Business owners plan to cut jobs, overheads after lockdown

Bernard Saw

The SME sector is braced for hard times following the announcement of a strict lockdown effective tomorrow for two weeks. – The Malaysian Insight file pic, May 31, 2021.

FOUR in 10 small-and-medium enterprises (SMEs) will suffer financial difficulties as a result of the latest lockdown and plan to cut jobs in order to reduce expenses.

“It is estimated that 40% of SMEs will face financial difficulties. Some of the companies are also preparing to suspend business for half a year and reduce their expenses. I am worried that the situation will deteriorate and more and more Malaysians will be unemployed,” said SME Association Malaysia president Michael Kang.

Kang said the industry needs moratoriums for loan repayments for at least three months, and subsidies for wages and rent.

He said the Finance Ministry needs to negotiate with the financial institutions to extend the loan repayment period to help SMEs weather this difficult period.

The government recently advised ompanies to speak to the banks themselves, but Kang disagreed.

“From past experience, we know that these discussions are ineffective. If it weren’t for the government, most banks would not give any loan moratorium.”

He said some 40% of the SMEs would not stay afloat for more than three months without government assistance.

“I received a call from a Malacca business owner earlier, and he said his company has no income this month. How is he to maintain his operations? He will have to lay off staff and reduce expenses.”

Malaysian Chinese Tourism Association President Albert Tan Sam Soon (MCTA) said in the past year, many employees at travel agencies had stopped work.

And with the wage subsidy programme coming to a close, Tan is worried that there will be another round of retrenchments. 

The 2021 budget set aside funds for the tourism and retail sectors to receive salary subsidies until June. The scheme was subsequently extended to September.

The money is expected to help 37,000 employers pay 400,000 workers. As of March 5, the government has allocated more than RM14.4 billion in wage susidies for 2.7 million employees overall.

However, Tan said the tourism industry will need another year to recover.

“Extend this plan until the general environment improves, and the amount should also be increased, from RM600 to RM800-RM1,000.”

He said many businesses are facing cashflow problems because overheads remain while income has dried up.

“Although the government encourages businesses to discuss with their banks about the deferment of loan repayment, many members say that they could not get any moratorium from the banks. 

“Hence, if the government does not step in, many tourism companies will have to face bankruptcy.”

Tan said the government should provide solutions each time it announces a lockdown. 

Pan Malaysia Koo Soo Restaurants & Chefs Association president Wong Teu Hoon said that the lockdowns have affected the food and beverage industry.

“The industry is trying very hard to find funds and fresh capital, otherwise they will have ended their businesses. Some restaurants currently adopt a method to reduce expenses and temporarily stop paying their employees.”

On Friday, Muhyiddin announced a strict lockdown from June 1-14.

During this period, social and economic activities are barred.

The number of daily Covid-19 infections have averaged more than 8,000 cases per day in the last week.

On Saturday, Malaysia reported the highest number of new infections at 9,020, for total of 76,218 cases. There were a record 98 deaths. – May 31, 2021.

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  • Most of those vocal on these issues are the towkays who are only concerned with their profits. These are empty threats made to somehow coerce the government to bail them out. Focus should be on the hopelessly poor and no one else. These SMEs will moan and groan and at the end will pick up the pieces and carry on as if nothing happened.

    Posted 3 years ago by Simple Sulaiman · Reply