SMEs ‘neglected’ in RM250b stimulus package – Phoong
KOTA KINABALU: Youth and Sports Minister Phoong Jin Zhe has expressed his deep concern on the current situation faced by the small and medium enterprises (SMEs).
Phoong, in a press statement yesterday, claimed that the SMEs especially startups were seriously affected during the Movement Control Order (MCO) period.
He said this despite the federal government had announced a RM250 billion “people-centric” stimulus package where the Prime Minister Tan Sri Muhyiddin Yassin asserted that “no one will be left behind”.
“Yet they neglected the largest group in businesses (nearly 99 per cent)...the small and medium enterprises (SMEs),” he said.
Phoong added that based on SME Association of Malaysia’s survey, more than 70 per cent SMEs interviewed stated they cannot sustain more than four months if the federal government do not come out with policies to assist them and that they will have to cut cost by laying off employees to survive and sustain their enterprises.
“As the Minister of Youth and Sports for Sabah, I received a lot of appeals and requests from youth entrepreneurs because most of these SMEs are operated by them.
“However, youth entrepreneurs do not possess huge amount of cash flow and capital to overcome the market closure and the situation now is only getting worse day by day.
“They are worrying about how to pay salaries and also rentals because not all owners are willing to defer or delay their rental payment, this causes the youth entrepreneurs to have their backs against the walls,” he said.
Furthermore, Malaysian Global Innovation & Creativity Centre’s (MaGIC) research shows that if the crisis remains for a year, 97 per cent of startups will collapse and shut down.
All these passionate and talented youth entrepreneurs will be suffering the most because they do not have an enormous amount of capital and resources to sustain through this storm, he said.
“Unfortunately, in the stimulus package announced by the federal government they are only entitled to borrow loans from the banks by a low interest rate. Moreover, not all SMEs are able and eligible to succeed in applying for these loans.
“Other than that, with many unforeseen circumstances in the economy now these entrepreneurs are doubting to increase their liabilities some more.
“Although the package includes providing RM600 for three months to assist the employers to pay for the salaries of their employees, it does not solve the issue for them.
“Our neighbour, Singapore’s policy is somehow a better solution by solving the problem at its roots. The Singapore government subsidies from 25 per cent to 75 per cent of the employees’ salaries accordingly.
“This is a more relevant policy where we should learn from the Singapore government,” he stressed.
Phoong went on to say that if the federal government neglect these SMEs and continue the “cash is king” mindset inherited from the previous Barisan Nasional era, which is taking a few billion to give cash to the people and not solving the issue at its roots, it will eventually cause a wave of SMEs collapsing and shutting down.
Until then, not only entrepreneurs will suffer but more than 70 per cent of the workforce will face the risk of unemployment due to these SMEs shutting down, he claimed.
“Only the federal government has the ability and capability to asisst. Nevertheless, according to Datuk Seri Mustapa Mohamed, only RM25 billion comes from the government which is 10 per cent of the whole economy stimulus package. The remaining is RM50 billion from Employees Provident Fund (EPF) and RM175 billion from commercial banks.
“This concludes that the economy stimulus package is mainly from the people’s retirement fund and capital from private sectors.
“From this, we can see that the federal government did not put effort into solving the issues by their roots and this Prime Minister is all mouth and no trousers. If majority SMEs and youth entrepreneurs collapse after this, what is the point of having a RM250 billion economy stimulus package.
“I strongly urge the federal government to pick up the responsibility and react quickly to assist these SMEs especially youth enterprises and startups,” said Phoong, who is also DAP Sabah Youth Movement chief.
He also opined that the government should provide assistance in different form such as a tax “holiday” to delay and defer payment of taxes, fully financial assistance to small enterprises and startups.
The solution offered by asking commercial banks to provide loans up to RM100 billion will not help SMEs as it is only a temporary solution for the moment.
“We should seriously look into other solutions such as referring to Singapore’s policy, providing up to 75 per cent salary aid. This is how we can really solve the issues once and for all for SMEs and most importantly youth enterprises that I prioritize the most.
“I hope that all youth entrepreneurs can sustain through this storm and bloom after the MCO and Covid-19 disease is over. All the best to Sabah and Malaysia,” he concluded.