China Daily Global Weekly

SMEs in ASEAN get help in difficult times

COVID-19 control measures in Southeast Asia test small businesses’ capacity to cope

- By PRIME SARMIENTO in Hong Kong prime@chinadaily­

Filipina entreprene­ur Pacita Juan is relieved that she and her partners had the foresight to develop an e-commerce site for their organic-products retail chain.

The founder and chairwoman of ECHOstore said the online shop keeps her business afloat at a time when the novel coronaviru­s outbreak has pushed the government to lock down the capital region of metropolit­an Manila.

But the higher online sales cannot compensate for the losses the company has incurred from the shutdown of all its physical outlets in mid-March under the Philippine government’s enhanced community quarantine measures.

Juan has also had to spend more for her business, since the absence of public transporta­tion has compelled her to provide free shuttle service for employees who are part of the company’s e-commerce site.

“This will hit our annual revenues badly — maybe down by 75 to 80 percent, because we have had to close all the stores located in malls,” she said.

Juan’s plight reflects how the lockdown in Southeast Asia continues to challenge the owners of small and medium-sized enterprise­s. The situation is especially acute in countries that are enforcing social-distancing measures to help curb the further spread of COVID-19.

Brunei, Indonesia, Laos, Malaysia, the Philippine­s, Thailand, Singapore and Vietnam have enforced either a partial or total lockdown to contain the outbreak.

With shopping malls and most public facilities closed, and customers forced to stay at home to avoid a spike in infections that could overwhelm healthcare systems, SMEs are barely coping.

Some, like Juan, are trying to get by with online shops and home deliveries, while others have been forced to retrench their staff amid a lack of revenue.

“Businesses are suffering as there are very few physical transactio­ns, and so a lot of SMEs need subsidies to pay wages to weather these difficult times,” said Oh Ei Sun, a senior fellow at the Singapore Institute of

Internatio­nal Affairs.

Oh said this has had a significan­t impact on the regional economy, since SMEs account for a huge percentage of each country’s GDP and are among the biggest employers in Southeast Asia.

SMEs also contribute more than 40 percent of the gross value added and 10 to 30 percent of the Associatio­n of Southeast Asian Nations’ (ASEAN) export revenues. Most SMEs are also involved in the retail, trade and services sectors — businesses that have suffered the most from the lockdown.

ASEAN government­s have recognized the predicamen­t that businesses face and have rolled out fiscal stimulus packages that include subsidies for SMEs.

In Singapore, the government has issued a comprehens­ive suite of measures to support businesses, including SMEs, according to Lawrence Low, the director of the Centre for Governance, Institutio­ns and Organisati­ons at National University of Singapore.

He cited a job support program under which the government will cofund the first S$4,600 ($3,240) for nine months for every local employee.

To help with their cash flow, SMEs will also get a corporate tax rebate of 25 percent, capped at S$15,000 per enterprise, he said.

The government will also provide credit of S$1 million, with 90 percent government risk share, to SMEs under an enterprise financing program.

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