SMEs Promised With Better Aid Packages From Government
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The economic stimulus package announced by the government last week focused mainly on one-time cash handouts to Malaysia’s young workforce.
In addition to cash handouts and loan deferments, the government will also partially pay for salaries of certain groups.
Small and medium-sized enterprises (SMEs), which make up 98.5% of all businesses in Malaysia, have voiced out that the economic stimulus package may not be enough.
Retail sectors have had almost zero income since the MCO started, driving them to the brink of insolvency. Even the F&B industry have had to band together to appeal to the government for a moratorium.
Picture Credit: Malay Mail
Frank Ng, managing director and owner of the Orange Esports internet cafe chain, has said that the biggest problem is finding the cash to continue paying staff salaries and shop rentals.
In addition to that, retail shops carry a higher risk of theft as they are now closed and unmanned during this time.
One of our outlets in Pusat Kepong was broken into with thousands worth of equipment carried away.
Frank Ng
Vincent Loh, CEO of Muscle Mania Club, which sells sports supplements, agrees. All 14 of his retail stores are closed during the MCO, resulting in zero income.
He claims that the one-off handout is a short-term solution that can save micro-businesses, but it is not sufficient to prevent the loss of jobs. His employees’ salaries and rentals alone are RM350,000 monthly, not inclusive of other operating costs.
Credit: Hari Anggara/Malay Mail
If there is not an effective long term economic stimulus plan in place to support SMEs, our economy will collapse. When the government protects SMEs, they are protecting the B40 and M40s in the long run.
Vincent Loh
The biggest problem is that all fixed costs are maintained with no way to generate income. This is equivalent to bleeding to death with no way to plug the wound.
Companies must maintain a certain cash flow to keep business running. Without cash flow, they would not be able to take care of the business and their employees. Instead of hemorrhaging money, some businesses may decide that closing down might be a better choice.
Credit: Malay Mail
The good news is that Prime Minister Tan Sri Muhyiddin Yassin will announce improvements to existing aid packages given to SMEs, according to Entrepreneur and Cooperative Development Minister Datuk Seri Wan Junaidi Tuanku Jaafar.
The government understands the hardships SMEs are going through during this time, but the country must first prioritise the effort to flatten the pandemic curve, he said.
We do not wish to see the possibility of many SMEs folding. The government has asked for a moratorium and rental waivers to be agreed upon first.
Entrepreneur and Cooperative Development Minister Datuk Seri Wan Junaidi Tuanku Jaafar
Studies are being carried out on affected industries for them to be regenerated to ensure there is no further slide in the national economy.
Right now, the government is even helping small and informal businesses such as the makcik who sells kueh.
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