The Covid-19 pandemic has pretty much stopped the world dead in its tracks. As more people isolate themselves indoors, certain sectors like the hotel and airline industry, construction, as well as manufacturing are hit the hardest. The rate of unemployment continues to rise, and people are beginning to spend less on material things, and more on food – telltale signs of an economic recession.

Back home, Malaysians have made the transition into the fourth phase of the movement control order (MCO), but whether or not this will be extended past May 12 and into the Hari Raya period remains to be seen.

With no reason to be out, car sales are beginning to decline. To dampen this effect, a number of car dealer associations have banded together to issue a memorandum to the ministry of finance (MOF), detailing several pointers to safeguard the national automotive industry (and all those involved in it) in the short term.

The memorandum, which was issued just before the start of phase two, asks that the MOF issue grants or subsidies for car manufacturing companies, as well as distributors, workshops, repair centres, and vendors. In total, there are 45 companies in the supply chain that have suffered losses due to the MCO, it says.

One of the ways to offset the losses is to revise the commission (handling fee) dealers get for every customer that applies for a hire purchase loan. Currently, the commission is capped at RM600 (stipulated by Bank Negara Malaysia since July 2000), but the memorandum suggests increasing this to RM1,000.

To help stimulate the auto industry post-MCO, the dealers also request that excise duties of cars be waived until the end of 2020. This, it is hoped, will prevent the “wait and see” mentality by customers.

Other measures include reducing employer EPF contribution from 13% to 5%, as well as temporarily suspending all employers and employees’ SOCSO, Employment Insurance System (EIS) and HRDF contributions until end-2020.

The memo also suggests the MOF extend the loan moratorium for another six months or more, and waive any refinancing penalties that have been imposed by the bank. It also asks for the interest rate for loans or overdraft be revised downwards to the minimum (the BLR usually increases, it said).

Lastly, for the purposes of injecting cash flow into the market and corporates, the associations suggest the MOF to suspend its collection of monthly tax deductions (deductible tax for individuals and corporates) for a minimum of six months.

“We hope that the aid and support provided by the government can help the national automotive industry remain relevant in the country,” it said in the memorandum. Those involved in the request include the Perodua Dealers Association Malaysia, Proton Edar Dealers Association, Honda Dealers Association Malaysia, Toyota Dealer Council Malaysia, and Federation of Motor and Credit Companies Association of Malaysia.

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