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SMEs in Labuan need help as rental debt set to pile up

26 Apr 2020 / 22:25 H.

LABUAN: Small and medium enterprises (SMEs) here have begun feeling the pinch from the movement control order (MCO) amid the Covid-19 pandemic, and are forecasting a massive rental debt in the coming months.

They said most of the SMEs on the island are still renting government-owned premises and land to carry out their business.

Labuan was declared a federal territory in 1984 and was subsequently granted the status of Malaysia’s international business and financial centre in 1996.

Labuan Chamber of Malay Entrepreneurs (DUML) president Datuk Seri Mohd Alias Abd Rahman said the rental waiver on government properties the MCO does not extend to Labuan, leaving SMEs on the island in a quandary.

He said they were worries whether they could continue to pay the monthly rentals imposed by the local authority of Labuan Corporation.

“We have been told that some operators are may have to close shops, especially those with shrinking cash flow, as we recorded zero transaction since the MCO was enforced. Our companies are not generating any revenue as we still obey the order,” he told Bernama today.

Under the Prihatin Rakyat Economic Stimulus Package unveiled on March 27, SMEs renting federal government-owned premises, which include all premises of state agencies and statutory bodies nationwide, are entitled to a six-month rental waiver.

The six-month rental exemption for canteens, cafeterias, convenience stores and other outlets operating in federal government buildings will involve costs of about RM20 million.

Alias said some SMEs are already facing cash-flow problems and are in dire need of assistance to avert closure as this relief has not been extended to Labuan even though the businesses there are also badly affected by the MCO.

“And we hope Labuan Corporation, which is under the Federal Territories Ministry, will look at our predicament,” he said.

Labuan Chinese Chamber of Commerce president Datuk Wong Kii Yii said the chamber anticipates several financial issues cropping up, including closure of businesses and a surge in the unemployment rate.

“When the government announced the six-month moratorium on loan repayments and restructuring of outstanding credit card following Covid-19 involving at least RM100 billion, it was also pertinent to look at the predicament of employers and business owners in Labuan,” he said.

Wong does not rule out the possibility of employers on the island imposing a hiring freeze, reducing the number of workers and cutting the monthly salaries if the pandemic worsens.

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