60% of SMEs in Malaysia reported having no sales over initial lockdown period

Cash flow disruptions were cited by SMEs as the main challenge.
By: | November 12, 2020
Topics: Malaysia | News | Restructuring

Over Malaysia’s initial lockdown period from March to May, 60% of SMEs in the country reported having no sales, according to a survey by SME Corporation Malaysia.

Another 39% experienced lower sales over the period, known as a Movement Control Order (MCO), which was first enforced on March 18 for two weeks after a spike of Covid-19 cases in the country. 

Cash flow disruptions were cited as the main challenge to SMEs, followed by lower demand, supply chain disruption and legal issues. 

Cash flow issues arose mainly due to the drop-in sales, insufficient cash-in-hand, and high overhead costs, the survey states, causing SMEs to halt their business operations temporarily with the possibility of huge losses.

The survey was held between March and May this year, involving over 1,900 smaller businesses across various sectors. 

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It also found that only 34% of SMEs were able to continue operations as essential service providers during the period, while others had to resort to alternative actions: negotiating with employees on salary and benefit cuts (37%); retrenchment (34%); limiting business trips (33%); and working from home (33%). 

Government measures that helped SMEs the most include its wage subsidy programme, six-month automatic moratorium on loans, free internet services and special relief facility initiatives, which are bank loans of up to 5.5 years aiming at alleviating the financial burden of smaller businesses.