Covid-19: After MCO, survey finds nearly 70pc SMEs lost half income

Customers observe social distancing guidelines as they do their shopping at the Shah Alam wet market March 26, 2020. — Picture by Yusof Mat Isa
Customers observe social distancing guidelines as they do their shopping at the Shah Alam wet market March 26, 2020. — Picture by Yusof Mat Isa

KUALA LUMPUR, March 27 ― A survey by an online home services platform Recommend.my have found that 68.9 per cent of local small and medium enterprises (SMEs) have suffered more than 50 per cent drop in business within one week of the movement control order (MCO).

The survey which studied SME sentiments one week prior to the lockdown and one week after also found that almost 100 per cent of local businesses have a negative outlook for the Malaysian economy for the rest of the year with more than half having a negative outlook on their own businesses.

“Around 60 per cent of SMEs had a negative outlook for their business for the rest of 2020. This number increased to 77.7 per cent one week after the MCO started. Around 92.5 per cent of SMEs now have a negative outlook for Malaysian economy for the rest of 2020.

“The majority of SMEs plan to use better hygiene practices, workplace disinfecting, and work from home policies as strategies to maintain business operations, but a worrying 10-15 per cent of them are considering to reduce or re-deploy their staff,” said the survey.

Among the problems faced by these SMEs prior to the MCO include fewer requests for their service, cancellation of order as things become worse, reduction in client spending and clients are avoiding face-to-face meetings.

After the MCO was initiated up to 91.1 per cent of the SMEs polled reported far severe problems facing their business.

Some of their misgivings range from customers who cancelled jobs because there was no clear direction if the business was allowed to operate to projects being postponed or outright cancelled as the companies can no longer meet the customer’s deadline or timeline.

Another problem facing by some of the SMEs is their inability to get supplies during the MCO period as their suppliers have temporarily closed down.

Up to 75 per cent of the SMEs reported that their biggest worry right now is their cashflow stemming from very low sales. Prior to the MCO, their fear was on supply chain disruption but now many companies just want to know where their next sale is coming from.

As a result, some of these businesses feel that they have lost control of the entire situation.

“One week into the MCO strategies began changing. Initial strategies like improving staff hygiene, work from home policies, and workplace hygiene dropped slightly in importance. This is probably due to offices and work spaces being closed while the MCO is in effect.

“Instead, more SMEs felt that the situation was beyond their control (9.3%), and 18.6% now feel the need to redeploy their workers, learn new skills and offer new products. Most workers can only work from home now, and it is important to be flexible enough to continue operating.

“Learning new skills, especially through the Internet, is now more crucial than ever,” said the survey.

When asked how the government can aid small business at this time, a vast majority (46.7 per cent) stated reduced taxes such as digital tax and service tax would be of great help while another 37.8 per cent requested cash grants for workers who had to take unpaid leave in order to cope.

 A group of 8.9 per cent suggested cash grants or any type of financial aid for businesses that are still operating. Others stated removing employee and employer EPF deductions (4.4 per cent) in the meantime and few suggested a 6-month moratorium on all bank loans (2.2 per cent).

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