Battered in 2021, businesses see a better 2022

With possibility of herd immunity at end-October, consumer confidence is expected to rebound in 2Q22


SENTIMENT among small business owners, who have suffered a terrible year so far, is picking up as they predict a better 2022 with the reopening of the retail economy and the accelerated vaccination rate.

Malaysia Retail Chain Association (MRCA) president Shirley Tay said her members are looking forward to doing better in 2022.

“It should be a better year than 2021,” she told The Malaysian Reserve (TMR). The retail industry has been one of the hardest-hit sectors due to prolonged movement restrictions of nearly two years as the country grappled with the Covid-19 pandemic.

She said 2020 and 2021’s performance was not good and most businesses have yet to recover.

“The last quarter of 2021 would be crucial and vital. With more sectors being opened, business establishments are working hard to recover from the losses that they incurred throughout the various phases of Movement Control Order (MCO).

“It is difficult for some as they lost a lot of business and cashflow is tight. Many closed down their branches and outlets earlier. It will be a very tough year still for many.”

Expressing the same sentiment, SME Association of Malaysia national VP Chin Chee Seong said generally, 2021’s performance was worse than 2020’s.

He said at least 85% of companies reported their performance declined by at least 30% and up to 100% due to the MCOs in 2021, and it will be worse than 2020.

“Business opportunities will improve dramatically starting 2022, as the government has begun to open up more and more economic sectors.

“With the possibility of herd immunity in the run-up to the end of October, we expect consumer confidence to rebound in the second quarter of 2022 (2Q22),” he told TMR.

According to Chin, many businesses, especially small and medium enterprises (SMEs), will need to recover and restart operations, which is not an easy task as cash reserves have largely been depleted.

He stressed the possibility of new virus spots emerging and harming the global community. “The border remains closed, which will impact many business sectors including tourism, transportation, hospitality and entertainment.

“The consumers still remain cautious in spending, as well as not wanting to travel because of the fear of being infected.”

Chin also feared an unstable political situation in Malaysia as the next general election is likely to occur in the latter half of 2022.

Meanwhile, Tay believed there will still be some fear among consumers to shop freely for now, since containment of the spread of the virus is an ongoing battle.

“If the spread can be traced, tracked and contained quickly and swiftly, preventing it from getting worse, it will help to build public confidence.

“We hope everyone will be responsible to play their part by maintaining personal hygiene and following standard operating procedures (SOPs) closely,” she said.

The government needs to encourage consumers to increase their spending and activities, so that industry players can recover quicker.

Tay hopes there are ways to ensure the public observes tight SOPs as we are looking forward to more tourists returning to Malaysia — after all, retail depends a lot on tourism to do well too.

“But the government needs to help by granting more stimulus and recovery financial aid. “An important and pressing issue would be the accumulation of huge outstanding rentals owing to the landlords. Hence, rental relief is something that retailers are desperately looking forward to receiving,” she said.

Chin urges the government open up the economy as much as possible and assist cashflow with an interest-free moratorium.

He suggests temporarily allowing a delay of at least six months for SMEs to abstain from statutory contributions such as the Employee Provident Fund, Social Security Organisation, Employment Insurance System and income tax.

“The government (needs) to pump in more projects or get government-linked companies to spend more, with the privilege given to local companies. No business licence fees for two years and speed up herd immunisation.

“(Also) extend the Wage Subsidy Programme for another six months and provide interest-free loan of RM50,000 for restarting of SME business with longer repayment period of at least 10 years,” he said.

Small and Medium Enterprises Association of Malaysia (Samenta) is hopeful that the Ministry of Finance will follow through on the announcement of an interest-free moratorium to also include SMEs, not just individuals.

Samenta central chairman Datuk William Ng said SMEs are far from being out of the woods and badly require support from the government.

“The wage subsidy and re-hiring incentives should stay until March 2022 at the very least, so that cash generated from operations can be plowed back into paying off debts, maintenance of equipment and stocking up on raw materials and supplies.

“We also take this opportunity to remind all SMEs to tread carefully as the economy re-opens, to follow all SOPs and to only operate when they feel they are fully ready to do so, regardless of whether their industry is allowed to operate or otherwise,” he told TMR.

Ng said the economic environment continues to be challenging for SMEs this year.

“With the economy reopening, we are hopeful that some SMEs will be able to restart their businesses and recover the losses incurred during the pandemic.

“SMEs continue to face severe cashflow crunch. With savings depleted, many SMEs are not able to rehire staff or even pay for raw material to re-start their operations.”