SMEs in Malaysia incurred RM$40.7 billion loss in 2020

Malaysia’s SME sector suffered a loss of RM$40.7 billion (US$9.64 billion) in 2020 caused by pandemic-led restrictions imposed by the government to control the spread of COVID-19. 

This is by far the largest loss incurred by the SME industry, said Entrepreneur Development and Cooperatives Minister (MEDAC) Datuk Seri Dr Wan Junaidi Tuanku Jaafar, highlighting that the sum of losses would indicate that each company incurred an average drop in earning of RM$35,000 for the year, across a total of 1.15 million registered SMEs nationwide. 

Overall GDP for the SME sector experienced a 7% year-on-year fall to RM$512.8 billion (US$121.5 billion) in 2020, compared to RM$553.5 billion (US$131.2 billion) in 2019.

Some 580,000 businesses, representing 49% of the SME sector, are at risk of failing by October if they are not allowed to open up operations by then, the minister highlighted. 

These businesses are mainly under the First to Close, Last to Open (FCLO) categories, which include operations like spa and wellness, entertainment, event management, sports and fitness, and beauty and grooming. 

READ: Malaysia proposes enhanced SOPs for reopening of businesses

Over 70% of entrepreneurs have very little savings and no employment benefit, based on a MEDAC survey conducted on June 15 to 28. Should they lose their jobs, over 90% of these entrepreneurs have no insurance, while 70% will have no safety net to fall back on.