KUALA LUMPUR (May 14): It is important that Malaysia-based European companies could benefit from the stimulus package that the government has offered for Covid-19 the same way as other companies in Malaysia would, said Ambassador and Head of the Delegation of the EU to Malaysia, Maria Castillo Fernandez.

She said as around 2,000 EU companies employ over 250,000 personnel in Malaysia, it is most important that the government provides support for wage costs to avoid layoffs as EU companies have been affected in the same ways as Malaysian businesses have.

Fernandez explained that as Malaysia’s Wage Subsidy Programme’s salary threshold has been set at RM 4,000, many European companies are not eligible to benefit from the scheme.

Many European investors operate in high tech manufacturing and high value-added services, and tend to pay better salaries to their trained administrative, skilled specialist and management staffs, she said.

She added that some bilateral chambers have suggested that a salary threshold of RM7,000 would have been more adequate.

“The recent government decision of April 6 to increase the Wage Subsidy Programme from RM6 billion to RM13.8 billion has been welcomed as going in the right direction. This will also have an impact on the long term outlook,” she said. 

Fernandez said according to a recent survey by the EU-Malaysia Chamber of Commerce and Industry  (EUMCCI), only 12% of its members have been able to continue operations with a reduced workforce.

Unfortunately, the remaining 88% have already seen a substantial decline in revenues. 

“Two-thirds of the EU businesses report a loss of revenue of 40% or more. Should the public health situation continue, one cannot exclude that companies are forced to resort to retrenchments in employment and delay future investments, in particular as Covid-19 is impacting the whole global supply chain,” she said.

Meanwhile, Fernandez thanked Malaysia for playing a vital role in the global supply chain of medical equipment and contributing to avoiding the shortage of essential products in Europe and around the world.

“For example in Penang, German companies have their global manufacture centre for products for intensive care, anaesthesia, surgery, and blood treatment. In Perak, an Austrian company is producing medical gloves. And many other EU companies doing parts for medical ventilators, medical devices and medical engineering,” she said.

Fernandez said under the current situation, EU businesses and investors in Malaysia understand the difficult task that the government has in balancing between short and medium-term economic damage and public health priorities and in return, support and comply with the measures taken.

Sourced by THE EDGE Markets