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RM10 billion lifeline will keep small biz afloat, say SME groups

FMM In The News: FREE MALAYSIA TODAY, PETALING JAYA, Monday, April 6, 2020 -The SME Association of Malaysia has welcomed the government’s RM10 billion aid package for small and medium enterprises (SMEs), saying a majority of companies will now be able to survive the national shutdown of public activities to stop the spread of Covid-19.

The association’s president, Michael Kang, told FMT that the expanded wage subsidies and loans especially for micro SMEs will help ease the cash flow of companies.

“I think with this, a majority of SMEs can survive and still afford to pay their staff. Only employees who earn a very high salary may need to take a pay cut.”

However he hoped the government would allow exporters and non-essential businesses to operate online, and allow the transport of goods.

“Many SMEs are also exporters, so when they cannot export their goods it affects their business.”

Earlier, today, Prime Minister Muhyiddin Yassin announced an additional RM10 billion in aid for SMEs including expanding and increasing wage subsidies from RM5.9 billion to RM13.8 billion.

Other measures announced were: RM2.1 billion in special grants of RM3,000 for micro SMEs; suspension of interest for the micro credit scheme under Bank Simpanan Nasional; and loans of up to RM10,000 under a RM200 million “Skim Pinjaman Mudah”.

Malaysia Retailers Association president James Loke said some clarification was needed on the details of the aid package, and the terms and conditions attached to them.

He hoped that more retailers would now be eligible for aid.

He hoped landlords would reimburse tenants for rent paid during the shutdown period, since the government was giving tax rebates to landlords.

“Many landlords have done this, but some have not,” he said.

Business Media International, which publishes SME Magazine said the expanded wage subsidy would result in a 12% to 20% reduction in costs for most SMEs.

An economist, Barjoyai Bardai, described the aid package as a “humanitarian” measure to help businesses survive, especially micro businesses.

“SMEs with more than 200 workers should have enough reserves for a rainy day; the situation is especially hard for those with fewer than 76 workers as their volume of business is likely to be too small to have created sufficient reserves.”

Bardai, who is with Universiti Tun Abdul Razak, said another round of stimulus was needed to get the economy going after the movement control order period ends.

Oh Ei Sun, a senior fellow at the Singapore Institute of International Affairs said it would be “a miracle if smaller companies could survive beyond April, not to mention the next three or six months. Surviving the next three months would be a luxury.”

Large companies need help too, says FMM

The Federation of Malaysian Manufacturers has urged the government to review the Prihatin Rakyat economic stimulus package from time to time to also assist large corporations.

FMM president Soh Thian Lai said the small and medium-sized enterprises were also dependent on large companies, Bernama reported.

FMM also urged the government to:

  • remove the condition that only companies suffering a 50% drop in revenue will qualify for the wage subsidy programme.
  • suspend the foreign worker levy for one year from April.
  • cut the interest rate on the RM5 billion special relief facility for SMEs, from 3.5% to 2%.

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