KUALA LUMPUR – Small and medium enterprises (SMEs) fear thousands more will go bust over the next few months if no new stimulus package is announced to cushion the impact of the fresh round of movement restrictions.
Chiefly, businesses are hoping for a blanket loan moratorium, similar to the one that took effect last year from April to September, and for it to be extended beyond the current March deadline.
They are also hoping for the Wage Subsidy Programme to be expanded across all sectors.
At present, both schemes are only for targeted groups and will end in the first quarter of the year, as announced in Budget 2021, which may not have taken the current lockdown into consideration.
SME Association of Malaysia president Datuk Michael Kang said many companies were still only starting to get back on their feet following a tough 2020 before the current movement control order (MCO) was imposed in six states and the Federal Territories.
He said with the lockdown – which will most likely be extended – non-performing loans among businesses are expected to increase considerably in the next few months if the government does not step in.
“Last year, between 10% and 20% of some 900,000 SMEs either went bust, or are now dormant. I think this year, if there is no assistance in the next one month, expect 5% to 10% more to close up shop,” he told The Vibes.
Kang said this is due to high overhead costs and wages with no income at all, and debts accrued over the past year following the first MCO.
Prime Minister Tan Sri Muhyiddin Yassin on Monday announced stricter movement restrictions nationwide, attributing the move to the increasing number of Covid-19 cases in recent weeks.
Pakatan Harapan MPs have poured scorn on the government’s lack of financial assistance to date, saying it shows inefficiency and a lack of planning, despite the lessons of last year’s MCO.
Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz, meanwhile, has said his ministry is discussing suitable improvements to be made to several Budget 2021 initiatives, considering the new MCO.
Banks can afford to expand, extend loan moratorium
On the loan moratorium, economist Prof Barjoyai Bardai of Universiti Tun Abdul Razak said financial institutions should have no issue expanding and extending it.
He said this is because such assistance does not require giving out cash, and that it will be up to the government to assert its power on banks to compel them to provide the aid.
“Technically, the government can do that under the present situation, since we are under an emergency, and banks must abide. In any case, banks won’t lose money, only the repayments are postponed.”
Additionally, he proposed a one-off fast loan of up to RM5,000 for microbusinesses, with approval given on an immediate basis, considering they are among the worst-hit by the pandemic and movement restrictions.
“Most can’t even take bank loans and, so far, they have not received any assistance.
“What we need is for these businesses to be given a blanket loan approval, perhaps between RM3,000 and RM5,000, like many other countries do.” – The Vibes, January 16, 2021
