MICRO, small and medium sized enterprises (MSME) have been severely impacted by the recent floods with losses estimated to be around RM1 billion, the various business associations said.

They told The Malaysian Insight that the floods damaged a lot of equipment to the point of rendering it useless.

The floods are another blow to the MSME community, given they are only just recovering from the numerous lockdowns to curb the spread of Covid-19.

“MSMEs have suffered severe losses. The current estimate puts it as much as RM1 billion but this figure might not be accurate as several states are still flooded,” president of the SME Association of Malaysia Ding Hong Sing said.

He added that the most important thing now is for the government to help all those affected, so they can replace damaged equipment and begin trading again or they might lose custom.

“In order for them to fulfil orders, the MSMEs must be able to buy or temporarily lease equipment as soon as possible.”

This is the third blow for MSMEs. The first was lockdowns preventing them from doing business.

This was followed by manpower shortages due to the restriction of entry of migrant workers.

Now the floods threaten their business once again, Ding said. He said the association is appealing for a RM100,000 grant to aid small businesses and RM300,000 for medium-sized enterprises.

While this sum is not representative of the financial impact of the floods, it will help businesses buy equipment for factories to generate income and pay their overheads, he said.

The suggestion has been submitted to the government and the industry is currently waiting for a reply, Ding added.

Approve loans to help SMEs

However, Low Kian Chuan, president of the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM), said it was still too early to put a figure on flood damage.

Areas in the east coast and southern states have still not recovered, he said.

“What we know for sure is the bill for floods will be in the millions.”

Low said the ACCCIM has allocated RM250,000 to help members affected by the floods while its members have actively raised funds as well.

To date, it has collected more than RM1 million in donations, he said.

“The flood in Selangor was a disaster as many did not anticipate it and this has made it difficult for many businesses to get back up on their feet,” he said.

“Many owners are still waiting for insurance companies to compensate them. In the meantime, the factories need at least two weeks for clean-up work and then they have to wait for the insurance pay-out before they can buy any equipment.

“This all means it will take a long time before they can resume trading.

“If these factories apply for a loan, banks should approve it without asking about performance because aid cannot be delayed.”

Low said the Disaster Relief Facility (DRF) 2022 by Bank Negara Malaysia allows for MSMEs affected by the floods to apply for financing with low interest rates.

“Employers are already facing tight cash flow, so we urge banks to approve loans quickly to help MSMEs.”

While most factories were able to complete their Christmas orders, they are now rushing to do so for Chinese New Year, so a loan is necessary.

The DRF 2022 will assist SMEs in covering the costs of repairs, replacement of assets and for working capital.

The relief facility is available to SMEs, including micro enterprises, with a cap of RM500,000 per SME and RM75,000 per micro enterprise.

It is a five-year loan, including a six-month moratorium on both principal and interest or profit payments.

Deputy International Trade and Industries Minister Lim Ban Hong said the ministry will co-ordinate with other ministries and agencies to support MSMEs to solve their problem.

Lim said the ministry is also working closely with SME associations to solve labour shortage issues and arranging for assistance from the auxiliary police.

Heavy rain on the December 18-19 weekend saw water levels rise in the Klang Valley, Pahang, Perak, Negri Sembilan, Kelantan and Terengganu.

Water levels rose quickly leaving many stranded for days in or on flooded houses. Thousands are still in temporary flood relief centres nationwide.

Meanwhile, Sabah, eastern states and Johor were also impacted by more heavy rain over the New Year period, which caused further flooding.

Prime Minister Ismail Sabri’s administration has been criticised for its dismal performance in managing the disaster. – January 6, 2022.