Malaysian small firms expect difficulty repaying debts: Survey
Talk to suppliers and creditors and seek advice early: CPA Australia senior manager
PETALING JAYA: Malaysia is the only market where businesses are most likely to expect difficulty repaying debts this year, according to the 13th annual CPA Australia Asia-Pacific Small Business Survey 2021-2022.
Based on the survey of more than 300 small businesses in Malaysia from late November to early December 2021, Malaysia is also the only market in the Asia-Pacific where businesses found it difficult to repay debts in 2021 despite government support and loan moratoriums.
“While the government and banks help in very important areas, there were other areas where businesses found paying their debt in 2021 difficult,” said CPA Australia senior manager of business and investment policy (policy & advocacy) Gavan Ord.
“We have seen this in other markets as well, as government support comes off, as loan moratoriums and rental assistance come off. So, once all these Covid-19 supports have come off, people are starting to worry more about their ability to repay their debts.”
Ord encourages businesses to talk to their suppliers and creditors and to seek professional advice early when having difficulty or experiencing cash flow pressure.
“The worst thing that businesses can do is to not ask questions, to not talk to anybody because it turns what potentially a bad situation into worse and limits the options that are available to the business to address such cash flow pressures,” he said.
Moreover, Malaysian small businesses found accessing external finance difficult in 2021 (37%). This relates to accessing new finance which means not just repaying debts to banks but also finding investors.
The top reasons for seeking external finance in Malaysia last year included business survival (54%), covering increasing expenses (41%), and business growth (39%).
Despite perceived difficulty in access, the increase in demand for external finance means businesses needed financial aid to fund growth.
About 60% of Malaysian small businesses expect to grow in 2022, up from 40% in 2021. Additionally, a third of Malaysian small businesses are expected to add new employees this year.
“So it’s a strong rebound in growth sentiment. So that’s a strong positive,” Ord said.
Technology continues to be critical to high-growth small businesses, including a strong focus on innovation and cybersecurity.
Fast-growing small businesses are much more likely to be selling online, receiving payments through new payment technologies, and using social media in a variety of ways, including learning more about existing and potential customers.
On scope for improvement, Ord said the area with the potential for the biggest improvement is investing in technology that enhances profitability.
Information from government agencies such as SME Corp or IT consultants can assist businesses to build a technology stack that will drive business growth, instead of just supporting day-to-day operations.
During the briefing, SME Corp CEO Rizal Nainy shared 28 key programmes and initiatives, including “revitalisation financing” and emergency funding it has lined up to support Malaysian micro, small and medium enterprises in 2022.