Save Our SME’s (SOS):Reintroduce Wage Subsidy and Loan Moratorium

With Malaysia entering a nationwide full lockdown including the shuttering of all economic sectors, the grim reminder of March 2020 is returning to haunt many business owners. During the first MCO many businesses were severely impacted as they were not allowed to conduct any business amidst the lockdown. Movements were completely restricted and barb wires were seen throughout the city. As cases continue to climb reaching 10,000 a day, the government is left with little choice but the shut down all movement including the economic sector in the country.

During the MCO 1.0 period, the Finance Ministry came up with a slew of aids to protect the people and small business like SME’s and mSME’s from further suffering from the lockdown. Financial supports in terms of direct cash handout, loan moratoriums, grants, cheap loans and food supplies were handed out to ease the burden. With the latest MCO which will begin on June 1 to June 14 and expected to extend beyond, SME’s and various business groups are calling for the Government to provide financials assistance once again.

SME’s are the backbone of Malaysia’s economy, they represent nearly 40% of our GDP and its imperative they are kept functioning effectively during these trying times. When it rains, the Government should find ways to support these industries, as we far well know these resilient enterprises will bounce back when the dust settles and contribute back during the country’s recovery period. Another sector that has been plagued deeply by the pandemic is the hospitality sector, Malaysia has relied substantially on tourism which has contributed expansively across all states. The situation is dire and need much saving as well, the Malaysian Association of Tour & Travel Agents has called on to ensure measures are in place following the governments decision to place the nation under Phase 1 of a “total lockdown.

“Tourist arrivals to Malaysia fell by 83.4% in 2020 with Malaysia’s tourist receipts also plunging by 85.3% from RM86.14bil in 2019 to RM12.69bil last year. Most of the tourists, or 4.23 million in 2020, arrived before the borders were shut on March 18. The industry and related economic activities have suffered losses of over RM100 billion in total”, said Faeez Fadhlillah, Honourary Treasurer of MATTA.

The body representing the legion of employees and employers in the hospitality industry have been facing a daunting year ever since the pandemic broke. With no sign of the industry starting again, MATTA is urging the government to implement initiatives to cushion the economic risks, 1) in a from of an automatic loan moratorium, 2) wage subsidies extension until the of the year, and for tourism players the cancellation of the Travel & Tour Enhancement Course (TTEC) fees and financial assistance for travel agents.

According to Minster of Finance Tengku Zafrul, the RM20 billion Wage Subsidy Program was successfully paid out to 3 million employees. For MCO 3.0, the Federation of Malaysian Business Associations (FMBA) has suggested a 70% wage subsidy given for all staff earning less than RM4,000 and a 30% subsidy (capped at RM3,000) for those who earn above RM4,000.

Whatever the subsidy, businesses will welcome any assistance they can get, they have struggled for the past 15 months so just hand them the crutches to wobble along until the situation gets better. Closing of the economy will leave a devastating trail, although the situation is temporary its impact will be severe, the government has announced assistance. For businesses the loan moratorium and wage subsidy mitigated the contemplation of closing down, which could not only affect the owners but also employees and their families.

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