APR 10, 2020

[REFSA DISCUSS #1] Flattening the Recession Curve: Saving SMEs and Preserving Jobs

REFSA’s first webinar aimed to explore and discuss a very important topic that every country in the world is trying to grapple with – the impending economic recession, its impact on businesses and more importantly on the livelihood of Malaysians.  

Key speakers were Datuk Michael Kang, Mr. Calvin Cheng and Smita Kuriakose.  REFSA Executive Director Tan E Hun moderated the event.  The event was covered by various media in English, Malay and Chinese. Scroll to end for links. 

The first speaker, Datuk Michael Kang Hua Keong, President of the SME Association of Malaysia kickstarted the webinar by sharing the current challenges faced by SMEs. He stated that the hardest hit sectors are the micro-SMEs, which comprise up to 76.5% of the total SMEs. Most do not have sufficient cash flow to survive the Movement Control Order (MCO) currently in its 5th week of enforcement. He also shared a survey conducted by the SME Association, whereby 33.3% of SMEs can only last until March, while 37.8% of SMEs can only last until April. He cautioned that 70% of SMEs may not weather through the MCO and urged the government to provide more financial assistance, ease loan processes, and consider allowing SMEs in green zones to operate partially. 

Calvin Cheng, an Analyst in the Economic, Trade and Regional Integration (ETRI) division at the Institute of Strategic and International Studies (ISIS) highlighted the economic impact of the Covid-19 outbreak with latest data showcasing numbers of jobs lost in different sectors (F&B being hardest hit). He shared a 2 stage policy response. To tackle the immediate impact, expansion of the wage subsidy programme is required. Further, grants will provide a stronger buffer for vulnerable SMEs as loans could be a burden in addition to the permanent revenue loss incurred due to the MCO. To achieve post-MCO recovery, he highlighted that it is vital for the government to expand infrastructure spending, create broad and immediate income transfers as well as invest in strengthening automatic stabilizers. 

Last but not least, Smita Kuriakose, Senior Economist in the Finance, Competitiveness, and Innovation Global Practice in The World Bank, pointed out that that the Malaysian economy will be hit hard due on foreign direct investment (FDI), commodities and tourism as well as domestic shocks due to the MCO and Covid-19 containment measures. Malaysia is also among the economies highest connected to global supply chains. She pointed out that international trade had declined equally as the most acute phase of the global financial crisis in 2008. She stressed that SMEs should build their online presence as e-commerce is expected to become the normal way of doing business in the wake of the pandemic. She also stated that even though the government had shown its commitment to react quickly and allocated substantial resources to respond to the outbreak, recovery was likely to take years.

Various media covered the webinar, in no particular order: 

Bernama, read here

Bernama, read here

Malay Mail, read here

Focus Malaysia, read here

Focus Malaysia, read here

The Malaysian Insight, read here

The Malaysian Insight, read here

The Malaysian Insight 透视大马, read here

Berita Harian, read here

Nanyang 南洋商报, read here 

Sin Chew 星洲日报, read here

Sin Chew 星洲日报, read here