MOST small and medium enterprises (SMEs) are trying hard not to retrench workers and are planning to stay in business after the movement-control order (MCO) period through wage cuts and downsizing, a survey released yesterday by SME Malaysia has found.

The undated survey among 4,380 participants revealed only 39% of businesses said they had plans to lay off employees.

Of these, 52% of respondents said they would lay off less than 30% of their workers, while 30% said they would lay off between 30% to 50% of their employees.

Some 18% said they would retrench half or more of their workers. 

On pay cuts, 61% of businesses said they would slash employee wages, of which 30% said they would cut pay by less than 30%.

Around 45% said they would cut pay by between 30% to 50%, and the remaining 25% said they would slash wages by at least half. 

A total of 70% of SMEs surveyed had also asked their employees to take unpaid leave during the MCO period.

The survey focused on the measures business owners have taken to survive during the MCO and their immediate plans for the coming months, after the MCO expires on May 12.

On post-MCO strategies, 28% of respondents plan to restructure their businesses, while 24% will downsize.

Around 19% said they could proceed with business as usual and 18% said they plan to go digital or rely on e-commerce.

Around 2% said they would merge with other companies while the remaining 9% had other plans, which were not specified.

The survey results did not state the types of businesses of those who had shared their post-MCO plans. 

Overall, the survey was conducted among a range of sectors, with retail and other services forming the largest group of respondents (46%), followed by business and professional services (37%). SMEs in manufacturing formed the next largest sector surveyed (15.6%), followed by SMEs in agriculture and mining (both less than 1%).

Overall, less than 25% also said they had plans to shut down temporarily, while 75% said they had not considered closing.

Of those considering temporary closures, most planned to do so for one to three months at 46%, while 33% planned to close for between three and six months. 

Around 13% said they would close for up to a year, and under 7% said they would shut for more than a year.

Special financial relief

More than half, at 56.6% surveyed, said their companies had zero income during the MCO.

Nearly 31% of SMEs earned less than 30% income, 9% earned between 30% and 50% income, and only 3% earned 50% and above in income.

On how long company cash flow could last, 25% said they would run out by the end of April, 36.4% said they could last until the end of May, 21% said they had until end of June, and 17% said they had cash till the end of July.

When asked if they applied for special financial relief, 48% said they had. 

Of these, 38% applied for a loan amounting to less than RM200,000, a further 32% applied for a loan between RM200,000 and RM500,000 while the remaining 30% applied for a loan between RM500,000 and RM1 million.

For companies that did not apply for bank loans, 48% relied on internal funding, 24% turned to friends or family, 13% said they used “other business loans”. 

Only 14% said it was business as usual for them, and a little over 1% relied on investors. 

About 71% of respondents also applied for the wage subsidies programme. – May 2, 2020.