Legal Updates for March 2020

Movement Control Order - Construction Industry: Update on "Critical Works"

On 23 March 2020, the Malaysian Ministry of Works (“KKR”) issued an update to its list of Frequently Asked Questions (“FAQ2”) in efforts to provide clarity and clear communication to address the queries affecting the construction industry arising from the implementation of the Malaysian Movement Control Order. A key highlight of the FAQ2 is that, in acknowledgment of the importance of ensuring the safety and cleanliness at the construction site during Restriction Period, KKR has revised the examples of “critical works” previously listed in its Frequently Asked Questions issued on 18 March 2020 (FAQ1).

Movement Control Order – Update on Employment Issues

Since the issuance of the Movement Control Order by the Government of Malaysia (“MCO”), business has slowed substantially for essential services providers and come to a standstill for others. The prospect of the MCO being extended beyond the initial restriction period, i.e. 18 March 2020 to 31 March 2020, is weighing heavily on the minds of business owners. The need to minimise expenses and conserve cash at a time when revenue has fallen substantially has given rise to questions of what employers can do to secure their business and at the same time support their employees.

In this Update, we examine various laws and pronouncements and explain their effects on the employer-employee relationship. We analyse in particular the two FAQs issued by the Ministry of Human Resources on 19 March 2020 and 20 March 2020.

Movement Control Order - How Does It Affect the Manufacturing Sector?

Manufacturing was not explicitly named as one of the essential services under the Prevention and Control of Infectious Diseases (Measures within the Infected Local Areas) Regulations 2020. However, the essential services list does provide for "any services or works determined by the Minister as essential or critical to public health or safety" to continue to operate during the Movement Control Order period between 18 March 2020 to 31 March 2020 ("Restriction Period"). On 18 March 2020, the National Security Council and the Ministry of International Trade and Industry issued corresponding press statement and circular to allow certain manufacturing companies to operate during the Restriction Period if such companies are producing critical products.

Movement Control Order – How Does It Affect the Construction Sector?

Since 16 March 2020, Malaysia has been abuzz following the announcement by the Prime Minister of the implementation of a Movement Control Order ("MCO"). The MCO restricts the movement of anyone to, fro and within an infected area. Following the announcement, the Government of Malaysia has gazetted the Prevention and Control (Measures Within the Infected Areas) Regulations 2020 ("Regulations") which shall take effect from 18 March 2020 to 31 March 2020 ("Restriction Period"). Under the Regulations, the whole of Malaysia has been defined as an infected area.

Following the Prime Minister’s announcement, the different sectors of the construction industry have sought clarification and guidance as to whether the type of construction, operation and/or maintenance work that they perform are classified or may be construed within the purview of Essential Services and/or be considered as critical works. To provide clarity, the Ministry of Works has made a further announcement that all construction work shall be subject to the MCO. Accordingly, all construction and maintenance work must stop. Only critical works are allowed to continue.

This FAQ strives to provide answers to the pertinent questions, addressing the perspective from both the public and private sectors, of the construction industry in general and a brief commentary on specific industry(ies) consequent upon the MCO, its impact and what steps need to be taken by these sectors during the Restriction Period.

The Prevention and Control (Measures Within the Infected Areas) Regulations 2020 – Containing the COVID-19 Outbreak in Malaysia

Following a sharp increase in the number of persons infected by the COVID-19 virus, the Malaysian Government has gazetted the Prevention and Control (Measures Within the Infected Areas) Regulations 2020 (“Regulations”). The Regulations are to have effect from 18 March 2020 to 31 March 2020. This followed the announcement by the Prime Minister’s Office on 16 March 2020 of a Movement Control Order, which according to the announcement, will be enforced under the Prevention and Control of Infectious Diseases Act 1988 and the Police Act 1967. The Regulations were issued subsequent to the Prevention and Control of Infectious Diseases (Declaration of Infected Local Areas) Order 2020 which declared all states and federal territories of Malaysia as infected local areas.

Anti-Corruption Efforts Intensify at the Stock Exchange

Bursa Malaysia Berhad announced anti-corruption and whistleblowing measures as additional corporate governance requirements under Chapter 15 of the Main Market and ACE Market Listing Requirements, respectively, at the end of last year. The requirements are slated to come into effect on 1 June 2020, complementing the new section 17A corporate liability provision under the Malaysian Anti-Corruption Commission Act 2009. The requirements aim to promote a culture of better governance and hold businesses to greater accountability to stakeholders.

Amendments to the Malaysian Franchise Act 1998

The Franchise (Amendment) Bill 2019 ("Bill") was passed by the House of Representatives (Dewan Rakyat) and the Senate (Dewan Negara) on 3 December 2019 and 19 December 2019 respectively to amend the Franchise Act 1998 ("Act"). To date, the Bill is not yet in force pending Royal Assent and a date to be appointed by the Ministry of Domestic Trade and Consumer Affairs for the Bill to come into operation by notification in the Gazette.
As an overview, the main amendments under the Bill are as follows:

  1. it will be an offence for not including the terms prescribed under the Act in a franchise agreement;
  2. a foreign person who has obtained an approval under section 54 of the Act to sell a franchise in Malaysia or to any Malaysian citizen must also register the franchise under section 6 of the Act before he can operate a franchise business or make an offer to sell the franchise;
  3. the period in which a registered franchise will be effective will be limited, thereby requiring periodic renewal of registrations; and
  4. a franchisee who is not registered will commit an offence. 
Legal Analysis of COVID-19 Outbreak: What Businesses Should Be Aware Of

On 30 January 2019, the World Health Organisation declared the coronavirus disease 2019 (“COVID-19”) a public health emergency of international concern. More than 90,000 people globally have been infected in a short span of two months, sending shockwaves through the global economy. Every business has been affected in some way or the other by COVID-19 and the measures taken by governments and authorities to contain its outbreak.

The first part of this guide provides a legal analysis on the potential impact of COVID-19 on seven crucial Malaysian economic sectors, namely, Building & Construction, Energy & Power, Events & Sports, Hospitality & Tourism, Oil & Gas, Real Estate & Retail, and Shipping & Trade. In the second section of this guide, we examine the general legal implications on contracts, employment, personal data protection, financing, mergers & acquisitions, and social media.

National Automotive Policy 2020

Launched on 21 February 2020, the National Automotive Policy ("NAP") 2020 aims to enhance the automotive industry in the era of digital industrial transformation by focusing on Next-Generation Vehicles, Industrial Revolution 4.0, and Mobility-as-a-Service to make Malaysia a regional leader in manufacturing, engineering, and technology. The NAP 2020 is an enhancement of the NAP 2014 that focused on developing Malaysia as the hub for Energy Efficient Vehicles through development of research and development capabilities for right-hand drive vehicles and related technologies such as fuel efficiency, light material, telematics, tooling, and component design. The NAP 2020 sets out five additional objectives to the NAP 2014, as well as three directions, three strategies, four roadmaps, three blueprints, and 12 targets. Analysts have predicted that Malaysia's new Government will continue to adopt business-friendly measures. Assuming the Government implements the NAP 2020, this should boost Malaysia’s automotive industry given the variety of initiatives aimed at taking the industry to the next level.