MCO survey: Malaysian firms say main concern are paying salaries, no customers; forced to dip into savings

A general view of the Pavilion shopping mall on Day 1 of the CMCO in Kuala Lumpur May 4, 2020. ― Picture by Miera Zulyana
A general view of the Pavilion shopping mall on Day 1 of the CMCO in Kuala Lumpur May 4, 2020. ― Picture by Miera Zulyana

KUALA LUMPUR, May 8 ― Companies in Malaysia in a recent poll are most worried about making payroll and having no customers, with most reporting that they were forced to use their reserves for operational costs during the nationwide movement control order (MCO) as many of them also reported no sales and revenue in that period.

This was the result of the Department of Statistics Malaysia's (DOSM) first round of a special survey on the effects of Covid-19 on companies in Malaysia, which involved 4,094 companies (with Bumiputera status at 52.2 per cent, non-Bumiputera firms at 47.8 per cent) of varying sizes (large 7.2 per cent, medium 9.1 per cent, small 40.4 per cent and micro businesses at 43.4 per cent).

Under the MCO that started March 18 and is due to end May 12 after three previous extensions, non-essential businesses had to stay shut for at least more than a month, with the local businesses surveyed reporting various financial challenges.

From the survey conducted from April 10 to May 1 or during the MCO’s second to fourth round, 53.4 per cent of companies polled said they can only last one to two months if they gave leave at full pay or half pay to their employees, while 16.5 per cent said they can last less than one month.

Only 25.4 per cent of the businesses polled said they could last for three to six months, with only 4.7 per cent of the 4,094 companies saying they can last more than six months.

During the MCO, the top options carried out by the companies polled were to give paid leave to their staff (35.6 per cent), implementing work from home (33.5 per cent), giving unpaid leave (16.5 per cent), while other companies surveyed reduced working hours or days while still giving full pay (13.2 per cent), reduced working hours or days with pay cuts (5.8 per cent), giving leave with pay cuts (8.6 per cent), and terminating the employment of employees at 3.8 per cent.

No money in, but money out

In the same survey, 67.8 per cent of the companies said they had no source of income during the MCO since there were zero revenue or sales, while 12.3 per cent carried out online sales and services, 9.8 per cent carried out physical sales or at premises, while 15.4 per cent were categorised as others in terms of source of income.

During the MCO, the top three challenges for the 4,094 companies polled were paying their employees’ salaries (76.6 per cent), followed by having no customers (65.5 per cent) and paying rental for premises (61.4 per cent).

Other major challenges for them are repaying bank loans (37.5 per cent), lack of working capital and cash flow issues (35.6 per cent), employees unavailable due to quarantine (22.3 per cent), lack of raw material (21.5 per cent), storage of raw material (21.2 per cent), lack of avenue to market goods (14.6 per cent), while 12.1 per cent were categorised as others.

When examined according to the types of company ownership, the DOSM survey found that the top concern for both private limited companies (Sdn Bhd) and partnerships is payment of salaries, while lack of customers was the main concern for companies owned by individuals.

In order to fund their operations or sustain working capital during the MCO period, 68.9 per cent of the 4,094 companies polled said they tapped their savings, while 19.8 per cent used loans and 11.3 per cent used capital injections.

In the same survey, other findings include how 42.5 per cent of the companies polled said they would take more than six months to recover, 28.7 per cent saying they need an estimated four to six months to fully recover, while 1.9 per cent polled said they will never recover and are expected to close down their businesses.

While the survey results paint a grim picture of how Malaysian businesses were impacted by the Covid-19 pandemic and the MCO, the DOSM qualified the findings by noting that they should be interpreted with caution to assess the impact of Covid-19 in the country and are not to be taken as official statistics.

The DOSM pointed out that the findings are based on the companies that took part in the survey and cannot be generalised to represent the views of all the businesses and firms in Malaysia.

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