Business associations warn more businesses to shutter from Covid-19 economic fallout

The two-decade high 5.3 percent jobless rate in May is reflected in the winding up of business due to the economic fallout from the Covid-19 pandemic, said business associations.

While the associations were unable to provide an exact figure on the number of closures, they believed the worst has yet to come, and they expect the full-blown economic impact will be felt in the fourth quarter of 2020.

The business community urged the government to be more efficient in handling various initiatives announced in the four stimulus packages.

"What we witnessed was a 0.3 percent increment of the jobless rate from five percent in March. This is rather reasonable (given the magnitude of challenges faced by the businesses)," said its president, Michael Kang.

Kang said the majority of the businesses, which resumed operations between May and July, are working out ways to restructure their business so that they could continue to survive.

"We will have a clearer picture of whether they are successful by next month. If they can't generate enough income in between (these months), I gather they will be winding down their businesses.

"Another challenge faced by the business community is they have to start paying their loans after the blanket moratorium period ends on Sept 30," he said when contacted by Malaysiakini.

Kang said SME Association would conduct research and obtain feedback from small and medium enterprises (SMEs) to get more information on problems faced by its members next month.

The Edge had reported that banks, which suffered a loss of income due to the six-month moratorium, have started to approach their customers on loan repayments.

Finance Minister Tengku Zafrul Tengku Abdul Aziz (photo) estimated the deferred loan/financing repayments under the moratorium, which took effect on April 1 as part of the Prihatin Rakyat Economic Stimulus Package (Prihatin), to have reached RM55.2 billion as at July 13.

Kang urged the government to further extend the moratorium for another three to six months beginning from October.

This could buy those impacted by Covid-19 more time to revive their businesses, he said.

Kang had previously cautioned that an estimated 30 percent or some 200,000 SMEs would shut down if the government failed to come up with a stimulus package to help the businesses.

When asked about this, he believed things are better now with the aid given by the government.

Kang, however, said those businesses with weak management and financial standing would have a difficult time getting through this period.

Timely delivery of aid

Meanwhile, Malay Chambers of Commerce Malaysia (DPMM) president Abdul Halim Husin warned that a full-blown economic crisis could lead to the closure of tens of thousands of businesses by year-end.

"We don't have the figure of how many have closed down now, but we know they are closing down," he said.

"We made known (initially) that up to 50,000 businesses could shut down at the end of 2020," he said.

Abdul Halim appealed to the government to improve the delivery of various initiatives listed in the stimulus programmes announced earlier this year.

"The government indeed came out with various initiatives to help, but it needs to deliver these programmes to those on the ground faster," he said.

He cited the RM5 billion special relief facility (SRF) that was not delivered on time to help the business community.

Abdul Halim had voiced his concerns where SRF applicants only received their aid after three months.

He believed the government could prevent more businesses from shutting down if they could act in time and hopes this could save at least 20,000 businesses from closing down.

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