By Sharina Ahmad
ON Feb 27, the government announced a RM20 bil stimulus package to boost the economy and mitigate any adverse repercussions from the coronavirus (Covid-19) outbreak and other external uncertainties.
In particular, financing facilities are provided for affected companies where Bank Negara Malaysia (BNM) will provide a Special Relief facility worth RM2 bil, particularly in the form of working capital for small and medium-sized enterprises (SMEs) at an interest rate of 3.75%. But is this enough to help the SMEs?
“It is not about the amount provided by the government. The way the stimulus package is offered is not really helpful in assisting SMEs who face financial difficulties.
“The government should come out with a special fund or stimulus economic solutions to help SMEs on short-term cash flow solutions,” SME Association of Malaysia president Datuk Michael Kang told FocusM.
He pointed out that most of the SMEs have experienced problems with their cash flow, and some can last for only two months.
“If a company did not receive any income for the next six to nine months, they will definitely close down or lay off 90% of their staff.
“Hence, I recommend the government to provide a special cash flow fund with an estimated value of RM100,000 to RM500,000 (short term) from 12 to 24 months with free interest to encourage SMEs to continue their business.
“It can also encourage domestic direct investment (DDI). On top of that, the government can create a special policy for DDI,” he said.
Kang said that, overall, Malaysia’s economy is doing pretty badly right now, coupled with the oil price crashes.
“Economy is bad now. Oil prices are going down. The last price for oil per barrel was at US$60 and now the price is only US$30. Therefore, the income for the government will be impacted.
This is due to the ongoing worries over the economic fallout from the Covid-19 outbreak and a plunge in global crude oil prices.
The price war in the oil markets saw crude oil prices slump by the most in at least 20 years, offering unprecedented discounts in Europe, the Far East and the United States to entice refiners to purchase Saudi crude oil at the expense of other suppliers.
Kang added that the tourism-related industry is the most affected industry due to the virus.
“The tourism-related business has been affected significantly by Covid-19. You can see most of the shopping malls empty. Nobody dares to go out shopping. All tours are cancelled. A lot of tour companies cut down the workforce as the government didn’t have solutions to help SMEs to keep the staff,” he opined.
According to a news report, Malaysia’s tourism industry has suffered an estimated RM3 bil in losses to date due to the Covid-19 outbreak.
Tourism, Arts and Culture Ministry secretary-general Datuk Noor Zari Hamat was quoted as saying that industry players such as hoteliers, travel agents, and food and beverage businesses had been severely impacted with the cancellation of flights and trips.
“We are talking about everyone in the industry, from high-end resorts, all the way to the cottage industry.
All have been affected since January,” he said on Wednesday (Feb 13) during the Tourism Recovery Action Committee town hall roadshow with local tourism industry players in Sabah recently.
Retail design firm Visata Creative Sdn Bhd co-founder Timothy Liew said SMEs related to the retail sector have been affected by the current situation.
“A lot of retail plans have been put on hold as well as projects that were supposed to take place did not proceed.
“For us, the stimulus package did not do anything as our industry is indirectly impacted by the current situation as opposed to other industries such as travel which is more direct,” he claimed.
However, Strella Consulting Sdn Bhd business development manager Javier Wong said the interest rate is incredibly attractive which is really helpful for SMEs at this moment especially those that are largely affected such as manufacturers.
“For us, we have been affected lightly. Most of our customers are from the manufacturing sector and a lot of them have had to scale down their production due to a shortage of parts and lack of demand,” he shared.
Wong added that the Covid-19 virus may cost Malaysia approximately RM5.9 bil this year and the figure could rise further if authorities around the world fail to contain the spread of the virus.
“The stimulus package of RM2 bil will cover only 33% of the impact. Additionally, with the plunge in oil pricing, we could be looking at an even bigger drop.”
According to the World Bank, sectors that are impacted by Covid-19 in Malaysia are tourism, foreign direct investment (FDI), supply chains and commodities, which include palm oil and oil and gas.
In Malaysia, hotel room cancellations are mounting.
The Malaysian Association of Hotels said that up to 157,000 room bookings valued at RM66 mil had been cancelled. Most of the cancellations involved visitors from mainland China as well as Singapore, Hong Kong, Taiwan, Vietnam and Europe.
Tourism-related industries like tour services and retailers have been hit as tourist arrivals drop significantly. Malaysia received 10.28 million visitors from Singapore and China in the first nine months of last year. – March 11, 2020
