Pikom says Covid-19 stimulus not helping tech firms

KUALA LUMPUR, March 30 — The government's Prihatin stimulus package does not contain enough support for businesses and employees in the technology sector, the National Association of Malaysia () said.

While Pikom welcomes the government's assistance, chairman Danny Lee said it feared this was insufficient to help small-medium enterprises (SMEs) and business owners survive the fallout caused by the coronavirus disease (Covid-19) pandemic and its aftermath.

“Malaysia is highly vulnerable to the global economic slowdown, and several major trading partners of the country have been severely affected by Covid-19.

“We must start thinking about the next coming months during the recovery period. It would take a minimum of six months before things return to a semblance of normalcy. Even then,

Pikom foresee many SMEs will continue to struggle to get back on their feet,” he said in a statement today.

He also cautioned that if businesses start to fail, the economy will stall and the unemployment rate will go up.

An association that represents over 1,000 tech companies, Pikom also highlighted some glaring concerns relating to the current pandemic including the RM600 subsidy for those earning RM 4,000 or less and the deferment of loans by financial institutions.

Lee said that while the assistance will no doubt help some, many employees in the technology industry would not be able to enjoy that coverage.

“In the tech industry, human resource costs can make up 70 per cent to 80 per cent of overall expenses of a company with many in the M40 (middle 40) category.

“The government should have used more in its arsenal to help combat the situation to prevent an economic meltdown.

“A direct cash aid to companies that require it the most is needed to prevent a collapse and ensure the business can remain sustainable,” said Lee.

He added that the exemption on HRDF (Human Resources Dividend Fund) contributions may not be sufficient and restructuring Employees Provident Fund contributions would help but the government should have allowed for an automatic suspension of EPF contribution by both employer and employee for at least six months.

“This will free up at least another 24 per cent into the economy during this vital time,” he said.

With the above concerns, Pikom has proposed some immediate steps that the government could consider taking to assist employers and employees.

This include reducing corporate and individual income tax rates, allowing firms to put workers on unpaid leave, encouraging landlord to delay or exempt rent payments for businesses, and waiving the sales and service tax temporarily.

Pikom also recommended that the government consider the IT as an essential service for all other businesses during the MCO.

“This is where IT infrastructure has to be robust, systems need to be up and running, and IT support services is required.

“We urge the government to allow IT services to continue operating should the company deem it necessary.

“This should not apply for IT retail which should remain closed during the MCO,” said Lee.

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