GEORGE TOWN: About 70% of the small and medium enterprises (SMEs) in the country have cash reserves to last for another two months.
Small and Medium Association Malaysia (Samenta) national secretary Yeoh Seng Hooi said this is an alarming situation as the impact of Covid-19 could extend beyond six months.
“A small size company with revenue of between RM300,000 and less than RM15mil a year would need to spend RM50,000 to RM200,000 a month on salaries.
“If we use RM50,000 to RM70,000 as the median, each small SME will require around RM120,000 to cover two months of wages if the movement control order is still in force, ” said Yeoh.
According to Yeoh, Samenta and Averest – a local B2B marketplace company – recently conducted a survey on SMEs in the country.
“There are over 200,000 SMEs, excluding the micro-enterprises, in the country. About 70% of them reported a sharp drop in revenue of 21% to 75% in monthly revenues for the first quarter of 2020, compared with the same period in 2019, ” he said.
On the latest stimulus package, Yeoh said the government needed to remove the 50% drop in revenue condition as a requirement for SMEs to obtain subsidy, in order for its stimulus package to be effective.
Samenta welcomes the doubling of monthly subsidy to RM1,200 from RM600 for SMEs with fewer than 75 workers, but the 50% drop in revenue condition makes it hard for SMEs to apply for the subsidy, as it is a very time-consuming process to comply, according to Yeoh.
“Many countries with wage subsidy programmes did not impose such a condition, as it is not practical to implement, ” he added.
According to Yeoh, Samenta’s survey shows that most of its members have indicated their preference to giving unpaid leave and pay cuts as part of their cost-control strategy.
“This shows the SMEs are genuine in trying to save jobs, as they did not propose a retrenchment exercise at the outset, ” he said.
Yeoh said the Covid-19 Special Relief Fund should be topped up as the RM5bil allocated is not adequate.
He said a staggering 88% of the SMEs that applied for the Covid-19 Special Relief Fund are still waiting for approval.
He said the government should follow up with directives to the banks to expedite the approval process.
“The loans should be approved within 14 working days. Otherwise, the benefits of the loan would be lost due to timing, ” he said.
According to Yeoh, the list of essential services that allowed to operate is too narrow.
“The list should be widened to include services supporting the essential industries, logistics and payroll processing services, ” he said.
Source : https://www.thestar.com.my/business/business-news/2020/04/07/sme-cash-reserves-can-last-another-two-months