RM250billion Stimulus Package: Dear PM, What About SMEs?

NOTE: We must say that Malaysia is doing a good job so far at dealing with the COVID-19 pandemic. However, the impact of this situation on rakyat’s lives and the country’s economy is still very blurry - uncertainty can be messy.

To cushion the said impact, the government has recently announced the RM250 billion stimulus package like loan deferments, one-off cash assistance, credit facilities and rebates. Having said that, there’s no financial support for the small and medium enterprises (SMEs) and micro-businesses. But, why?

You see, in a statement, the Malaysian Institute of Economic Research shared that Malaysia’s GDP may shrink by about 2.9% in 2020 compared with 2019. Additionally, this will result in an estimated 2.4 million job loss. And guess what? 67% will be among the unskilled workers. Do you know why? Because businesses will no longer able to afford their operation cost as usual if this pandemic were to prolong.

So, in response to the matter, here's an open letter to our Prime Minister from Finology's Managing Director (our boss), Jared Lim.

 

Dear PM,

Congrats on your recent appointment to the highest office. You didn't even have time to catch your breath. Yet already, you find us looking to you for leadership to navigate unprecedented challenges facing our country. I applaud the conciliatory language in your public addresses, find comfort in the calm onscreen presence you exude and love how you took decisive actions since the beginning of the crisis.

On your economic stimulus package - With the highest level of urgency, there is something I beseech you to consider. Because I fear what comes next.

SMEs have been left out by the government's latest stimulus measures that have been primarily skewed towards once-off handouts. Instead, please reconsider for the same money, a higher skew towards helping employers keep people employed over the sustained period needed for the economy to recover.
 

Keeping people employed is the main driving locomotive for ensuring a healthy functioning economy.

Source: Murai.my

It's how we ensure Makcik Kiah can continue to survive once the handouts run out. Because employed people with salaries can continue to buy her food, while Makcik Kiah can keep her few employees employed in perpetuity who can go on to buy from Pakcik Syed and so forth. By helping to ensure job security for many, the virtuous cycle of economic transactions can still chug along once this Covid-19 nightmare is over.

For a sobering picture, the majority of SMEs surveyed do not even have 3 months of operating cash reserves. Meanwhile, they have to continue paying salaries, rentals, and other operating expenses.

If nothing is done for SMEs, come May/June, we are going to see a large number of closures and layoffs by SMEs. Many of them will exist no longer.

Going straight to the heart of the matter, if the government does not provide DIRECT ASSISTANCE for employers towards meeting their PAYROLL obligations, no amount of govt directives on what employers can or can't do is going to stop this from happening. There is simply no more money in their bank accounts. 

Once that starts, it will be the beginning of a countrywide downward spiral, where the contagion effect on every part of the economy will come quicker than the spread of this virus. 

But, unlike the virus, no MCO or heroic efforts of our health workers are going to be able to stop its spread.

To our new PM, I humbly ask you to consider the plight of SMEs. Thank you. 

Wishing you good health and stamina for the days to come.


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