MSME sector suffered RM40.7b losses in 2020


MALAYSIA suffered a total of RM40.7 billion losses last year from the Micro, Small and Medium Enterprises (MSME) sector as a result of a nationwide strict lockdown order imposed by the government to tackle the COVID-19 issue.

Based on the latest figures shared by Department of Statistics Malaysia (DOSM), the MSME sector’s GDP contribution suffered more than 7% year-on-year decline to RM512.8 billion last year against RM553.5 billion in 2019.

“This is an anomaly as, for the past 15 years, the growth of MSME is always higher than non-MSME,” said Entrepreneur Development and Cooperatives Minister Datuk Seri Dr Wan Junaidi Tuanku Jaafar (picture).

He added this is by far the biggest ever losses incurred by the MSME sector – a strong indication how much the entrepreneurs are suffering from not being able to open up their businesses.

Looking at the current 1.15 million registered MSME nationwide, he said the losses would mean that each MSME company incurred an average drop in earning of RM35,000 for the year 2020.

Wan Junaidi added that some 580,000 businesses, representing 49% of the MSME sector, are at risk of failing by October, if they are not allowed to open up their operations by then.

These businesses are mainly in the First to Close Last to Open (FCLO) category providing non-essential products and services such as spa and wellness, entertainment, event management, sports and fitness, beauty and grooming and many more.

Citing a survey conducted by The Ministry of Entrepreneur Development and Cooperatives (MEDAC), he said more than 70% of entrepreneurs are in the B40 category, with very little savings and do not have any employment benefit.

More than 90% of these entrepreneurs have no insurance and 70% have no safety nets to fall back on should they lose their jobs.

“The MSME sector is involved directly with the rakyat. Failure to help this sector would have a devastating impact on the country’s socio-economic landscape as well as the people’s overall wellbeing,” he added.

This situation will also affect the country’s aspirations to increase the MSMEs GDP and export value contribution to 50% and 30%, respectively, in 2030, under the National Entrepreneurship Policy (NEP).

“Lockdown is no longer the answer to the problem. We have to accept the fact that we need to live with Covid and find a balanced solution for this. That is why my ministry has proposed an Enhanced SOP so that we are able to speed up the reopening of economic activities, particularly those in non-essential categories,” he said.

MEDAC on Tuesday, had submitted to the government a proposed Enhanced SOPs to help 2 speed up the opening of businesses, particularly those in the FCLO (First to Close Last to Open) category, safely.

The Enhanced SOPs proposed focuses on six economic activities, which are in food and beverages (F&B dine-in), shopping malls, watch shops, pedicure and manicure (grooming services), beauty parlour/salon and barber/hair salon.

Almost half of the business activities identified are owned by women entrepreneurs, among the groups most affected by the nationwide lockdown.

The SOPs entail a comprehensive set of guidelines from handling of customers, managing staff, operating hours as well as premises maintenance to ensure all comply with the post Covid-19 safety requirements.

Among the mandatory procedures proposed include:

i) Business owners and workers must complete the two doses of COVID-19 vaccination jabs;

ii) Business owners and workers must go for weekly COVID-19 swam test and;

iii) Immediate closure of premise, for sanitation purposes, should there be any case COVID-19 detected.