KUALA LUMPUR (Oct 12): Up to one-quarter of Malaysia’s small and medium enterprises (SMEs) are at risk of closure over the next few months because of the Covid-19 pandemic, says the SME Association of Malaysia.
Its vice president Chin Chee Seong said many SMEs have started to face the possibility of being wound up, adding it is unfortunate that the second wave of Covid-19 infections has come just after the six-month loan moratorium ended.
As such, he said the recovery of SMEs’ businesses is very much dependent on how well the country curbs the spread of the pandemic.
“Looking at the current situation, I won’t dare to say that we will recover fast. It is subject to the public taking serious note by not allowing any more transmission of the Covid-19 virus,” he said.
Chin said if the transmission is checked, the Malaysian economy “could bounce back fast and could do better than other countries. The next three to six months is a critical period.”
Speaking at the Malaysian Economic Summit 2020, Chin however added: “But sad to say, there will be more SMEs closing down.
“Our unemployment rate, which is now close to 5%, is quite alarming to us. I do hope we all can get through this critical time.”
Chin said the government’s grants to encourage more SME participation in digital platforms is helpful for them, as they get to expand their sources of income.
When asked about the role the SME Bank can play in helping SMEs get through this challenging period, Chin said the SME Bank is currently not receiving sufficient funding from the government
Having said that, he believed the government has pushed the commercial banks to provide as much assistance as they can to SMEs, including by extending the loan repayment period.
Banks have said they will continue to assist borrowers hit by the pandemic through targeted bank assistance beginning Oct 1, after the blanket moratorium ended on Sept 30.
The loan moratorium was introduced as part of the PRIHATIN package, which took effect starting from April 1.
A survey carried out by the SME Association in August among 1,713 members revealed that 20% of the respondents were considering permanently shuttering their business in the next six months.
The survey also found that 22% of the respondents have sufficient cash flow to last them for a month, while 27% can sustain till November and 31% until December.
Since then, the country’s Covid-19 cases have been on the rise. As of noon today, Malaysia has reported a total of 16,220 cases.