KUALA LUMPUR, April 1 — DAP’s Lim Kit Siang called today for the government to prepare a rescue package for the nation’s over a million small and medium businesses (SMEs) now facing a grim future as the Covid-19 crisis takes a heavy toll on profits.
As experts expect the pandemic’s effect on the economy to outlast the four-week movement control order (MCO), cash-strapped SMEs face increasing financial pressure, with many suggesting they could shut down in the absence of government assistance, the Iskandar Puteri MP noted.
The warning comes as the country marks the first day of the extended MCO. With the number of infection cases expected to peak mid-April, Prime Minister Tan Sri Muhyiddin Yassin said the authorities are left with no choice but to extend the restriction.
“With the beginning of the extension of the MCO today, Muhyiddin should also announce an economic rescue package for SMEs and others missed out in the economic package last Friday, which was conceived to deal with the MCO but not its extension,” Lim said in a statement.
About a third of SMEs said they have cash just enough to last through March, while another 38 per cent to last until April, an online survey conducted by the SME Association of Malaysia (SME Malaysia) found.
Liquidity had topped their concerns as profit margins shrunk to near zero, the association’s president Datuk Michael Kang said.
Most companies expect to have no income for roughly three months more due to the MCO but will need to pay salaries and rent in full along with some statutory payments.
Kang had been critical of the government’s move to provide RM100 billion in credit and guarantees for SMEs. As most small businesses are already in debt, Kang said what is needed isn't more loans but direct cash assistance instead.
Several of the country’s top economists have echoed Kang’s concerns, including the former economic adviser to the seventh prime minister Muhammed Abdul Khalid, who chastised the Muhyiddin administration as being keen on placating credit rating agencies instead of helping small businesses.
As MP, Lim said he has received similar pleas from his electorate. He quoted several of the complaints he received in his statement, most of them mom-and-pop businesses shuddering at the prospect of having to close shop.
“As I know a lot of SME is facing the same problem. My next door neighbor has 60 workers, five rented factories and some installment paying machinery,” read one of the quotes.
“He needs RM300k every month. At 42, his 15 years of hard work is going to be wiped off if lockdown continues.”
The DAP stalwart said an economic rescue package to bail out the SMEs must be Muhyiddin’s topmost priority now.