KUALA LUMPUR, March 25 — The government should provide loan facilities or securities with zero interest rate for a period of time to help small-medium enterprises (SME) as a step towards weathering the Covid-19 outbreak, a research think-tank suggested today.

The Institute of Political Studies for Change (KPRU) said SMEs face the biggest pressure under the current economic climate, with over a million of the Malaysian workforce set to lose their jobs if 10 per cent of existing SMEs were to declare bankruptcy.

"Therefore the government must strengthen the recovery process of SMEs so they do not get crushed by the Covid-19 outbreak,” it said in a statement here.

Under a RM2 billion stimulus package announced on February 27, Bank Negara Malaysia (BNM) had announced special relief facilities (SRF) aimed at alleviating the short-term cash flow problems faced by the SMEs adversely affected by the Covid-19 pandemic.

Yesterday, BNM announced an automatic moratorium on loan repayments to be granted to SMEs and individuals for six months to relieve the financial burden affected by the Covid-19 outbreak.

However, the loan and interest repayments accrued during the six months will not be waived.

KPRU also suggested that the SRF could be improved further and Malaysia stood to gain if it adopted several economic stimulus packages from other countries.

It then cited the United Kingdom’s package whereby its government had allocated £5 billion to help SMEs finance their operation costs as well as operating and working capital.

"Loans under this scheme are given zero interest rate for a period of six months. This will directly lower the repayment cost of SMEs and encourage them to increase their workforce to reach bigger production levels or expand their investment. This would directly help in the economic recovery process due to Covid-19,” KPRU said.