Stimulus package gives breathing space for SMEs, micro-entrepreneurs

The Prihatin Rakyat Economic Stimulus Package (PRIHATIN) announced today is seen as providing breathing space for small and medium-sized enterprises (SMEs) and micro-entrepreneurs by helping to alleviate their cash flow burden amid the Covid-19 pandemic.

Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the Movement Control Order (MCO) from March 18 to April 14 has affected their sales activities, affecting their revenue in the near term.

“The MCO has affected their economic activities, but this has to be done because we need to break the Covid-19 chain. So it is kind of giving them some breathing space,” he told Bernama.

Mohd Afzanizam applauded the government’s move to provide an additional RM4.5 billion for five key initiatives to help those adversely affected by the Covid-19 pandemic.

They include a Special Relief Facility amounting to RM3 billion, a RM500 million micro-credit scheme, and Credit Guarantee Corporation Malaysia Bhd’s BizMula-i and BizWanita-i schemes which offer financing of up to RM300,000.

He said SMEs and micro-entrepreneurs would opt to defer their loan repayments with banks for six months and postpone payments of income tax instalments for three months from April 1, 2020, which would enable them to conserve cash and use it to revive their business.

“But how soon are they going to be back on track? This will greatly depend on how soon we can stop the outbreak,” he added.

Meanwhile United Overseas Bank Malaysia Bhd (UOB Malaysia) senior economist Julia Goh said the stimulus package appears fairly broad despite the government’s tight fiscal position.

She said the package should be sufficient to help SMEs and micro-entrepreneurs if the recovery comes through by the second half of 2020.

“Overall, the measures offer assistance, but given a highly uncertain outlook, conditions will remain challenging for the broad economy,” she said. - Bernama