COVID-19 Stimulus Package: Supporting SMEs with an Exit Strategy
On 10 April 2020, IDEAS organized the fourth series of IDEAS Webinar. “COVID-19 Stimulus Package: Supporting SMEs with an Exit Strategy” was the title chosen. The webinar discussed the questions of should the government rescue all businesses and how long can the businesses be sustained by fiscal and monetary reliefs? The webinar also raised concerns towards the government’s policy direction and tools to mitigate massive insolvency in the near term while preparing domestic production capacity for an eventual recovery post-MCO lockdown. IDEAS’ Research Manager, Lau Zheng Zhou moderated the event.
The first speaker is YB Dr. Ong Kian Ming, MP for Bangi and the Assistant National Director for Political Education, Democratic Action Party (DAP). YB Dr. Ong started off by welcoming the initiatives announced by the government. He thought that the increased wage subsidies were very relevant to the SMEs especially the ones with less than 76 employees. The implementation of the policy is very important as the wage subsidies will be coordinated with SOCSO. He expects rise in entrenchment hence the application for Employment Insurance Scheme (EIS) would increase. There was also praise from him for the allocation of RM5 billion for special relief facilities and Bank Simpanan Nasional’s RM700 million financing scheme with 0% interest for enterprises. For these initiatives to be implemented successfully, the spreading of information and processing the application in a timely manner will be the key.
YB Dr. Ong also explained that the key to a good exit strategy is for there to be good preparation in anticipation of the lifting of MCO. The question remaining is under what conditions would the MCO end? He hopes to hear SOPs announced by individual ministries to give guidance to businesses on continuing or restarting their activities post-MCO. A quick transition to ‘new normalcy’ will give confidence to SMEs that we are ready and prepared to face gradual lifting of MCO.
The second speaker is Datuk Michael Kang Hua Keong. He is the National President, SME Association of Malaysia. As the representative of the industry, Datuk Michael highlighted the problems faced by the SMEs especially during this COVID-19 crisis. First, from the survey done by the association, they found out that only 33.3% of SME have cash in hand to last until March while 37.8% of them could last until April. From these two groups, possibly around 40% would shutdown operation while the rest could survive another 1 to 2 months without receiving assistance. Micro-SME is the most critical as up to 76.5% of SMEs are micro-SME. They had to shut down their business since MCO is implemented because the profit is just enough for them to put food on the table.
Datuk Michael also mentioned that around 70% of SME have problems to get loans from the bank due to documentation issues. As of 9 April 2020, only 1003 loans were approved and on top of that, the fund for the loans could not be released due to MCO. He stressed that SMEs’ business model would need to change post-MCO. New technology has to be adopted and businesses need to go online. He also asked the government to help SME to go digital instead of remain in the traditional way.
The third speaker, Dato’ Ng Wan Peng is the Chief Operating Officer of Malaysia Digital Economy Corporation (MDEC). She is convinced that a good stimulus package in place is needed and digital is one of the key areas we need to put emphasis on. A lot of initiatives driven by government agencies are already out there. Dato’ Ng mentioned that 3 weeks of MCO saw a surge in the interest towards e-commerce platforms like eUsahawan. It is not only quick but also medium and longer term. Post-MCO, e-commerce solutions coupled with manufacturing in the supply chain is going to help businesses reach out to more customers.
Plus, more than 100 modules of digital marketing have been developed for SME and they could be accessed for free. MDEC also had worked together with the ICT industry to compile a list of solutions to help businesses besides having an arrangement with technology service providers to come out with packages to help SME to use digital platforms. Dato’ Ng also mentioned that SME Digitalization Grant would be continued and has held talks with its champion, Bank Simpanan Nasional (BSN) and its partner SME Bank to expand the categories to support more digitalization. On the other hand, MDEC as the champion of Small Automation Grant would be rolling out the grant in 1 to 2 months time. Lastly, she assured that more such initiatives will be pushed to the market for the businesses to continue and move forward.
The moderator concluded that this discussion managed to understand what is happening on the ground which is the issue of liquidity, addressing the implementation timeliness is key to ensure assistance for SME and it is not just about delivering the services digitally but also using digital to add value to the products.
Watch the discussion down below:
This article first published at IDEAS website (www.ideas.org.my)