GEORGE TOWN, April 7 — The additional RM10 billion stimulus package for small and medium enterprises (SME) will help in the short term but Putrajaya must still formulate lasting solutions to reignite the economy, according to analysts.
They believe the package — which included an additional RM7.9 billion for wage subsidies and RM2.1 billion in grants for 700,000 micro businesses — would not guarantee long-term survivability.
“I don’t think it will help for the next three months and for some, it will be impossible to survive for six months,” senior fellow of Singapore Institute of International Affairs Oh Ei Sun said when contacted.
He said many small businesses may not even last long enough to benefit from the measures.
All non-essential activities have stopped due to the movement control order (MCO) implemented to try and contain Covid-19 in Malaysia, effectively starving most businesses of any revenue for at least four weeks.
“This is because they have zero income now, they won’t be able to survive,” he said.
Economist Prof Yeah Kim Leng also said the expanded stimulus package will help tide some SMEs over but would not change the fact that the MCO period was a complete loss for them.
Like Oh, the Sunway University Business School economics professor also said not all firms will still be around when the subsidies and incentives arrive, unless they start cutting jobs to try and eke out some extra time.
He said the survivability of the SMEs will vary across different sectors, with those such as entertainment and tourism facing devastation.
“Even after the MCO is lifted, the entertainment sector may continue to suffer losses as there may still be precautions against large gatherings of people within a public space,” he said.
He said the export industry will also be affected as demands dropped and productions plunged due to the MCO.
Yeah said exporters were at the mercy of external factors, such as how other countries are coping with Covid-19 and measures they put in place to contain the disease.
“On top of being unable to operate, there is a decline in demand for exports and we can expect to see this kind of impact for the rest of this year,” he said.
Another analyst, Tan Sri Ramon Navaratnam, said the expanded package finally took into account the SMEs but should not have come with conditions.
He said restricting recipients of the wage subsidy from retrenching for a period of six months might not be feasible for some.
“It is not fair, some companies may not survive that long; maybe reduce the condition to three months with a review on the company’s situation from time to time,” he said.
He said a periodic review of the subsidies will be needed to accurately ascertain the financial situations of the SMEs.
“I hope the announcement of the expanded package was made based on consultation with the SMEs, if not, they will continue to suffer if their needs were not actually met,” he said.
He said the government should actually refer to stimulus packages announced by Singapore and the United Kingdom.
The director of the Asian Strategy and Leadership Institute (ASLI) and chairman of the Centre for Public Policy Studies (CPPS) also hoped that the subsidies and grants would be fairly distributed to all eligible SMEs and micro businesses.
“I hope they do not leave anyone out,” he said.
In the additional package announced, SMEs that employ more than 200 workers will now be able to claim RM600 for 200 employees, up from 100 previously.
Those employing between 76 and 200 people will receive RM800 per worker while firms that employ no more than 75 people will get RM1,200 per worker.
All companies registered with the Companies Commission Malaysia (SSM) and Social Security Organisation (Socso) before January 2020 will be eligible for assistance but with the condition that no workers be laid off for the next six months.
The subsidy will last three months and the companies that take up the subsidy must retain their employees for all three months and for at least three more months after.
The prime minister also announced a special grant worth RM3,000 each to benefit 700,000 microenterprises.