An online survey conducted by the SME Association of Malaysia (SME Malaysia) has found that 33 percent of respondents have just enough cashflow for them to pull through in March, while 37.8 percent can only sustain themselves until April 2020.
The association’s president Datuk Michael Kang said that the respondents’ biggest headache is tight cashflow.
He added that there will also be no income for these companies for roughly another three months due to the movement control order (MCO), yet they are expected to pay salaries and rent in full along with some statutory payments.
“Only 26.3 percent of SMEs found that government assistance through stimulus packages will help them sustain their business despite the additional allocation of RM100 billion loan to SMEs under Prihatin Package. 77.6 percent of SMEs have yet to apply for the special relief fund.
“SMEs are afraid to have too high of gearing as many of them already have existing loans.
“The economic uncertainty for next six months will burden repayment capability and risk to go under bankruptcy. Four percent out of 22.5 percent who have applied for the loan has been rejected by the banks,” said Kang.
The survey, jointly conducted with Bizsphere and launched on March 29, attracted 15,627 SME responses in less than 18 hours via WhatsApp and Facebook viral shares.
Out of the participants, 59.2 percent were small-sized SMEs, 22.3 percent micro SMEs and 18.5 percent medium-sized SMEs.
Up to 53.3 percent of respondents have less than 75 employees and found that more than half or 51.2 percent have projected losses of more than RM500,000 within six months from March to September this year.
A quarter of respondents (25.6 percent) said they have decided to retrench their employees or cut total employment if there’s no strong stimulus package from the government to the enterprises, while 43.8 percent said they will try to persuade their employees to take annual leaves voluntarily.
Bizsphere managing consultant Yap Keng Teck pointed out that since SMEs employ 70 percent of the 10-million-strong workforce in Malaysia, a job slash of 25 percent can potentially see up to 2.56 million people being jobless.
At the same time, 82 percent of respondents predicted a loss for the financial year 2020.
The majority of the respondents, or 61.7 percent, estimated that businesses will need more than nine months to stabilise.
A more optimistic 29.1 percent, however, said they are hoping that it will be “business as usual” after six months. – MMO