KUALA LUMPUR: Small and medium enterprises (SMEs) in Penang affected by the floods may have to cut employee bonuses, if necessary.
Malaysian Employers Federation (MEF) executive director Datuk Shamsuddin Bardan said this is one of the methods employers can opt for to cut back on losses and damages caused by the floods.
“Their employees will have to understand that this is probably the only way the business can sustain through the entire period of non-operation,” he said.
Shamsuddin added that while the floods have hit many businesses in Penang, it has only been a week and he believes that these businesses are still able to sustain.
“Most of the businesses I believe are still able to sustain but if at all they are anticipating major losses that could lead to a shutdown, I would advise them to start discussing with the Labour Department on how to handle the situation,” he said.
Federation of Malaysian Manufacturers (FMM) Penang branch chairman Dr Ooi Eng Hock had previously estimated damages suffered by these businesses to be around RM200 million.
He said more than 100 out of the 400 companies from the manufacturing industry are also thought to be impacted, while more than RM50 million in damages excluding machinery have been estimated by FMM.
Responding to this, Shamsuddin said the SMEs can apply for a special loan announced by Bank Negara Malaysia (BNM).
“This loan will be able to aid these businesses that need some help with recovery.
“Times are quite challenging, and not all of these businesses have reserves as backup. As it is, they may only be making just enough to break even, and have not been able to stock up for emergencies like this,” he said.
BNM had yesterday announced the availability of a RM500 million Disaster Relief Facility to alleviate the financial burden and assist in the resumption of business operations of SMEs affected by the floods.
Affected businesses can obtain financing at a concessionary rate from any commercial bank, Islamic bank and development financial institutions regulated by BNM.
BNM will provide 60 per cent guarantee on the financing obtained through Credit Guarantee Corporation Malaysia Berhad (CGC).
Businesses that need assistance can approach participating financial institutions starting from Nov 8 until May 31, 2018.
Meanwhile, independent economist Dr Hoo Ke Ping, commenting on the impact of investor confidence, said the state would likely see a negative downturn in its economy depending on several factors.
“There are two ways of looking at this whereby investors may choose to leave Penang depending on the recurring flood situation.
“The investors are more inclined to believe that overdevelopment on the island is causing the floods to worsen and are anticipating subsequent flood occurrences.
“The push factor here is the floods, and the pull factor is that they can move back to their country or to Selangor or Sendayan. As for foreign investors, the pull factor could include the Trump (US President Donald Trump) Tax Plan, where they are likely to shift back to the US,” said Hoo.
He added that if the situation of overdevelopment does not improve, Penang’s economy is looking at a downturn in the next two to three years.