Businesses fear choppy waters ahead

26 Mar 2020 / 09:55 H.

PETALING JAYA: Small and medium enterprises (SMEs) are bracing for a very difficult few months ahead. Many are already digging deep into their reserves to keep themselves afloat.

Most SMEs were caught unawares when the movement control order (MCO) was put in place to stem the spread of Covid-19.

A senior executive at a corporate training company based in Kuala Lumpur said she has not hosted a training event since last month.

“We are totally dependent on having our clients physically present at our workshops and conferences,” she said.

She fears her company does not have enough reserves to last beyond August if people do not feel safe attending public events by then.

The executive, who requested anonymity, urged the government to inject funds into industries affected by the outbreak.

“Although aid has been promised, there has not been any clear instructions on how to apply for them and this is causing some confusion.”

She said past experience shows that trying to get help from the SME Bank or other financial institutions is a tedious process.

“Apart from the pile of paperwork, they also ask for a 30% cash collateral, which is impossible when we’re already low on capital.”

She said if the situation does not improve, she may have to lay off most of her employees, ask them to take unpaid leave or fold up. She has about 20 people working for her.

She said the government could help by waiving the sales and service tax (SST) this year and offer SMEs a no-interest loan of up to RM500,000.

She said income tax, EPF contributions for employees and employers, the Human Resources Develpment Fund levy and employee insurance scheme payments should be deferred until the end of the year.

Lee Boon Hong, 61, managing director of Grace and Glory Sdn Bhd, a security systems provider based in Penang, said the MCO has effectively cut off his major income streams.

“We’re in dire straits,” he said. “We now make do with some contract-based monthly maintenance fees but we have to dig deep into our pockets to sustain employees’ fully paid leave.

Lee fears it would be difficult for his company to last if the situation does not improve soon.

He said the government could help by subsidising up to half of the employees’ salaries during the duration of the MCO.

L. Nagatamby, 54, who owns a grocery store in Klang, said he has not felt the negative impact of the MCO but he sees uncertainty ahead.

“I am still getting my regular customers but it has become increasingly difficult to get supplies.”

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