Only a third of SMEs have enough cashflow for March

KUALA LUMPUR, 30 March 2020 – SME Association of Malaysia (SME Malaysia) in partnership with Bizsphere Brand & Marketing Group (Bizsphere) launched a survey on 29th March and had attracted 15,627 SME responses in less than 18 hours.

The survey titled “Business Sustainability of SMEs During Covid-19 Crisis” was initiated to gauge the sustainability of Malaysia SMEs during the COVID-19 crisis and impact from Movement Control Order (MCO).

“We have been receiving phone calls, emails and messages from SMEs since the 1st day of MCO. Many has highlighted their challenges in business operation and fear the sustainability of their businesses. SME Malaysia has been sharing all these feedback to various ministries yet lack sound facts to support. Thus, we decided to run a survey to collate inputs from all SMEs.”

Datuk Michael Kang, National President of SME Malaysia

The survey has attracted participation of 15,627 SMEs mostly via WhatsApp and Facebook where the sharing went viral.

59.2% of the survey was completed by small size enterprises, while the balance was responded by 22.3% micro and 18.5% medium size enterprises where most of them (53.3%) have less than 75 employees.

The survey found that more than half or 51.2% of those enterprises are projecting to experience more than RM 500,000 losses within 6 months from March to September 2020.

The biggest challenge of SMEs is cashflow. It is expected that there will be no cash inflow for at least 3 months due to the MCO for most of the enterprises

However, they will still need to continue paying full salary, rental and some statutory payments. Nearly one third or 33.3% of the enterprises can only have enough cashflow for the month of March while 37.8% can only sustain up to April 2020.

The survey found that only 26.3% of SMEs will be able to utilise the stimulus packages provided by the government to help them sustain their business despite the additional allocation of RM100 billion loan to SMEs under the Prihatin Package.

Datuk Michael added that SMEs are afraid to have too high of a gearing as many of them already have existing loans. The economic uncertainty for the next 6 months will burden their repayment capability and risk the possibility of many to go bankrupt. 4% out of 22.5% whom have applied for the loan has been rejected by the banks while 77.6% have yet to apply for the special relief fund.

The survey found different reactions when asked about the possible actions they will take to manage their employees from April 2020 onwards without a strong stimulus package from the government to SMEs. 43.8% say they will persuade employees to utilise their annual leaves on voluntarily basis.

About a quarter or 25.6% will initiate retrenchment of employees or cut total of employment. SMEs employ up to 70% of the country’s total employment of 10 million. This may translate to the possibility of 2.56 million people losing their jobs.

SMEs are now lacking confidence for the coming months. 82% predict that they will be at a lost financially for year 2020. 29.1% of SMEs believe that “business as usual” can only happen after 6 months whilst 61.7% of them believe that their businesses will need more than 9 months to be able to return back to normal.