KUALA LUMPUR: The micro and small and medium enterprises (MSME), which account for 40% of the country’s GDP, is on the brink of collapse if the restrictions on business operations continue indefinitely.
The Ministry of Entrepreneur Development and Cooperatives (MEDAC) said on Wednesday its recent survey estimated 580,000 businesses, or 49% of the MSME sector, are at risk of failing by October, if they are not allowed to open up their operations by then.
The fallout from the failure of these businesses, which are mostly in the “first to close, last to open (FCLO)” category, would also mean more than seven million Malaysians are expected to be unemployed.
Assuming each worker has an average of two dependents, another 14 million people will be affected.
MEDAC minister Datuk Seri Dr Wan Junaidi Tuanku Jaafar said this was the hard truth that needed to be voiced out so people would realise the dire situation faced by the local MSMEs.
He said there was an urgent need to come up with the right remedial actions to help these MSMEs.
He cautioned failure to resolve the matter would have a devastating impact on the country’s socio-economic landscape, which would subsequently affect the overall wellbeing and happiness of the rakyat.
“If we don’t do something to help them now, I am worried many of these MSME will fail and will not be around to help rebuild the economy once businesses are allowed to open,” he said.
Dr Wan Junaidi said the failure of these MSME businesses due to the prolonged restriction will create a domino effect, hitting the societies hard at the core, leading to a more serious social and economic impact.
MEDAC, on June 15 to June 28, had conducted a survey to gauge the impact of the MCO 3.0 on the entrepreneurship landscape in Malaysia. It recorded 6,664 respondents nationwide.
The survey revealed many businesses are now suffering a “business fatigue” syndrome and declining confidence as a result of lockdown. About one third of the respondents said that they did not receive the various assistance introduce by the government.
The findings of the survey, Dr Wan Junaidi said, included mental issues as nearly 60% of entrepreneurs suffer from at least one form of mental health condition during the lockdown.
The top three factors affecting mental health condition of the entrepreneurs include decline and loss of income, debt and financing issues as well as risk of business closure.
He also said more than 90% of these entrepreneurs have no insurance and 70% have no safety net should they lose their jobs.
“The impact of the lockdown is not only affecting the economic aspect but also the social aspect as well. I am concern the longer businesses are not allowed to operate, the longer it will take to recover.
“People are becoming increasingly unhappy. They are unhappy because of financial issues as well as not being able to socialise. It is time we look at other holistic measures on how to deal with this other than lockdown,” he added.