FINANCE: Malaysia- SMEs told to list aid requests
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PETALING JAYA: The government has asked small and medium enterprises (SMEs) to put forward a proposal on the type of help they need.
SME Association president Datuk Michael Kang said they were asked to provide a sectoral-based proposal during a meeting with government ministers, led by Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed yesterday.
“Mustapa said a decision on how the government can help SMEs will be made during the Cabinet meeting on Wednesday,” Kang told theSun.
“I am confident that at least 70% to 80% of the proposals that we will hand over to the government tomorrow will be adopted.”
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Among some of the proposals are the setting up of a government fund to help pay salaries of SME employees.
Kang said the association is also seeking a moratorium on paying income tax for six months as this would give its members some breathing space for them to get back on their feet.
The association is also proposing that the government suspend employers’ contribution to the Employees Provident Fund for the time being. He said every sen his members could save would help them.
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A survey involving over 15,000 SMEs found that one third or 33.3% of them have only enough cashflow for March while 37.8% could only sustain up to April, he pointed out.
The survey found that many were worried about the challenges in business operations, and have doubts about the sustainability of their businesses, Kang said.
“The biggest challenge facing SMEs is cashflow. Most SMEs are very tight in cashflow. It is expected there will be no cash inflow for at least three months due to the movement control order (MCO). Yet, we will still need to continue paying full salaries, rental and some statutory payments.”
Kang said only 26.3% of SMEs found that the government assistance through stimulus packages would help them sustain their business despite the additional allocation of RM100 billion under Prihatin Package, while 77.6% have yet to apply for the special relief fund.
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SMEs had different reactions when asked about the possible actions they would take to manage their employees from April, without a strong stimulus package from the government.
According to Kang, about 43.8% of them would try to persuade employees to utilise their annual leave on a voluntarily basis.
“About a quarter or 25.6% will initiate retrenchment. SMEs employ up to 10 million people. This may translate to a possible 2.56 million people being out of job.”
He said SMEs lack confidence in the business environment for the coming months, with 82% of them projecting losses for FY2020.
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Kang said only 29.1% of SMEs believe that “business as usual” can only be back after six months whilst 61.7% believe it will take more than nine months for businesses to stabilise to normal.
Mustapa had said the country’s economy will need at least six months to recover after the Covid-19 crisis ends. He said that the estimated recovery period was reasonable with the right strategies.
He added that the government was ready to discuss with SMEs and micro-entrepreneurs, who claimed that they were left out of the people-centric economic stimulus package (Prihatin).
SMEs are big in numbers and it is beyond the government’s ability but the government is open for discussions, he added.
Kang said the 10 million people SMEs employ curretly make up about 66% of the Malaysian workforce, and that SMEs form the backbone of the nation’s economy. He said that if they collapse, so will the economy./ RAJVINDER SINGH /
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