Industries unable to sustain: FSI
Published on: Wednesday, April 01, 2020
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Kota Kinabalu: The Federation of Sabah Industries (FSI) is of the view that it is equally important for the Government to protect the productive assets (both human and capital) of the industries to keep the economy going at the same time. 

“It is in this context that we would like to submit our appeal and proposals for consideration by the State Government through the Ministry of Trade and Industries in the implementation of MCO and related policies,” said FSI representative Tan Chee How (pic).

He said even though the contribution of the manufacturing sector to the State GDP is less than 8 per cent, nevertheless FSI would like to point out that the sector remains as a significant contributor to employment and acts as an important multiplier to the overall economy of the State.

FSI is asking to allow employers to adjust compensation to employees based on productivity and attendance.

“The small number of companies in the industry sector indicates that manufacturing is not a very profitable business in the State.  Many of them will not be able to sustain the imposition of 50 per cent production and full payment to workers on compulsory leave for more than a month.

“It is proposed that the Government consider bearing 50 per cent of the compensation to employees on compulsory leave based on need basis, not just the B40 group, as workers earning over RM4,000 also have commitments which are not adjustable immediately.

“Allow employers and employees to work on mutual settlement on redeployment, suspension and retrenchment.”

FSI is also asking to extend the moratorium on payment of principal and interest to loan by hire purchase companies.

“Many SMEs obtained loans at high interest rates from hire purchase companies, which is not included in the financial moratorium package announced by the Government.

“We propose the State Government allocate RM100 million cost free to agency originally set up to help the development of the industry in Sabah such as Borneo Development Corporation to tide over this difficult period and for future growth.”

Tan said FSI is asking also electricity and water charges for the productive (manufacturing) sector to be reduced.

“The discount for the electricity and water tariffs, which is limited by the quantum given, is insignificant and counter-productive to manufacturers.  While an increasing tariff may be good in discouraging household consumers to reduce wastage, the same does not apply to industry. 

“The State Government should consider adopting lower and reducing tariffs to encourage the manufacturers to produce more.

“In addition, electricity distribution companies operating at industrial parks who were given big discount by SESB should pass on the benefit to industrial users to enhance the competitiveness of the manufacturing sector and the State’s economy as a whole.

FSI is asking that income EPF and HRDF Fund contribution be suspended for six months to ease cash flow for firms. 

FSI is also asking that the Sales and Service Tax (SST) be abolished to make the manufacturing sector more competitive.  

“SST is a single point tax collection for goods produced by manufacturers and it is cost loaded onto the most important sector of the economy rendering that nation productive sector uncompetitive.”

They asked that Corporate Tax be reduced to below 15 per cent for SMEs and 20 per cent for companies with Federal Manufacturing Licence (FML) to ease their cash flow for the time being and to make local industry more competitive in the region.

FSI also wants Port Storage and other port charges, especially storage charge caused by the slow movement of goods due to the Movement Control Order to be waived and that there is effective and efficient disbursement of all aids.

FSI also would like to take the opportunity to thank and congratulate the Government for coming up with a Relief Package to calm the public affected by the safety measure implemented to control the spread of the deadly coronavirus which could potentially kill many people and destroy the nation.


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