“We are all worried but the government is trying its best to reach out to everyone … well almost.”
Those were the words of a respected friend.
It’s been a nightmare for many small businesses and SMEs in Malaysia since the start of the year. In fact, the effects were already felt late last year when major companies were preoccupied with closing their accounts while the decision-makers were planning their year-end break as the ugly coronavirus was brewing in Wuhan, China.
Come January, Malaysians were already in Chinese New Year mood. And the effects of Covid-19 were evident as suppliers were finding it difficult getting goods from the mainland.
The following month, Malaysians were shocked with a political upheaval which resulted in Tun Dr Mahathir Mohamad resigning and the collapse of Pakatan Harapan – the loose coalition that won the 2018 general election.
Businesses that had dealings with ministries, government agencies and government-linked companies were left in limbo, unsure of their existing and upcoming contracts.
On March 1, Tan Sri Muhyiddin Yassin was sworn in as the eighth Prime Minister and it’s not been a walk in the park for him and his Cabinet as they deal with being labelled “a backdoor government” and tackling the worldwide Covid-19 pandemic.
Critics are not impressed with the Prihatin Economic Stimulus Package that Muhyiddin announced last Friday. The F&B industry and SMEs say they could be forced to close shop sooner than anticipated, resulting in more people losing their jobs.
The economic stimulus package reminds some of election goodies. Give out one-off payment to the masses, cover as many people as possible and hopefully they will be happy. But how long will these one-off payments last? And the “payment holiday” for loans isn’t a holiday per se. You still need to pay your dues, eventually.
But this is not an election. This is a pandemic that has collapsed the world and businesses all over.
And what needs help, rightfully, is the business community especially the SMEs to ensure everyone still has a job and is able to put food on the table in the coming months and years.
The whole idea behind the economic stimulus package is to energise cash flow, to ensure people continue spending and to ensure money goes around.
It may be pretty on paper, but not in reality.
Melvin sells and repairs computers for a living and he has a small shop in Ampang. He has been operating for about two years now and has five people working with him, including his wife, seven days a week. He also hires interns and several freelancers when the need arises.
Since March 18, Melvin has been forced to close operations and sit at home. He had several orders cancelled due to the pandemic.
Some companies have yet to pay him for his services due to the ridiculous 90-day or 120-day payment policy. These companies do not provide deposits.
His cash flow is stuck. He has no heart to tell his workers to leave as they too have mouths to feed.
Melvin does not qualify for any of the “incentives” announced by the Prime Minister and has to instead use whatever little savings he has to pay his staff. This would mean Melvin and his wife will not be drawing any salaries for the next three to six months.
Melvin and his family would have to stop the services of their part-time maid. They would also have to pull their children out from tuition and extracurricular activities as every sen matters.
If Melvin is forced to close shop, four of his staff, his part-time maid, the freelancers, interns and those who earn a living teaching his children tuition or taekwondo will also lose their income.
It’s not about bailing out the business owner. It’s about helping the ecosystem that hinges on a business.
Would Melvin be interested in taking a loan despite lower interest? No, as this would mean he would be further in debt. And if things don’t work out in the next six months or so, he wouldn’t want the bank to take his home.
Most of these SMEs don’t want just handouts. Money will never be enough. What they need are tax incentives, rebates and encouragement to stay resilient and to assure their staff that things will be back to normal soon. They hunger for jobs to keep them motivated.
The money spent on SMEs and businesses will naturally go back to the people. In short, life will be the same for the masses.
Judging by what is happening, most businesses are instilling fear in their workforce. Most business owners will eventually get exhausted with this battle and raise the white flag. That will result in a rise in unemployment in the country.
There is also a ‘Business Sustainability of SMEs During Covid-19 Crisis Survey‘ by SME Association of Malaysia and Bizsphere Brand & Marketing Group to gather feedback and be the voice of SMEs to highlight concerns and recommendations. The survey ends today.
Senior lawyer Derek Fernandez, in sharing his views with Twentytwo13 managing editor Pearl Lee, laid down practical ways to help small and medium businesses.
i. allow a double tax deduction of wages and salaries of six months for businesses that pay full wages to staff who can’t work or businesses that can’t operate due to the Movement Control Order.
ii. bank interests should not be clawed back after six months since the government already released some reserves to banks and online/credit card institutions.
“This will provide much needed help to employers and greatly assist them to retain their workers and absorb the business risks in the hope their business recovers later,” Fernandez added.
Business is all about risks. Some win, some lose. But these are unprecedented times. The business community must come together and voice their concerns and displeasure. The powers-that-be must hear them out and act quickly.
As Muhyiddin said in his Friday speech, the nation is at war with invisible forces and the situation we are now facing is unprecedented.
He also rightfully acknowledged this government may not be the government Malaysians voted for but said his government cared for its people.
Muhyiddin seeks the support from all and the business community, especially the SMEs, will gladly assist and ensure the government it will stay in business and retain its workers if everyone joins forces to overcome the crisis.
The call is yours, Mr PM, sir.