580,000 businesses face closure by October

Many businesses are now suffering ‘business fatigue’ syndrome and declining con dence, says Medac


UP TO 580,000 businesses — representing 49 % of the micro, small and medium enterprise (MSME) sector — are at risk of closing down by October, Minister of Entrepreneur Development and Cooperatives (Medac) Datuk Seri Dr Wan Junaidi Tuanku Jaafar (picture) said.

He said Malaysia’s MSME sector, which accounts for close to 40% of the country’s GDP, is on the brink of collapsing should the current nationwide lockdown continue.

“If we don’t do something to help them now, I am worried that many of these MSMEs will fail and will not be around to help rebuild the economy once businesses are allowed to open.

The longer businesses are not allowed to operate, the longer it will take to recover,” Wan Junaidi said in a statement yesterday.

“It is time we look at other holistic measures on how to deal with this other than lockdown,” he added.

To make it worse, he said many businesses are now suffering “business fatigue” syndrome and declining confidence as a result of lockdown.

This illustrates the harsh reality faced by local MSMEs and he urged for remedial action on the matter.

Failure to resolve the issue and prolonged lockdown, he added, will have a terrible impact on the country’s socioeconomic landscape, affecting the rakyat’s general wellbeing and happiness.

Last month, The Malaysian Reserve (TMR) reported that more than 50,000 small and medium enterprises (SMEs) may be out of business should the Full Movement Control Order (FMCO) extend another six weeks.

SME Association of Malaysia national VP Chin Chee Seong said about 100,000 companies have ceased operations since the first MCO.

“The affected SMEs, especially in retail and food and beverages, are just hanging on at the edge of a cliff. About 40% have indicated that they will shut down their businesses should the lockdown continue for the next four weeks,” Chin told TMR.

Medac, from June 15-28, had conducted a survey to gauge the impact of the FMCO on the entrepreneurship landscape in Malaysia.

A total of 6,664 respondents nationwide took part in this survey. Notably, about one-third of the respondents said they did not receive the various assistance introduced by the government.

“Entrepreneurs are worried about their future, thus contributing to higher stress levels, affecting their mental and emotional wellbeing,” Wan Junaidi added.

The survey uncovered approximately 60% of entrepreneurs suffering from some type of mental illness during the lockdown.

The top three factors that influence entrepreneurs’ mental health are income loss, debt and financing issues, as well as risk of business closure.

The survey also found that over 90% of these entrepreneurs have no insurance and 70% have no safety nets to fall back on should they lose their jobs.

“People are becoming increasingly unhappy. The lockdown has hit the society at the core with the financial worries and inability to socialise,” he said.

Medac had announced that it will utilise the RM100 million allocation to help micro-enterprises in the non-essential sector, or the First Close, Last to Open (FCLO) category, severely affected by the lockdown.

The ministry identified around 1,400 FCLO entrepreneurs to participate in this programme from 14 non-essential businesses, including post-natal, spa and wellness, homestay, sports and recreation, and many more.

The FCLO Recovery Programme — a collaboration between Medac and two of its agencies, Tekun Nasional and National Entrepreneurship Institute — will provide up to RM10,000 micro-financing and benefit around 10,000 FCLO entrepreneurs.