Over 90% of MSMEs in Malaysia at risk of business closure if MCO continues: MEDAC

With 54% of themstating that their business will only be able to survive between three to six months.

According to a survey conducted by Malaysia’s Ministry of Entrepreneur Development and Cooperatives (MEDAC) in March 2021, over 90% of micro, small, and medium enterprises in the nation (Perusahaan Mikro, Kecil dan Sederhana, or PMKS) are at risk of premature business closure if the movement control order (MCO, or PKP) continues.

A total of 3,855 respondents were involved in the survey. Of that number, the majority of 58% are micro enterprises, meanwhile the rest are small, medium, and informal enterprises.

The following are the key findings:

• The majority of MSMES (PMKS), as well as informal entrepreneurs from various economic sectors, feel upset with their overall business situation.
• More than half (54%) of respondents, especially micro-enterprises, state that they will only be able to survive between three to six months.
• Close to three in four (72%) of entrepreneurs expect their businesses to suffer continued losses.

Minister for Entrepreneur Development and Cooperatives, Dr Wan Junaidi, said: “Micro and informal enterprises are the worst affected because their products and services are in the non-essential sector. And they neither have strong savings nor strong cash flows.”

“Despite accounting for a relatively smaller contribution to the economy, the number of micro and informal entrepreneurs is among the largest in the country.”

This situation is feared to contribute job losses to over 3mn people in Malaysia.

In another, similar survey involving 2,888 respondents, the following are the findings:

• Employees working in the private sector face the highest risk of being laid off.
• The B40 group is more affected with financial issues, while the M40 and T20 groups were affected by social issues.
• More than half of the B40 group, and close to half of the M40 group has experienced a 10% reduction in income, and up to 30% as a result of MCO (PKP).
• Approximately one-third (30%) of the T20 group has experienced a reduction in income of more than half.

Although Minister Wan noted these findings are worrying, he stressed that MEDAC has identified appropriate intervention measures to help entrepreneurs cope with the impact of PKP—think the Entrepreneur and Cooperative Rehabilitation Plan, the funding assistance, and the targeted moratoriums.

“It is important to ensure that the appropriate type of assistance is given,” he said, “to help micro as well as informal entrepreneurs.”

“And the PEMERKASA+ initiative announced by the Prime Minister Muhyiddin Yassin recently is expected to be able to support this group when the lockdown period is implemented.”

Minister Wan also highlighted that MEDAC will, in the meantime, carry out another series of surveys after the two-week lockdown. “This is to assess the further impact faced by entrepreneurs including measures of the effectiveness of the intervention implemented by the Government,” he shared.

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