MALAYSIA suffered a total of RM40.7 bil losses last year from the micro, small and medium enterprise (MSME) sector as a result of a nationwide strict lockdown order imposed by the Government to tackle the spread of COVID-19.
Based on the latest figures shared by Department of Statistics Malaysia (DOSM), the MSME sector’s gross domestic product (GDP) contribution suffered more than 7% year-on-year (yoy) decline to RM512.8 bil last year from RM553.5 bil in 2019.
This is an anomaly given for the past 15 years, the growth of MSME is always higher than non-MSME.
By far the biggest ever losses incurred by the MSME sector, Entrepreneur Development and Cooperatives Minister Datuk Seri Dr Wan Junaidi Tuanku Jaafar described this as a strong indication of how much the entrepreneurs are suffering from not being able to operate their businesses.
Looking at the current 1.15 million registered MSME nationwide, he said the losses would mean that each MSME company incurred an average drop in earnings of RM35,000 during 2020.
This situation will also affect the country’s aspirations to increase the MSMEs GDP and export value contribution to 50% and 30% respectively in 2030 under the National Entrepreneurship Policy (NEP).
“Lockdown is no longer the answer to the problem,” Wan Junaidi pointed out.
“We have to accept the fact that we need to live with COVID-19 and find a balanced solution for this. That is why my ministry has proposed an enhanced SOP (standard operating procedure) so that we are able to speed up the re-opening of economic activities, particularly those in non-essential category.”
The enhanced SOPs were were introduced in order to safely speed up the opening of businesses, particularly those in the first to close last to open (FCLO) category.
It focuses six economic activities which are food & beverages (F&B dine-in), shopping malls, watches shop, pedicure & manicure (grooming services), beauty parlour/salon and barber/hair salon.
Wan Junaidi further cautioned that some 580,000 businesses which represent 49% of the MSME 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 FCLO category that provides 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 finding by MEDAC, Wan Junaidi 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.
“Failure to help this sector would have a devastating impact on the country’s socio-economic landscape as well as the people’s overall well-being,” added Wan Junaidi.
MEDAC had on June 15 to 28 conducted a survey to gauge the impact of the MCO 3.0 on the entrepreneurship landscape in Malaysia. A total of 6,664 respondent from across the nation took part in this survey. – July 29, 2021
