More businesses will close without extended moratorium, warns MEF

(FMT) – The country’s largest employer and employee groups have called on Putrajaya to rethink its decision not to extend the loan moratorium, saying the post-Covid 19 business climate was “far from usual”.

Both groups claimed that although the economy had improved following the gradual lifting of the movement control order on May 4, it was “far from business as usual”.

Speaking to FMT, Malaysian Employers Federation (MEF) executive director Shamsuddin Bardan said ending the moratorium will result in “many businesses closing faster”, irrespective of any targeted facility offered by the banks.

“It is true that many businesses have resumed but it is far from business as usual. Consumer confidence is still very low and people are only spending on essentials, so the question of demand and volume of business are still there,” said Shamsuddin.

He said exporters were also faced with issues of cancelled orders and rescheduling of shipments as importers in other countries were also facing problems.

“I do not agree with the notion that businesses will be able to service their loans. The process of restructuring loans will take up a lot of time due to the sheer number of borrowers, ” he said, adding that an extension until December would be good.

In Parliament today, Finance Minister Tengku Zafrul Aziz said businesses “could pay their loans” now as they were generating business, and that banks would use a targeted approach to assist their clients.

The six-month automatic loan moratorium introduced on April 1 following the Covid-19 outbreak and the movement control order (MCO) will end in September despite calls for an extension from various parties.

Meanwhile, the Malaysian Trades Union Congress said it would continue to pursue the extension of the moratorium to ease the financial burden of the people.

“The government has a moral obligation to the people, as do the banks to their customers. The people have continuously supported the banks,” MTUC secretary-general J Solomon said.

He said there was no reason for the banks not to provide a moratorium extension unless they were “intent on confiscating assets and properties” of the people when they cannot make their payments.

“Everyone is affected, not just here but globally. Many businesses are still affected and this means that wages are also likely to be affected,” he said.

Solomon urged the government to look after the “80%” who were struggling rather than the top 20%.