We had seen over the last few weeks that the Malaysia Government took quite fair a bit of time to introduce the SME stimulus package. Well kudos that it has now been done after so much lobbying from the associations that represents the SME business community.
One of last hurdle that many SMEs want to see is the enactment of Covid-19 Act, which is very similar to the one introduced by countries such as UK, Hungary and Singapore.
Why do we need such an act? Simply it is to ensure that SME will not collapsed when they resume operation. By May or June when MCO is lifted, SME will need to make 2 choices, pay salary or pay rent? As matter of logic of course pay rent and reduce man power because logically there aren’t much business to do as consumer market is soft. With a high unemployment what does it tells you? Well we all know the academic answer.
As the Malaysia Government had declared Covid-19 as a pandemic outbreak, a Covid-19 Bill has to be temporarily introduced. Whether Parliament convene using face to face or using e-conferencing technology that one we leave it to the learned minister to decide.
Covid-19 Bill is needed to assist SME businesses to obtain temporary relief as they are unable to fulfill their contractual obligation. At least six-month moratorium so that they can focus on reviving their businesses instead of worrying about potential litigation and how to pay their rent and electricity for example.
Some measures that needs to be in placed are:
1. Suspending certain contractual obligations especially rent and maintenance services
2. Limiting certain bankruptcy and insolvency proceedings
3. Regulating certain conduct of corporate meetings with the company secretary
4. Bring down the discount of electricity tariff further
The temporary Covid-19 Act measures should be applicable to certain contracts that prohibit certain actions to be taken against counter parties or their guarantors if the inability of the counter party to perform such contracts is to a material extent caused by COVID-19. Not only leases (rent) but it also applies to supply of constructions materials, performance of corporate bonds, performance of provision of goods and services for events, performance of goods and services related to tourism, performance of private hire purchase related to factoring service provider and repossession of goods used for the purpose of a trade and business.
Further to add that any contracts enter before MCO should be protected under the Covid-19 Act to protect businesses from failing further.
The government should implement this act without haste to protect businesses further and such act is only a temporary measure for 6 months. When the act has passed its shelve time the contractual obligations will continue unabated.
Malaysia Government should act now!