PETALING JAYA: The taps are running dry for small and medium enterprises (SMEs) as Malaysia moves into its fourth phase of the movement control order (MCO) tomorrow.

Quite a number of them had been squeezed to the maximum and were forced to fold because there is just no more liquidity in the company to go on.

On May 12 when the MCO is expected to end, it will mark 56 days of non-operation for the majority of businesses where cash is being burnt everyday without any inflow.

There is also the possibility of another round of extension, depending on the situation of the coronavirus (Covid-19) pandemic.

At the rate this is going, the SME Association of Malaysia is estimating that about 200,000 to 300,000, or up to 30%, of SMEs may collapse over the next one year.

This is because most of them have no more money to see past next month.

A recent survey by the association found that 70% of SMEs only have sufficient cash up to April.

This could result in some two million people becoming jobless as wages constitute quite a substantial amount of a company’s expenses.

There are around 1.08 million SMEs, including micro companies, with an employment size of about 9.8 million people.

But strangely, the government’s RM13.8bil wage subsidy programme did not seem too popular with the SMEs.

At least 500,000 SMEs were registered with the Social Security Organisation (Socso) which is handling the subsidy application since April 9 but as of Sunday, only 228,797 employers applied.

This involved 1.84 million employees, the bulk of which are from companies with up to 75 workers.

Assuming that all these applications were approved, the total three-month payout would add up to only about RM5.91bil or 43% of the fund allocated by the government.

This is also a far cry from the 4.8 million employees that the government expected will benefit.

SME Association president Datuk Michael Kang said a lot of SMEs were reluctant to sign the statutory declaration for the subsidy, which will require them to retain the employees for at least six months (three months under the wage subsidy and three months after) with no forced unpaid leave and to retain the wages.

He said the SMEs have urged the government to remove the conditions in place to help them survive.

Kang added that a lot of companies would rather close down as it would cost them more to remain in operation with the conditions.

“The government really has to come in to help the SMEs to survive, especially when you want to maintain employment.

“If the conditions are removed, there will be many more who will apply for the subsidy.

“If companies can at least reduce the wages of their employees with this subsidy, they will at least be able to retain their staff for the next six months and work on reviving the company, ” he said.

Under the wages subsidy programme, all companies with local employees earning RM4,000 and below monthly are entitled.

For three months, the government will provide RM1,200 per employee for companies with 75 or fewer workers, RM800 for companies with between 76 and 200 employees and RM600 for companies with a workforce of more than 200.

Companies will have to prove that their income dipped by more than 50% as compared to January, except for companies with less than 75 workers or less.

Kang added that when the six-month moratorium by banks comes to an end, companies that were unable to service their loans will have to go through restructuring and more employees would be laid off.

The Employees Provident Fund (EPF) chief executive officer Tunku Alizakri Alias(pic below) recently said that even if 1% of Malaysia’s SMEs fail, more than 60,000 jobs will be lost, which would also impact 0.6% of the country’s gross domestic product (GDP)

https://www.thestar.com.my/business/busines...ing-out-of-cash

This post has been edited by Starbucki: Apr 28 2020, 09:18 AM

JJSME.

Lives more important - MCO lover 😁

This post has been edited by Namelessone1973: Apr 28 2020, 09:17 AM

Ernie Chen got new FB rant or not?

Lot of them hide lot of taxes all over the years so scared to sign anything for gov help

Some already took action when first extension announced

Probably one the the main reason many close shop

Even SG also probably no less than 500 companies filed for bankruptcy.

from the article, seems like their interest is not about easing their co cashflow....

MCO lover said sell your Benz and BMW

Hahaha padan muka, when times are good under declared everything when times bad dont dare to take anything or even fails to obtain government funds

if i towkay i oso choose to kolos shop 1st

Why would you squeeze tax from makcik pakcik roadside?

Lol. A lot of SME haters here because most of the haters are SME employees. The irony.

The other 70% SMEs all in essential item/services business?

Many low keras people here in /k/ lol.

For kuli and bangla, they look at liquidity salary as liquidity.

For business owners, they look at the market outlook and prospect as the determinant factors of liquidity.

That's the main difference.

This post has been edited by ALeUNe: Apr 28 2020, 09:43 AM

Not what I meant la bro... But why wish for your bosses' demise when you would lose your job and income too. The economy of the country would suffer too. I can't brain them.

#MCOHATERS

Many are gomen worker too.

They always dengki to sme boss. Always dengki to people who made it.

just let them die. the strongest shall survive.