PUTRAJAYA has not provided details to address the needs of small and medium enterprises (SMEs), which feel left out in the RM250 billion Prihatin economic stimulus package, said Ong Kian Ming.

There was an outcry among SMEs who felt left out from the package to mitigate the effects of Covid-19, said the former deputy international trade and industry minister said in a statement.

“I have been waiting for more than a week to see if the government would listen to the cries from the SMEs,” Ong said.

“But despite meetings with some of the key ministers, assistance to address the specific needs of the SMEs in Malaysia has not been forthcoming.”

SMEs will receive financial aid collectively amounting to RM4.5billion under the Prihatin package.

He identified said three challenges faced by SMEs.

These include the overhead costs as a result of the movement-control order (MCO), uncertainty surrounding the business environment after the end of the MCO and policy uncertainty on whether the MCO will be extended beyond April 14 or future MCOs.

“Will the government hear their cries this week, the third week of the MCO or will their cries continue to fall on deaf ears?”

Ong, the Bangi MP, also listed examples on how SMEs in different business sectors will be affected.

Example 1: owner of restaurant chain in shopping malls

Such an owner may incur overheads of RM100,000 a month without any revenue during the MCO. These include salaries, EPF and Socso. She chooses not to do delivery services for the safety of the staff.

She will also have to pay a rental of RM5,000 as malls will not waive rental. Therefore, it is unlikely for her  to take advantage of the RM600 a month subsidy from the government because she has to conserve cash flow and close one outlet and retrench 10 employees.

Example 2: manufacturer of non-essential items

While the Ministry of International Trade and Industry only approves essential industries during the MCO, non-essential items manufacturers may lose clients from overseas as a result of non-delivery, in turn losing revenue during the MCO period.

It can claim the RM600 per month for most of its factory workers who earn less than RM4,000 a month but due to an uncertain business climate, it would prefer to furlough staff while looking for new customers.

Example 3: hotel owner and operator

And because no one knows when the MCO will end, this hotel cannot even accept local bookings for the foreseeable future. The owners might consider declaring bankruptcy than borrowing more to keep the hotel afloat.

While there is a moratorium on loans for six months, they cannot take bookings because there is uncertainty on when the MCO will end. They’re unlikely to retain their staff.

Example 4: retailer in a small town

He would have lost RM10,000 during the MCO. His customer base could be locals and he does not conduct business via e-commerce platforms. This will bring his cash flow to a dangerously low amount.

He will apply for the RM600 per month wage subsidy but he is not sure how to “audit” his sales revenue figures to prove that it has fallen by more than 50% since January. He may have to incur some costs to undertake this audit.

Example 5: long-distance bus operator

With 50 bus drivers under on the payroll earning between RM3,000 and RM4,000 a month, including allowances and overtime, the RM600 wage subsidy will only help a little because of high overheads of RM100,000.

As operations are stopped during the MCO and even Hari Raya this year a subdued affair with much less travel compared to previous years, he is unsure if he can keep all 50 of his bus drivers in order to qualify for the RM600 per month subsidy.

Example 6: gym owner and operator

He is likely to close one of his gyms after the end of the MCO and let go of some of his personal trainers.

As his revenue streams are based on the subscription models, he will still have cash flow to sustain his business during the MCO period.

However, due to this subscription model, his business has not dropped by 50% since January. Hence, he doesn’t qualify for the RM600 wage subsidy. He will still have to pay utilities, rental of more than RM10,000 and wage bills.

Example 7: event organiser

The MCO has led to a complete stop to these events and the Ministry of Health has advised against large-scale gatherings for the next six months.

Hence, this company has no choice but to undertake a voluntary separation scheme (VSS). Under these circumstances, the RM600 wage subsidy and the discounts in electricity bills are not helpful.

Example 8: distributor of non-essential items

He gets his supplies from overseas and has experienced some bottlenecks clearing his stock from Port Klang because of the policy confusion among the ministries. He is unable to transport his goods from his warehouse to his customers.

However, when he finally manages to fulfil the orders, he is told that he would have to wait until the MCO is lifted before he can be paid since the products cannot be sold to customers during the MCO.

Example 9: mid-sized law firm

She is one of three partners in a mid-size law practice employing about 20 lawyers, two-thirds of whom earn more than RM4,000 a month.

These lawyers earn more than RM4,000 a month and revenue/billings for clients are case dependent, partners are not sure if the billings for the period of the MCO would have dropped by 50% compared with January.

In any case, because of the wage profile of the lawyers, the RM600 wage subsidy is hardly enough to cover overheads.

Example 10: printer in Sabah or Sarawak

He prints banners, posters, Chinese New Year and Hari Raya cards, ang pows and duit raya packets, corporate diaries and so on.

He has enough cash flow for the next two months but is not sure if he wants to make use of Bank Negara Malaysia’s special relief fund (SRF) loan facility because he does not want to take on additional debt which he is unsure if he can service after the six-month loan moratorium is over.

He will have to decide how many staff he can retain based on his future projected revenue. – April 6, 2020.