SMEs in Malaysia need more help to recover from COVID-19
For many small and medium-sized enterprises (SMEs) in Malaysia, a return to full operation only began when the country entered into the recovery movement control order (RMCO) phase last month.
If a loan moratorium is not extended for these SMEs beyond September, up to 70% of them will not be able to meet their loan obligations, resulting in retrenchment or forced closures, warned Datuk Ooi Eng Hock, northern chapter chairman of the Federation of Malaysian Manufacturers (FMM).
Predicting that SMEs will need an additional six months to get back on their feet, he urged banks to extend the loan moratorium for SMEs, which contribute about 40% of Malaysia’s GDP.
Datuk Ooi’s comments came as Malaysian Prime Minister Tan Sri Muhyiddin Yassin announced a three-month extension of the loan repayment moratorium for the public. However, this applies only for those who have lost their jobs this year and are yet to find employment.
He insisted that since the implementation of the RMCO period, economic activities have gradually picked up across Malaysia, with the number of SME borrowers who have chosen not to opt for the moratorium facility increasing from 331,000 in April to 601,000 in July.
Datuk Ooi, however, said that about 70% of SMEs will be able to service their loans for a maximum of two more months, after which they will be forced to reduce operational costs by retrenching staff, reducing production or close down.
Without an extension, the loan repayment moratorium will end in September this year for SMEs in Malaysia.