MEDAC: MSMEs suffered RM40.7b losses in 2020

Datuk Seri Wan Junaidi Tuanku Jaafar cautioned that some 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.

KUALA LUMPUR: The micro, small & medium enterprises sustained RM40.70b losses in 2020 due to nationwide lockdown to curb the Covid-19 pandemic, the Ministry of Entrepreneur Development and Cooperatives (Medac) said.

Medac said on Thursday based on the Statistics Department’s latest data, the MSME sector’s GDP contribution shrank more than 7% on-year to decline to RM512.80bil from RM553.50bil in 2019.

“This is an anomaly as, for the past 15 years, the growth of MSME is always higher than non-MSME,” said its minister Datuk Seri Dr Wan Junaidi Tuanku Jaafar, who described this as the biggest ever losses incurred by the MSME sector.

Based on the current 1.15 million registered MSME nationwide, he said the losses would mean each MSME suffered an average drop in earnings of RM35,000 for 2020.

“Lockdown is no longer the answer to the problem. We have to accept the fact that we need to live with Covid and find a balanced solution for this.

“That is why my ministry has proposed an enhanced SOP so that we are able to speed up the reopening of economic activities, particularly those in non-essential category,” he said.

Dr Wan Junaidi cautioned that some 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.

These businesses are mainly in the first-to-close, last-to-open (FCLO) category providing non-essential products and services such as spa and wellness, entertainment, event management, sports and fitness, beauty and grooming and many more.

Based on the findings of Medac’s survey, he said more than 70% of entrepreneurs are in the B40 category, with very little savings and do not have any employment benefit.

“More than 90% of these entrepreneurs have no insurance and 70% have no safety nets to fall back on should they lose their jobs,” he said.

On Tuesday, Medac had submitted to the government a proposed enhanced SOPs to help speed up the opening of businesses, particularly those in the FCLO category, safely.

The enhanced SOPs proposed focuses on six economic activities, which are in food and beverages (F&B dine-in), shopping malls, watches shop, pedicure and manicure (grooming services), beauty parlour/salon and barber/hair salon.

Almost half of the business activities are owned by women entrepreneurs, among the groups most affected by the nationwide lockdown.

Tight restrictions to curb the spread of the Covid-19 pandemic have also impacted SMEs.

The SOPs entail a comprehensive set of guidelines from handling of customers, managing staff, operating hours as well premises maintenance to ensure all comply to the post Covid-19 safety requirements.

Among the mandatory procedures proposed:

i) Business owners and workers must complete the two doses of Covid-19 vaccination jabs;

ii) Business owners and workers must go for weekly Covid-19 tests and;

iii) Immediate closure of premises, for sanitisation purposes, should there be any Covid-19 case.