.
“Employers and employees can now refer to the Labour Department for advice to resolve any issues,” he said.
There is also an automatic 30-day moratorium from the last day of the enhanced MCO for companies to submit statutory documents to CCM.The deadline for companies to submit their financial statements has been extended for three months from the last day of the enhanced MCO.
This applies to companies whose previous financial years ended between Sept 30 and Dec 31 last year.
The companies must apply for the extension and no late submission fees will be imposed.
PETALING JAYA: While the additional stimulus for small and medium enterprises (SMES) is a welcomed relief, response from the industry has been somewhat tepid as these additional measures will likely only be sufficient to help soothe the pain until the end of the movement control order (MCO) in mid-april.
If the MCO is extended, the supplemental stimulus will not be enough to keep businesses going and the likelihood of them shuttering their operations will still be on the cards as they brace for a recession.
In an announcement yesterday, the Prime Minister presented an additional stimulus of Rm10bil to ease the financial burdens of the SMES following calls from the industry to provide greater support for the business community.
SME Association of Malaysia president Datuk Michael Kang took the stimulus positively but noted that there were other issues not addressed in yesterday’s announcement.
“We welcome these measures. But the measures are not really enough. They should allow SMES to do business to get their income and cashflow during this MCO period. But if the MCO is extended, these measures are definitely not enough,” he said.
For now, though, Kang is just grateful that the industry, at the very least, “got something”.
“This shows that the government is understanding and they are trying to help so that the SMES can survive and can retain as many jobs as possible.
“It didn’t fully meet our expectations. But of course, we proposed a lot of things,” he added.
One of the important issues which was not addressed in the stimulus is statutory payments, which many employers have said are among the main burdens on their monthly cashflow. Many business associations had asked for a waiver on EPF contributions – or a deferment till year end – and a deferment of monthly tax deductions to the end of the year.
“We hope this will be addressed later,” said Kang.
He also pointed out that there is a lack of impetus to stimulate the economy, moving forward, and this would continue to affect market demand post-mco, making it even more difficult for businesses to get back on their feet.
The new package saw an increase in allocation for the wage subsidy programme to Rm13.8bil from Rm5.9bil previously, with changes made to the payout amount based on the number of workers in a company.
For companies with more than 200 employees, a subsidy of RM600 per employee is maintained and the maximum number of workers eligible for subsidies will be increased from 100 to 200 workers.
For companies with 76 to 200 employees, the company will receive a subsidy of RM800 per employee while companies with up to 75 employees will receive a subsidy of RM1,200 per employee.
The expanded initiative is expected to benefit 4.8 million workers.
Special grants have also been doled out to micro businesses, which make up the largest portion of SMES and are the hardest hit.
The government has also incentivised owners of private premises to reduce rental rates for the duration of the MCO plus, three months after, with tax deductions. While this will help businesses in the services industry, particularly those in food and beverage, retail and accommodation – which make up about 63.9% of the services-based SMES – it remains to be seen if landlords will indeed take the bait.
Meanwhile, Ambank Group chief economist Anthony Dass said the additional stimulus measures supporting the SMES is positive, given that many are experiencing tight cashflow due to no or minimal sales revenue.
“However, the tight cashflow is not just because of the MCO. Businesses were also affected by the poor implementation and policy inconsistencies in the past. Besides, they were affected by the trade war and other domestic challenges.
“Even if the MCO is lifted by midapril or end April, demand is expected to be weak for some time due to travel aversion and social distancing.
“The drop in consumer and corporate spending will intensify the adverse chain reaction that will fuel the collapse of micro businesses, especially the younger and smaller businesses, due to their highly vulnerable situation,” he said.
Not every small business is equipped to survive this downturn, said Dass. And because small businesses contribute disproportionately to job loss during recessions, policy responses are necessary.
“Many SMES have been forced to close their doors and some may not reopen. Apart from revenue loss, they will be impacted by poor credit standings,” he added.
The additional measures will more likely help reduce bankruptcies and bad loans but job losses will remain a major concern.
Apart from rolling out effective measures to help SMES, another crucial point that policymakers will have to take note of is fast and smooth delivery of these measures. With most companies’ cashflow lasting only for two months or so, they cannot afford to weave through a mountain of red tape for a meagre sum.
A few companies that have tried to apply for aid under the Special Relief Facility announced last month said that not all banks are offering the loan and many of those that were, imposed a lot of conditions such as they have to be existing customers to qualify. Additionally, most bankers are unsure about how to handle the applications.
“The procedures and documents are proving to be quite a challenge,” said one food manufacturer.
These loans will also take time to be approved and are further subjected to the approval of Bank Negara and Credit Guarantee Corp Malaysia.
The Prime Minister has assured that the initiatives under the stimulus package will be monitored and implemented quickly and efficiently under a new implementation unit set up in the Finance Ministry. The unit will report directly to the Finance Minister and the Prime Minister.
“Most SMES in Malaysia employ fewer than 76 people. So actually, about 75% of companies qualify for this RM1,200 per employee.” Koong Lin Loong
PETALING JAYA: About 75% of companies in Malaysia are expected to benefit from the RM1,200 payout per employee under the expanded wage subsidy programme.
Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) SMES committee chairman Koong Lin Loong said the majority of companies in Malaysia, especially small and medium enterprises (SMES), employ fewer than 76 people and would be entitled to this subsidy.
In the Prihatin SME+ stimulus package announcement on Monday, the government increased the allocation for the programme to Rm13.8bil from Rm5.9bil previously.
Under the programme, companies with more than 200 workers will receive a subsidy of RM600 per employee and the maximum number of workers eligible for the subsidy is 200 workers.
For companies with 76 to 200 workers, the company will receive a subsidy of RM800 per employee and companies with up to 75 workers will receive a subsidy of RM1,200 per employee.
“The main objective of the wage subsidy is to help employers retain employees. It should also help the bigger players.
“That was why we asked for the programme to be expanded to all companies, but we need to help the smaller ones more.
“And if you look at most SMES in Malaysia, they employ fewer than 76 people.
“So actually, about 75% of companies in Malaysia qualify for this RM1,200 per employee,” he said.
Koong also clarified that companies with up to 75 workers did not need to prove that there was a 50% drop in sales since January to apply for this subsidy.
Only those with 76 workers and above will need to provide supporting documents to show that sales have declined by at least 50% since January.
“People think that every company needs to prove the 50% drop in sales.
“Actually if you look at the criteria, companies that have up to 75 employees don’t need to prove that sales dropped by more than 50%.
“They are exempted,” he said.
He added that the criteria to prove a 50% or more drop in sales was imposed on companies with 76 workers and above, as they are likely bigger players and would have slightly more reserves to last a little longer.
“If you are a bigger company and you have more than 200 employees, that is a total of RM120,000 that you can get in a month.
“And this programme is for three months. That is quite a bit.
“I think companies are receptive of this. I think that this is actually something significant from the government to help our businesses.
“We have to be fair to the government. Although it can’t subsidise 75% of wages like Singapore because of limited resources, this up-to-75-people criteria covers most companies already,” said Koong.
Prihatin Plus Stimulus Package
BELOW are some frequently asked questions relating to the Prihatin Plus Stimulus Package.
Q : I am a micro-sme, is there a specific initiative for me?
A: Under the Prihatin SME+ stimulus
Package, a special Prihatin Grant worth Rm2.1bil will be established for eligible micro enterprises. A grant of RM3,000 will be provided to each company. The micro SMES must be registered with LHDN.
The government has also abolished the 2% interest rate to 0% under the Micro Credit Scheme amounting to Rm500mil under Bank Simpanan Nasional (BSN). The soft loan scheme for micro enterprises is also extended to TEKUN Nasional with a maximum loan limit of RM10,000 at 0% for each enterprise.
Q: What is a micro-sme?
A: According to SME Corp, a micro-sme is defined as a company with sales turnover of less than RM300,000 or employs less than five people.
Q : How can I obtain financing from the Rm5bil Special Relief Facility (SRF) at an interest rate of 3.5% for SMES?
A: Information and application for the SRF can be made through participating banks or online through the / imsme.com.my/ portal. The IMSME portal is Malaysia’s online SME financing/loan referral platform managed by Credit Guarantee Corp Malaysia Bhd (CGC) and is supported by Bank Negara.
Financing of up to RM300,000 is also available for SMES in operation for less than 4 years under the Bizmula-i and Bizwanita-i Scheme on the IMSME portal.
Q : Can I make adjustments to my workers’ employment terms to cope with the MCO?
A: The government has agreed to encourage negotiations between employers and employees on the terms of their employment, including the option to deduct salaries and allow unpaid leave during the MCO.
Employers and employees can refer to the Labour Department to obtain advice in regards to any problems arising from a resolution.
Negotiations have to be based on employment laws of the country.
Q :What is the wage subsidy programme?
A: The wage subsidy programme is a financial assistance paid to employers for every worker who earns up to RM4,000 a month. It is intended to help employers with more than 50% drop in sales since January with headcount costs to continue operating and prevent employees from losing their jobs.
Companies with more than 200 employees will receive a subsidy of RM600 per employee for up to 200 workers. Companies with 76 to 200 employees will receive a subsidy of RM800 per employee while companies with up to 75 employees will receive a subsidy of RM1,200 per employee.
Employers can submit their applications for the subsidy at prihatin.perkeso.gov.my/ and further information can be obtained at perkeso.gov.my/ index.php/en/wage-subsidyprogramme
Q :How can a company with 76 employees and above prove that it is suffering a decline in revenue or sales of 50% or more?
A: Employers can prove a decrease of 50% or more with supporting documents showing the total sales revenue or income in January 2020 compared with the other months.
Q :When does the wage subsidy programme come into effect and end?
A: The wage subsidy programme goes into effect on April 1, 2020 and is for a duration of three months. The deadline for application is Sept 15, 2020.
Q :What documents are needed to apply for the wage subsidy programme?
A: i. List of employee that the subsidy is being applied for
ii. Employer’s bank account statement (front page only)
iii. Employer’s bank registration information
iv. Copy of the company’s registration documents
v. Copy of declaration form PSU50
vi. Supporting documents such as financial statements or sales reports to prove loss of revenue that has been verified by management or other related documents
Q :My company has various departments / branches. Can I select only part of the staff from the different departments / branches for the wage subsidy programme?
A: Yes. An employer can choose any local employee with a salary of up to RM4,000 to qualify for the wage subsidy programme.
Q :Who is NOT eligible for the wage subsidy programme?
A: i. Company that registers and operates on or after Jan 1, 2020;
ii. Employers and employees who are not registered with and/ or have not contributed to SOCSO
iii. Employees who are financially supported by the Employment Retention Programme (ERP) in the same month
iv. Employees with monthly salary of over RM4,000
v. Employees who have already been dismissed
vi. Employees of the public sector, federal and state statutory bodies, local authorities and those self-employed
There are great uncertainties ahead, but China has
brought the coronavirus under control and proven the strength of its
capacity for national mobilization. The country also possesses the
world's most comprehensive national industrial base. China is completely
able to overcome any challenge it meets, safeguard its strategic
security, and protect its people's interests.
The spread of the coronavirus in the US has become a
disaster and a tragedy for urban and rural low-income groups. Income
inequality and the unbalanced distribution of health system
