If were to list the number of industries impacted due to the pandemic we would probably need a several pages, the lockdown as we know it has prevented a large portion of businesses to operate and while those who can open have have seen revenue drop drastically by 90%.
The government is aware of this, having introduced various stimulus aids throughout the MCO period with Perkasa, Memperkasa, Bantuan Prihatin and with the latest being Pemulih which are all designed to assist the people and businesses.
Armed with RM150 billion, the Pemulih package has a more clearer and extremely focused approach is assisting especially on the distressed sectors who are often the small and micro operations. Taking the lead to assist some of these sectors is the Ministry of Entrepreneur Development and Cooperatives which will be utilising the RM100 million allocation for a special recovery programme to help micro enterprises in the non-essential sector or the First Close, Last to Open (FCLO) category.
Minister Dato Sri Dr. Haji Wan Junaidi Tuanku Jaafar said The FCLO Recovery Program is designed to provide an end-to-end solution for the affected FCLO operators – comprising structured advisory and consultation, coaching and
training, financing and progress monitoring. The program, a collaboration between MEDAC and two of its agencies TEKUN Nasional and National Entrepreneurship Institute (INSKEN), will provide up to RM10,000 micro financing and benefit around 10,000 FCLO entrepreneurs.
To kick-start, around 1,400 FCLO entrepreneurs have been identified to participate under this programme from 14 non-essential businesses including post-natal, spa and wellness, homestay, sports and recreation segment. To put it simply, this is a hand-holding recovery programme. This is not just about giving them money to help their business but a tailor-made recovery plan for the participants added Junaidi.
Based on surveys conducted by the Ministry and from representatives from the MSME sector, it found that the FCLOs are clearly in dire situation and most are unsure of their future. Since the first round of MCO until now, the FLCOs are only able to operate for around five to six months, and many are now uncertain of their future, if the lockdown continues, as they only have cash reserves to sustain their operations for the next three to six months.
The non-essential business which accounts for almost 90 per cent of the country’s MSME sector, are businesses providing non-essential products and services such as spa and wellness, entertainment, event management, sports and fitness, beauty and grooming and many more. “We need to help these FCLO business operators. If they close shop, it will mean that approximately 4 million Malaysians will be made jobless – that is indeed a high number of unemployment for a country with a population size of around 30 million. “This is something not to be taken lightly. The socio-economic impact is indeed frightening. Assuming that these 4 million workers have an average of three dependents, it will also mean that another 12 million people will also be affected from this. This is just a conservative assumption the actual numbers could be higher,” the Minister concludes.
It is found that more than 60 per cent of the entrepreneurs in the FCLO sub-sector are in the B40 category, with very little savings and do not have any employment benefit. More than 90 per cent of these entrepreneurs have no insurance and 70 per cent have no safety nets to fall back on should they lose their jobs. There is also proposals sent to the Ministry of Finance (MOF) to relax the current regulation concerning bankruptcy due to many MSMEs are struggling to pay their loans and other financial commitments and bills, thus making them highly at risk of slipping into insolvency.
According to the Medac many of those on the brink of bankruptcy are women entrepreneurs and once they are placed under that category, it is difficult for them to get out of it. The call is since the country is operating in an unusual condition, it would require unconventional solutions.
