KUALA LUMPUR, Malaysia (June 27): According to the Small & Medium Enterprises Association, two out of every three small to medium enterprises (SMEs) do not expect their firms to rebound this year (Samenta). The association’s chairman, Datuk William Ng, said in a statement today that the association’s mid-term poll was conducted from June 19 to 23, and that 16 percent of respondents stated their businesses would only recover in 2023.
“The current FMCO [full movement control order] is extremely damaging to the bulk of our SMEs. Many SMEs still have cash buffers to keep their company afloat throughout MCO 1.0.
“However, after more than a year of business disruption, SMEs are no longer able to thrive on their own.” Indeed, 30 percent of SMEs would have ran out of funds during the FMCO, and many of these would simply close down if the FMCO was extended,” he added.
After surviving the movement control orders, Ng anticipated that roughly 90,000 firms would have closed by now. This is three times the 30,000 reported by the Malaysian Companies Commission, and it takes into consideration the fact that some enterprises may have closed without informing the commission.
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In the latest Malaysia Economic Monitor, the World Bank confirmed that our SMEs have lower cash flow than their regional counterparts.
“Our measures as a government to mitigate economic losses from the epidemic are notably absent from the National Recovery Plan.” More importantly, it is deafeningly silent on our plans for’recovery’ and how Malaysia might reclaim the path it has been on since the outbreak began. “At this critical juncture, the government must take the lead by offering a clear, realistic plan for our economy, and by extension, for our SMEs, to recover from the epidemic and capitalize on opportunities in the new normal,” he added.
Aside from the immediate issues posed by the epidemic, Ng believes it is critical for Malaysian SMEs to transition away from “cheap” labor, increase automation and reduce dependency on physical manpower, and improve the education levels of the next generation of entrepreneurs.
He pointed out that the more connected the country’s SMEs are to the global market, the faster they will be pushed to digitalize.
“At the same time, don’t raise the threshold to the point where our small businesses are discouraged from investing in technology.” Stop talking about IR 4.0 when the majority of our SMEs are still using manual ring files,” Ng stated.
Instead of teaching Malaysians to be just middlemen and distributors of foreign, low-value-added items, the Samenta chairman stressed the importance of developing indigenous brands and local heroes.
This is happening because the country is permitting low-cost, low-quality products to enter our market in the name of globalization, to the disadvantage of Malaysian SMEs, according to Ng.
“We need to be more adamant about ensuring that massive de facto monopolistic marketplaces prioritize local SMEs,” he continued.
Ng also expressed the expectation that the government will continue to prioritize capability and capacity building for Malaysian SMEs, as it has done through SME Corp, rather than short-term assistance, which, while necessary during the pandemic, should be phased out once it is over.
“SME Magazine and Willis Towers Watson performed a recent SME Employee Experience research. Watson found that, contrary to popular belief, Malaysian SMEs outperform their regional peers in terms of employee engagement. This indicates that our SMEs are, on the whole, “excellent employers.” Regrettably, this has not resulted in SMEs becoming favored employers,” Ng noted.
He finished by adding that the government should look beyond the economy’s reopening to assist its SMEs in regaining “lost ground and sprinting ahead of our regional peers.”
“As the phrase goes, a good crisis should never be squandered,” he continued. Continue reading
