The Budget 2021 might have allowed more breathing space for individuals, but there seems to be apparent cracks that need to be covered for small and medium-sized enterprises (SMEs) if the sector were to see any recovery to further boost the economy as a whole.
Institute for Democracy and Economic Affairs (IDEAS) senior fellow and Centre for Market Education CEO Dr Carmelo Ferlito said the budget has offered support for the SMEs and wages for a limited time, but it is missing “a change in pace”.
He said the budget could have offered containment to recovery measures — such as opening more of the markets — rather than closing them.
“These containment measures will be effective, only if there is a wider strategy for recovery,” he told The Malaysian Reserve.
He said the lack of such a strategy would not bode well for any of the reskilling initiatives that are also somewhat questionable.
“In fact, where there is a lack of labourers now is in the dangerous, dirty and difficult jobs, so we would need people to de-skill, unless a strategy is in place to seriously relaunch the economy. And I did not see it,” he said.
Ferlito said one now could expect a flat GDP for the year due to the lack of coverage on the region’s strategy and international borders.
“Nothing has been mentioned on liberalising the job market against the more recent moves from the Ministry of Human Resources, which will make multinational companies leave Malaysia and foreign direct investments to go elsewhere.
“There is nothing aiming to a real economic recovery, so under the present circumstances we can at best expect a flat GDP next year and rising unemployment,” he said.
Start-ups and SMEs have always been the weight in the country’s GDP as in the year 2019, the sector’s GDP contribution increased to 38.9% from the 38.3% recorded in the previous year.
However, peer-to-peer (P2P) financing platform for SMEs Funding Societies co-founder and CEO Wong Kah Meng said the company resonates with all three of the Budget 2021 main thrusts of people’s wellbeing; business continuity; and economic resilience.
“Particularly, we laud the government’s recognition of the P2P financing industry’s contribution of almost RM1 billion in SME financing opportunities with the additional allocation of RM50 million in matching investment grant for invoice financing.
“This is very timely, given the challenges that local businesses face to ensure they can bridge their short-term cashflow amid the ongoing Conditional Movement Control Order (CMCO) on top of the pandemic,” he said.
He added that the company welcomes SME-focused initiatives such as PenjanaKerjaya, the short-term Employment Programme, Skim Lestari financing, among many others, with the aim to socially and financially empower SMEs via more employment opportunities, and reskilling and upskilling opportunities.
“We are confident that while the fight with this unprecedented force may be far from over, we all will navigate all challenging circumstances swiftly and come out even stronger on the other end,” Wong said.
Mednefits CEO Chris Teo said start-ups and SMEs contributed close to 40% to the country’s economy in 2019.
“It is therefore heartening to hear the government allocating up to RM150 million to help start-ups and SMEs accelerate the adoption of digital technologies.
“All businesses — big or small — should seize the opportunity to invest in technology, which will help simplify and automate routine administrative processes, so that they are better placed to capture growth opportunities when the economy improves,” he said.
Shopee regional MD Ian Ho said the platform is also encouraged by the continuation of initiatives like Shop Malaysia Online and micro, SMEs e-commerce campaigns.
“These campaigns are aimed at spurring local consumption, stabilising cashflow, boosting revenue and driving economic growth through e-commerce platforms,” he said.
The confidence in e-commerce is not unfounded, cashback application ShopBack Malaysia has found that 84% of its respondents indicated that they have shopped online more frequently versus to the time before the MCO implementation.
Source: https://themalaysianreserve.com/2020/11/09/support-for-smes-a-little-too-limited/