Malaysian SMEs running out of cash due to COVID-19
The taps are running dry for small- and medium-sized enterprises (SMEs) as Malaysia moves into its fourth phase of the movement control order (MCO) to curb the spread of COVID-19, reported The Star newspaper.
Kuala Lumpur’s illuminated skyline (Photo: www.imf.org)
Kuala Lumpur (VNA) – 🔜The taps are running dry forsmall- and medium-sized enterprises (SMEs) as Malaysia moves into its fourthphase of the movement control order (MCO) to curb the spread of COVID-19,reported The Star newspaper.
Quite a lot of SMEs had been squeezed to the maximum andwere forced to fold because there is just no more liquidity in the company togo on. On May 12 when the MCO is expected to end, it will mark 56days of non-operation for the majority of businesses where cash is being burnteveryday without any inflow.
There is also the possibility of another round of extension,depending on the situation of the COVID-19 pandemic. ꦿ The SME Association of Malaysia is estimating that about200,000 to 300,000 SMEs may collapse over the next one year.
A recent survey by the association found that 70 percent ofSMEs only have sufficient cash up to the end of April. This could result insome 2 million people becoming jobless as wages constitute quite a substantialamount of a company’s expenses. There are around 1.08 million SMEs, including microcompanies, with an employment size of about 9.8 million people. The Employees Provident Fund (EPF) Chief Executive OfficerAlizakri Alias said that if 1 percent of the Malaysian SMEs go bankrupt, morethan 60,000 jobs will be lost, which would also impact 0.6 percent of thecountry’s GDP. The Malaysian government has announced a wage subsidyprogramme worth 13.8 billion ringgit (3.2 billion USD) for the SMEs. However, about 500,000 SMEs were registered with the SocialSecurity Organisation which is handling the subsidy applications and only228,797 employers applied as of April 26. Some economic experts called on the government to raise thewage subsidy for the smaller companies to 1,500 ringgit from 1,200 ringgit. Smallfirms with employment sizes of less than 50 are believed to be the mostvulnerable to cashflow problems./.
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Kuala Lumpur’s illuminated skyline (Photo: www.imf.org) 
