MCO extension to hit economy, small biz further: MEDAC


A prolonged Movement Control Order (MCO) will hit the economy further and affect the lower income group the most, says Minister of Entrepreneur Development and Cooperatives Datuk Seri Dr Wan Junaidi Tuanku Jaafar.

“There is no other way to sugar coat the situation. Further extension of the MCO would affect the economy…and the ones who would be severely hit are the B40 group, including micro and informal business operators,” he said in a statement today.

He explained micro and informal business owners mostly do not have the financial muscle to absorb the financial losses due to this lockdown.

“We are talking about people like your neighbourhood ‘Mak Cik Goreng Pisang’ who does not have a steady monthly income. Her livelihood depends on her daily sales.

“The longer the duration of the lockdown would mean the more these small businesses will suffer.

We have earlier estimated that there are close to two million of these microenterprises nationwide, where almost half comprise of informal businesses,” he added.

“This is not a small number. It is important to take into consideration how the MCO 2.0 would affect this group of people.”

Dr Wan Junaidi further said a total of 41,349 businesses were closed down between January and September last year, according to a report by Companies Commission of Malaysia (SSM).

Based on surveys conducted by MEDAC, among the main challenges that entrepreneurs will face during MCO 2.0 period are cash flow constraints and lower sales volume.

The ministry said this is largely due to the decline in customer demand as well as shorter business operations duration.

Supply chain may also be affected due to logistical issues and delays in delivery of raw materials as a result of the restricted movements.

According to the ministry, for the cooperative sector, business activities that are expected to be significantly affected by this  MCO and nationwide state of emergency declaration are tourism, agriculture, wholesale as well as retail.

It added that the emergency proclamation may cause ‘force majeure’, unforeseeable circumstances that prevent someone from fulfilling a contract, and would result in losses to entrepreneurs.

MEDAC said it could also affect investor confidence on the country’s business landscape, which, in turn, could potentially result in a domino effect on the stock market as well as foreign direct investments (FDI).

Despite all these risks, Dr Wan Junaidi is optimistic of seeing the positive effects from the current situation namely in terms of increasing demand and supply of products and services online.

Up to 299,431 new businesses were registered– of which 86,295 are online businesses.

“We are now living in post Covid-19 era. Lots of things around us are changing and we have to accept and adapt to the new norm. In business, it is all about survival of the fittest.

“As such, we would like to call on entrepreneurs to take full advantage of the various assistance, incentives and programmes made available by MEDAC and its agencies to remain competitive in today’s challenging business environment,” he said.

“For the informal businesses, we would like to encourage you to register yourselves with the relevant authorities so that we know who you are and we can channel all the available allocations as well as assistance to you,” he added.