GKP 4.0 with RM1b allocation will benefit an estimated 1m MSMEs with handouts of RM1,000 each
by ASILA JALIL
NO ONE is spared the effects of Covid-19 which has been dragging the economy and shuttering businesses since the pandemic struck last year.
Small and medium enterprises (SMEs) were among the hardest hit by the global health crisis due their vulnerabilities and lack of financial support to withstand the brutal impact.
To help them get to grips with the tide, the government has rolled out a total of eight stimulus packages since March last year, totalling RM530 billion with direct fiscal injection of RM81.8 billion.
The latest round of financial aid worth RM150 billion, dubbed Pemulih, short for National People’s Wellbeing and Economic Recovery Package, was announced by Prime Minister Tan Sri Muhyiddin Yassin on June 28 to support in stages the National Recovery Plan (NRP), namely Phases 2, 3 and 4.
All the packages offered support to SMEs which play a pivotal role in national growth. SMEs make up 98.5% of registered businesses in the country. In 2019, the sector’s contribution to GDP increased to 38.9% from 38.3% in 2018 while in terms of value, SME GDP at constant 2015 prices escalated to RM552.3 billion in 2019 from RM522.1 billion in 2018.
Pemulih was unveiled two weeks after the announcement of NRP as Malaysia and countries around the globe continue to fight the pandemic and new variants of the virus with lockdowns and ramped up vaccination efforts.
Six states have moved to the NRP Phase Two, Kelantan, Pahang, Terengganu, Perak, Penang and Sabah while Perlis, Labuan and Sarawak have transitioned to Phase Three.
The transition to Phase Two is conditional on three indicators — daily Covid-19 infections dipping below 4,000 cases for seven consecutive days, moderate occupancy of beds in in intensive care units and 10% vaccination rate of two doses for individuals.
For Phase Three, number of daily cases must fall below 2,000, 40% of the population vaccinated and the health system at a manageable level.
In recent weeks, the infection toll has reached over five-digit cases daily, with Selangor averaging more than 5,000 cases a day. Many have pointed fingers at the manufacturing sector in the state for the rise in cases as factories deemed as essential industries are still allowed to operate.
However, the Federation of Malaysian Manufacturers on June 27 reiterated that factories were not the main source of Covid-19 cases. On Aug 14, out of 34 new clusters, only 14 were linked to factories. Of the total 20,670 new Covid-19 cases detected on that day, only 233 were from the factory clusters.
To curb the spread of the virus in the manufacturing sector, the government had launched the Public Private Partnership Covid-19 Industry Immunisation Programme in Selangor, Penang and Johor.
Pemulih Initiatives for SMEs
Pemulih offers a variety of measures to help small businesses steer through the difficult times.
The Prihatin Special Grant (GKP) 4.0 with RM1 billion allocation will benefit an estimated one million micro SMEs (MSMEs) with handouts of RM1,000 each, split into payments of RM500 in September and November respectively.
The government not only took note of the calls to extend wage subsidies with an allocation of RM3.81 billion for Wage Subsidy Programme 4.0 (PSU) 4.0 to help up to 242,000 employers help pay the salaries of an estimated 2.5 million workers. The subsidy was also opened to all, doing away with the previous salary cap of RM4,000.
PSU 4.0 supports up to 500 workers per company with a subsidy of RM600 per worker for four months which covers two months for all sectors in Phase 2 of NRP and another two months in Phase 3 for sectors categorised in the negative list.
With the labour market still negatively impacted, the government has boosted the Employment Recruitment Incentives Programme (PenjanaKerjaya) programme under Social Security Organisation with incentives to employers to increase opportunities for job seekers.
The programme, which was supposed to expire end of June, has been given a fresh lease with PenjanaKerjaya 3.0 and more flexibility. To encourage companies to hire locals instead of foreign labour, minimum salary has been reduced from RM1,500 to RM1,200 for all categories, while work contracts are relaxed from 12 months to six months for employees aged 50 and above, the disabled and ex-prisoners.
As the pandemic pushes businesses to pivot to digitalisation, SMEs can look to Pemulih to defray the burden of the transition cost and complexity of the shift.
The package offers RM200 million for MSMEs and RM100 million for SMEs to embrace digitalisation. Another RM100 million is allocated for the SME Digitalisation Grant to enable entrepreneurs to secure matching grants of up to RM5,000 to procure systems or digital platform subscriptions.
Under Pemulih, all micro-businesses, SMEs and individual borrowers would be granted an opt-in six-month moratorium on bank loans with automatic approval regardless of their income bracket. The moratorium was effective on July 7, 2021.
Spurring Business Recovery
Since 2013, Nurhidayah Hairom only took orders during festive seasons for her snack business, Cadbreo Enterprise.
When GKP was launched to help entrepreneurs like her to survive, she used the cash handout to expand her business online and doubled her output.
“With GKP, I am able to produce more snacks daily beyond the festive season. It enabled me to buy more equipment and sell in larger quantities to meet demand,” she said.
She was able to buy more packaging materials to secure her products for delivery.
“Everyone is going online now because the market is bigger there. Assistance provided by the government gives hope for small entrepreneurs to gain income during the pandemic,” said the 33-year-old.
Malaysian Hairdressing Association founder Billy Lim said there is an urgent need for the government to expedite the vaccination process for the benefit of every entrepreneur in the country.
Hair salons and barbers were not allowed to operate during the lockdown last year, before they were allowed to resume operations for just a few months during the recovery phase. But then, they had to shut down again when infections rose earlier this year.
“The main problem now is not only faced by SMEs, but everybody in the country. What we need is to manage the pandemic and fully vaccinate everybody or at least 80% of the population. When everything is in order and the situation is back to normal, our economy would be secure and SMEs could be helped,” he said.
The NRP aims to have 60% of the population vaccinated by end-October. As of Aug 14, 31.9% of the population or 10.4 million individuals have received two doses of the vaccine while 51.7% or 16.9 million people
have been jabbed with the first dose. Malaysian Entrepreneurs Foundation chairman Nitesh Malani said the government should provide a comprehensive business continuity plan and a sustainable support system to put SMEs back on track for recovery such as tax exemption because of the setbacks over the past year.
“More business-friendly initiatives by agencies with designated digital platforms are needed to spur business recovery. Many businesses are not able to wait any longer as they have depleted their available resources for the past 18 months, hence it is of utmost urgency to have a clear and comprehensive support system in this recovery period,” he added.