Yes, sounds like a scam,  vss =3 month salary,  retrenchment = 10 month salary, I rather go for retrenchment. 

And using firing to as scare tactics. Want fire also need proof of misconduct. No proof sue the company.

Is retrenchment mandatory paid by years of service?

First time I heard this. Is this by law?

Not bad... at least can get 10 months salary if 1 month compensation for 1 year of service

Retrenchment means no compensation. If got last month celery also cukur.
Usually, will offer VSS first. You don't take, next round retrench, you habuk pun Tak ada.

When did I said retrenchment get 10 month salary?  Go and understand your own country labor law then come back again and argue.

After you do some labor law research,  answer me how much is the compensation for people who work for more than 10 years? As per the article.

What I meant is the terms of services for 10 years retrenchment compensation = 10 months, 11 years is 11 month and so on.

Of course this is for people with income lower than 2k but there is many other conditions like foreigner first out,  last in first out,  company cannot expand or hiring anyone recently. The company want to retrench,  it's basically retrench everyone,  the entire company will not left many workers.