PETALING JAYA: With the expected fall in revenue for small and medium enterprises (SME), 40% of them have had their loan applications rejected in the last six months, prompting the Small and Medium Enterprises Association (Samenta) to appeal for government help.
The expected revenue growth index for SME dropped from 171 points in the first quarter (Q1) to 165 points in Q2, according to a survey conducted jointly by executive mentoring firm Vistage and the Malaysian Institute of Economic Research.
According to the survey, the expected revenue growth index declined from 154 points in Q1 to 138 in Q2. On business recovery, 16% of SME are expected to need more than a year to stabilise.
Samenta secretary-general Yeoh Seng Hooi said the RAM-CTOS survey showed 40% of SME had their loan applications rejected in the last six months.
“This is an alarming statistic given the storm that has impacted SME recently, with higher production costs, rising interest rates and lower consumer confidence.
“Other than supply chain disruptions, creeping interest rates and higher raw material costs, the weakening ringgit has caused further havoc to manufacturing costs. On the demand side, the projected decline in consumer confidence and spending power have made the economic prognosis worse for SME.”
Yeoh said SME with pending orders need working capital to finance imports and purchases of raw materials, adding that without the additional trade lines and working capital, up to 20% of the SME revenue could be lost.
“The bulk of those affected are in manufacturing, especially those supporting the electrical and electronic equipment sector and those who are export-oriented.
“Even those in the construction sector need to finance the spike in the costs of construction materials. They need working capital to support their growth.”
Yeoh said the government should facilitate the survival of SME by lowering the costs of doing business during such difficult times.
“There should not be excessive red tape and additional regulations on how businesses should operate. We shall not overstate the importance of labour supply here as enough has been said elsewhere.
“Let’s not be too quick to impose additional fines if compliance is not 100%. For minor errors due to oversight, warnings should be given the first time instead of penalties.
“SME are in a period of recovery during this endemic phase. They need to focus on running and strategising their businesses to adapt to the tougher economic conditions.”
Yeoh added that the government should also not allow regulatory agencies to impose higher fees that burden SME.
“For instance, paying a fine of RM5,000 for not listing the company registration number on your website is overkill.
“There is an appreciation for soft loans, grants and subsidies provided to SME. We advocate the government continue to support the survival and growth of SME.
“However, the action of giving with one hand and taking with another would frustrate the development of SME during these hard times,” he said.
