KUALA LUMPUR – Only 72% of small and medium enterprises (SMEs) are expected to rebound within a year through the various Covid-19 relief packages, said the Finance Ministry.
“With the support and assistance, a total of 72% of SMEs are anticipated to rebound within a year. However, the rest would require more than a year to stabilise their businesses,” it said in its Economic Outlook 2021 report.
The ministry said most SMEs still faced challenges in restarting their businesses due to “lesser demand, insufficient capital, supply claim issues, and difficulties in complying with SOPs”.
Citing an August survey by SME Corporation Malaysia, the ministry said more than 90% of the country’s SMEs only have enough cash in reserve to survive up to five months, following the impact of the Covid-19.
Also, nearly 60% of SMEs reported not having any sales during the first phase of the movement control order from March 18 to May 12, while 39% experienced lower sales.
The drop in sales at the beginning of the pandemic coupled with high overhead costs have left businesses with serious cash flow problems.
As a result, they have had difficulties paying employees’ salaries and benefits, business loan repayments, rental and utility payments, and purchasing of raw materials and packaging.
“Consequently, more than 90% of SMEs were expected to survive only up to five months within existing cash-in-hand.” – The Vibes, November 5, 2020
