Small and Medium Enterprises (SME) Association of Malaysia president Michael Kang said charity centres are seeing more micro business owners and workers as well as those in the informal sector lining up for free food and rations.
“We can see the M40 (middle 40 income) group falling into the B40 (below 40) group.
“And those in the B40 group are becoming even poorer,” he said during a panel discussion at the virtual launch of the World Bank’s 24th Malaysia Economic Monitor: “Weathering the Surge” report today.
Kang said the funds from the government’s various economic stimulus packages could help those involved in micro-businesses put food on the table.
“They depend on their daily income, which is only sufficient for two to three days at most.
“If they do not generate cash, they face problems even to buy food,” he said, adding that the funds could be rolled out immediately by government agencies involved with SMEs and micro-businesses.
He also urged these government agencies to reach out to micro-businesses and help them expand their reach through digitalisation.
“Help (those in) the informal sector to go online, to operate and to help (them) with delivery systems,” he said.
According to Kang, SMEs have been struggling since the first round of the MCO last year but managed to survive due to immediate government assistance and moratoriums, while some still had surplus cash.
“But now, 30% to 40% are bleeding their reserve cash and are not able to sustain their operations during the extended lockdown,” he said.
The third round of the MCO started on May 12. This was followed by the ongoing total lockdown since June 1.
The way forward, Kang said, was by allowing more business sectors to open under Phase 2 of the national recovery plan announced last week by Prime Minister Muhyiddin Yassin.
Phase 2 will be initiated once daily Covid-19 cases drop below 4,000 and 10% of the population is vaccinated.
All sectors will be allowed to open from October onwards under Phase 4 once cases fall below 500 daily and 60% of the population is vaccinated.
“Businesses in the retail, tourism and several manufacturing sectors may not be able to continue operating and sustain their staff (until October),” Kang cautioned.
Earlier this month, the Malaysian Employers Federation (MEF) had warned that many SMEs and micro-enterprises were reaching a breaking point under the total lockdown and “have zero cash flow” to sustain their businesses.
Its president Syed Hussain Syed Husman had pointed out then that it was only the second week since the total lockdown was implemented and already, these companies were struggling to survive.
SME Association of Malaysia vice-president Chin Chee Seong had also reportedly said that at least 50,000 SMEs may be out of business should the lockdown last for another four weeks, noting that about 100,000 companies had ceased operations since the first MCO.
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