SMEs, facing bankruptcy, ask for more help

March 31, 2020 editor Ask, Bankruptcy, Facing, Julia Goh, Loan, Malaysia Rating Corp, Moratorium, More Help, Retailers, SMEs, UOB

PETALING JAYA: Local SMEs, especially retailers, say not enough help is forthcoming to help them survive the impact of the MCO on their businesses.

Local retail business owner Christina Ng said many retailers were facing the possibility of bankruptcy due to the forced shutdown of their outlets, coupled with the need to continue paying steep rentals at shopping malls as well as workers’ wages.

Ng, who runs seven retail outlets and employs about 100 workers, said her operational costs amounted to about RM500,000 each month.

She added that the wage subsidy, while a welcome move, should be given to all SMEs in affected industries, instead of requiring struggling businesses prove that their revenues had more than halved in order to qualify for the assistance.

“We are in the midst of a crisis. We are trying to stay afloat and pay our rentals and workers wages, without any income.

“SMEs need to be protected, so we can protect our workers, ” she said.

The government, she said, could help by deferring and lowering corporate taxes, introducing incentives to help SMEs pay rentals, and increasing assistance for workers’ wage payments.

Fitch Solutions, in a report yesterday, had noted that Malaysia’s retail and consumer facing sectors will be one of the hardest hit by the Covid-19 pandemic, owing to the government’s move to close all non-essential businesses during the MCO period.

UOB Research senior economist Julia Goh told Starbiz that a failure to assist SMEs during this period would result in business closures and potentially millions of job losses, given that SMEs employ 66% of total employment.

“As such, measures should be directed towards helping SMEs to retain jobs at this juncture else private consumption and welfare will be severely affected, ” she said.

The Malaysian Rating Corp Bhd (MARC), meanwhile, said that while it applauded the government’s proposal to help struggling businesses through the wage subsidy programme, additional support was needed for businesses to help sustain their cash flows and retain employees.

For instance, it said, the government could consider an extension for the deferment of income tax installments for all SMEs until December 2020.

“This is because the current supply chain disruption in the economy will likely impact businesses over a longer time frame than is currently anticipated and SMEs, being the backbone of businesses in Malaysia, are financially fragile, ” it said.

It also pointed out that the RM100bil worth of loan moratoriums will only defer the burden shouldered by businesses.

As such, it said financial institutions could play a role in ensuring businesses remain viable in the medium term by providing more assistance to SMEs through special funds to help them through this turbulent time.

Source: TheStar