Saturday, August 21, 2021

Azmin/Ministry of INTERNATIONAL TRADE and Industry - did it do its job to protect Malaysian businesses vis-a-vis contractual obligations, etc with overseas companies??

Azmin and MITI providing exemptions for local businesses to operate during the pandemic - but did they do the needed in protection Malaysian business and their international trade obligations? 



Remember that what the PM, Minister or government say in statements have almost no impact on LEGAL CONTRACTS/AGREEMENTS. What was needed was LAWS. 

Remember in most LAWS, power is given to the Minister(or some other) to also make subsidiary legislation which can come in the form of Regulations, Orders, etc - and all these need to be Gazetted. Relevant Ordinances(during Emergency) or laws should have been enacted.

The failures of government is broad - from loans, worker rights, etc - but today, we would look at whether the government did the needful to help Malaysian persons/entities with regard their contractual obligations with foreign persons/entities and governments? This responsibility reasonably should have been with the Ministry of INTERNATIONAL Trade...

Azmin and MITI is famous during this pandemic, being the Ministry responsible in giving of the 'exemptions' that allows a business/workplace to operate...BUT, the question in my mind was what did they do about International Trade - i.e. the obligations already existing between Malaysian businesses and foreign persons/entities and countries. 



Many of these Malaysian businesses are BOUND by contracts/agreements with these foreign entities/persons, and a failure to do what is needed in time is a BREACH of that agreement, which will mean that these Malaysian businesses may later be burdened with paying DAMAGES, etc. This is also not simply a worry of these businesses only BUT EACH AND EVERY PERSON, as everyone when he saves in banks, have monies in KWSP/EPF knows that they use the monies to invest in businesses, and our interest or dividends is based on how these businesses do - and many businesses are BOUND by agreements with foreign persons/entities.

NOW, in many of these AGREEMENTS/Contracts with foreign persons/entities, there maybe a CLAUSE that may say that some other law, say Swiss or US laws, applies - not Malaysian law.

WORSE, there may also be clauses that say, that in the event of any dispute arising from such contracts, it will be dealt with in some foreign courts - not the Malaysian courts.

Sometimes, the agreement states that disputes will not even be dealt with in courts - but in some Arbitration Tribunal somewhere. [In one case that I am aware of, where there was an agreement between a Malaysian company and a foreign company, that agreement said that Swiss law applies, and disputes will be dealt with in come arbitration body in Switzerland - hence, Malaysian law..Malaysian Courts and even Malaysian based arbitration bodies cannot deal with such cases.

SO, the question was whether MITI did anything to about this problems that has arisen or will rise later...because many business because of Covid could not fulfill their contractual obligations to foreign customers or companies. Not so bothered about multinational companies whose subsidiaries are operating in Malaysia, but the Malaysian companies that trade/contractual obligations to foreign entities/companies...

Would the Covid-Pandemic, where the Malaysian government also caused businesses to SHUT DOWN temporarily, imposed movement restrictions, quarantine of persons, etc - be even legally recognized as something that allows one to rely on something like 'force majeure' which means an unforeseeable circumstances that prevent someone from fulfilling a contract. 

Does Malaysia, by law, recognize this Covid-19 pandemic as such an 'unforeseeable circumstances that prevent someone from fulfilling a contract'. [Of course, Parliament/King and the courts can make law - best always that this is done by the Parliament/King vide laws]

Some of the bigger companies, maybe like Petronas, etc, may have considered and included all such things into their contracts with foreign entities, but many of the other businesses may have failed to do this - and for BREACHES of contractual obligation, may face termination of contracts and maybe even need to pay LARGE damages.

So, did MITI work out agreements with these foreign multinationals/companies to help Malaysian businesses? Did it deal with other countries to pass laws to take into account problems arising because of Covid resulting in Malaysian companies being unable to fulfill contractual obligations? Did it try to vary trade agreements? Did it try to do anything with the World Trade Organisation(WTO), OECD or even the UN - so that failures/delays in fulfilling contractual obligations by reason of the Covid-19 pandemic(including measures implemented on business by government?

In short, did MITI do anything to protect all the Malaysian businesses, not just the GLCs, from later consequences of breach of contracts with foreign customers/entities? What exactly was done? Tell us in Malaysia.

As it is, even in Malaysia, the government spoke about Moratorium on Loan Repayments - but all we seem to have is government statements, and there seems to be NO LAW. A government or Ministers statement does not alter a contract/agreement between a financial institution and the borrower. 

Did Bank Negara get the written agreement with the banks in Malaysia? Did the agreements with banks(if there is between government and bank, even specify, what happens later - do they have have to pay LUMP SUM all that is owned after moratorium ends? Do they pay the usual month rates, but just for a longer period - where the re-payment period is extended to as long as the moratorium lasted?

YES, then when it comes to MITI, the fact is that many businesses in Malaysia may really have taken loans in foreign banks not in Malaysia - what happens then?

As it has already been mentioned above, many of the Malaysian businesses in contractual relationships with companies in OTHER countries will not even be governed by Malaysian Law, and the disputes will also not be dealt in Malaysian courts - so, MITI should have been focusing its attention in other countries ensuring that such Malaysian companies are protected or that their loss be minimal...OR is that not the responsibility of the Ministry of International Trade? 

Malaysian courts may recognize the pandemic as an unforeseeable circumstances that prevent someone from fulfilling a contract - force majeure - but will law/courts in other countries?

In my opinion, MITI was taking on a lot of work - which ought to have been dealt with by other Ministries even the Ministry of Domestic Trade...Ministry of Health...Ministry of Local Government - Why did this happen? 


In any event, now maybe the next Prime Minister will find a suitable Minister to resolve all this potential problems that our companies having contracts with overseas companies customers will face?

We certainly need a law that defines this Covid-19 pandemic as an unforeseeable circumstances that prevent someone from fulfilling a contract - allowing one to plead/rely on 'force majeure'  

New PM need to organize his Cabinet well, and hopefully it will be a small Cabinet with qualified MPs appointed as Ministers who have the wisdom to do the needful for Malaysia/ns. Allocation of responsibilities need to be clear - we do not want certain areas missed out. 

 


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