KUALA LUMPUR (July 28): Malaysia’s small and medium enterprise (SME) sector suffered a total loss of RM40.7 billion last year as a result of a nationwide strict lockdown order imposed by the government to tackle the Covid-19 issue.
Entrepreneur Development and Cooperatives Minister (MEDAC) Datuk Seri Dr Wan Junaidi Tuanku Jaafar said this is by far the biggest-ever loss incurred by the SME sector, signifying how much the entrepreneurs are suffering from not being able to open up their businesses.
Looking at the current 1.15 million registered SMEs nationwide, he said the losses would mean that each company incurred an average drop in earning of RM35,000 for the year 2020.
Based on the latest figures shared by the Department of Statistics Malaysia (DOSM), the SME sector’s gross domestic product (GDP) contribution suffered more than 7% year-on-year decline to RM512.8 billion last year against RM553.5 billion in 2019.
This is an anomaly as the growth of the SME sector is always higher than non-SME over the past 15 years, according to DOSM.
Wan Junaidi cautioned that some 580,000 businesses, representing 49% of the SME sector, are at risk of failing by October if they are not allowed to open up their operations by then. These businesses are mainly in the first to close, last to open (FCLO) category providing non-essential products and services such as spa and wellness, entertainment, event management, sports and fitness, beauty and grooming and many more.
Based on a survey by MEDAC, he said more than 70% of entrepreneurs are in the B40 category, with very little savings, and do not have any employment benefit.
More than 90% of these entrepreneurs have no insurance and 70% have no safety nets to fall back on should they lose their jobs, according to the survey, which was conducted between June 15 and 28 with a total of 6,664 respondents taking part in the survey.
“Lockdown is no longer the answer to the problem. We have to accept the fact that we need to live with Covid and find a balanced solution for this. That is why my ministry has proposed an enhanced standard operating procedure (SOP) so that we are able to speed up the reopening of economic activities, particularly those in non-essential category,” he added.
MEDAC had on Tuesday submitted to the government a proposed enhanced SOP to help speed up the opening of businesses, particularly those in the FCLO category, safely.
The enhanced SOP proposed focuses on six economic activities, which are food and beverages (F&B dine-in), shopping malls, watches shop, pedicure and manicure (grooming services), beauty parlour/salon and barber/hair salon. Almost half of the business activities identified are owned by women entrepreneurs, among the groups most affected by the nationwide lockdown.
Source : The Edge Market – 30 July 2021 (Friday)