Unrestricted thoughts - Stimulus for SMEs


  • Corporate News
  • Tuesday, 07 Apr 2020

Carrying out his oath, the medic applies a gauze to stop the blood from sprouting out from the wound. There are other medicines the medic will be using later to stabilise the soldier but in essence, this is what is happening around the world. The government, like the medic, is not going to conduct a full diagnosis of the economic health and needs of the SMEs. It is going to do what it can to tide things through. What it wants to avoid is massive unemployment. It knows that as companies fold, people will be out of a job. And that will make it more difficult and costly to fix things.

IMAGINE a battlefield where bullets are whizzing around and a fallen soldier cries out for a medic.

Up comes the medic, disregarding his personal safety to tend to the wounds of the soldier.

Carrying out his oath, the medic applies a gauze to stop the blood from sprouting out from the wound. There are other medicines the medic will be using later to stabilise the soldier but in essence, this is what is happening around the world.

We have seen governments do what they can and think what they need to do to stop the economic carnage from economies wrecked by the Covid-19 outbreak.

All indications are that the economic and unemployment numbers in the next few months will look horrific.

Bank Negara too in its early assessment of the situation in Malaysia feels that a recession is almost unavoidable with the risks tilting heavily to one.

In fact, there is a possibility of deflation, which is going to make it bad for economies.

If the episode of economic weakness is temporary, then all the economic difficulties will be short. If it drags on, and it can, then there is going to be much pain.

What the government did yesterday by giving out an additional RM10bil with the focus of the extra stimulus for SMEs, was to help companies weather the initial shock.

The government, like the medic, is not going to conduct a full diagnosis of the economic health and needs of the SMEs. It is going to do what it can to tide things through.

What it wants to avoid is massive unemployment. It knows that as companies fold, people will be out of a job. And that will make it more difficult and costly to fix things.

It agreed to spend RM7.9bil more to RM13.8bil to help companies in the hope these companies are able to keep its workforce afloat.

It also allowed companies to start discussions with their labour unions and workers on the harsher realities of working on a temporary pay cut or even grant no-pay leave.

The measures to help SMEs even saw the government asking landlords to grant rent relief with that sacrifice being offset by taxes later on.

It made available interest-free loans up to RM2.1bil and will give RM3,000 to 700,000 micro SMEs, a crucial move to help the most vulnerable.

There were other measures and SMEs were generally grateful for the aid being given by the government.

Sure, there are grouses from the SMEs that they would like to see more being done but the government now is like the medic tending to the wounds of the SMEs.

As that is being done, what is most important for businesses is for the movement control order (MCO) to be lifted.

That will allow companies to fire up their businesses again and get cashflow going.

But very few are expecting things to return to normal once the MCO is lifted. Maybe the government will stagger the lifting in places least affected by Covid-19.

Doing so for the whole country at once is not advisable as that will precipitate the virus spread to flare up again if things are not kept in check. Conditions returning to normal should be done in a controlled and staggered manner.

Only then will the patient – the economy – will be released from hospital in good health for a recovery.

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