PETALING JAYA: Fears of job losses and of businesses having to pay a lump sum of compounded interest on loans are among the biggest worries raised by two business groups after the government announced its Pemulih economic recovery package today.
SME Association of Malaysia president Michael Kang said the RM150 billion package did not deal with job security among the country’s ailing SMEs, which are struggling to stay afloat during the Covid-19 pandemic and movement restrictions.
Another small-business coalition called Business Survival Group said the terms and conditions of the six-month automatic loan moratorium were uncertain.
The group’s pro-tem president, Abdul Malik Abdullah, said: “We’ve been fighting for a blanket moratorium all this while and we’re glad the government has listened to the rakyat – but we are worried about the interest factor.”
“We’re worried that banks will start charging compounded interest and push the payments as a lump sum in 2022, and businesses will have to pay then. We also want to know if there will be restructuring fees,” he added.
The Business Survival Group is a federation of 262 business associations and over 900,000 businesses in the country which represent 3.2% of the total existing SMEs in the country.
The automatic six-month loan moratorium announced today applies to individual borrowers and micro-entrepreneurs, Prime Minister Muhyiddin Yassin said. He also announced a four-month extension to the wage subsidy programme and the removal of the RM4,000 cap on qualifying monthly salary.
Malik said he welcomed the lifting of the RM4,000 cap as the MCO has seen numerous businesses close, but he wanted to see more focus on industries such as hospitality and tourism which have struggled since last year’s lockdowns.
“It’s affecting their mental health and people are getting depressed and committing suicide,” he said. “I think the government is feeling the rakyat.”
“We feel thankful, but again, some industries are still not allowed to operate, so more emphasis should be on that,” he added.
Earlier this month, SME Association of Malaysia warned that 50,000 more SMEs would be out of business if lockdown measures were to be extended another six months, and that about 100,000 companies have already ceased operations.
Kang said today’s announcement by Muhyiddin would not be enough to help SMEs, noting that many of them have “totally no income now”.
He also predicted that at least 40-50% of SMEs would fold or close temporarily next month as they were unable to pay for rental and workers’ salaries.
“I hope the government will seriously look into how to help SMEs generate income so they can keep their staff,” said Kang.
“I’m worried that even more will lose their jobs. Who suffers if businesses stop for six months? The employees. It’s best to allow these businesses to operate, or temporarily shut down and give the workers RM1,000 a month. At least they will have food to eat,” he said.
Worries about cash flow, credit and costs
The Associated Chinese Chambers of Commerce and Industry of Malaysia said a survey it conducted had shown that 77% of 442 companies were concerned about cash flow, credit and costs, Bernama reported.
“More than 60% of companies indicated poorer business conditions, cash flow and debtors’ condition in the second half of 2021. The lockdown has threatened the survival of micro, small and medium enterprises. Low and middle-income households, individuals and the self employed in the informal sector also suffered financial difficulties,” the association said.
It said vaccinations would be the only solution to help build protection and return to normal conditions, and called for some modification to the lockdown extension to support some level of economic and business activities as well as daily lives.
The association called for en bloc approval of supply chains to operate with 60% to 70% manpower levels with stricter procedures.
It also added that the government must continue to mobilise resources of private healthcare services to speed up the vaccinations, approve private sector sourcing of vaccines and the use of vaccination passports to reopen domestic travel. - FMT
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