After SMEs, would the bigger boys get help?

  • Nation
  • Tuesday, 07 Apr 2020

ANYONE earning less than RM4,000 in small and medium enterprises (SMEs) should have little to complain about.

The additional RM10bil stimulus package indirectly helps them keep their jobs for the next three months.

The RM1,200 wage subsidy per month for the next three months essentially incentivises a large number of SMEs to retain their workers.

The majority of SMEs are those employing less than 75 workers and they make up some 70% of the workforce in employment.

On average, they pay their workers a basic salary of between RM2,000 and RM3,000.

The workers get additional income from overtime and other claims.

Before the RM10bil additional stimulus package, most would have let their workers go.

This is because they face cash flow problems due to the inability to operate their business as usual in the last three weeks.

They expect the situation to continue for another two to three months, depending on how the world copes with the Covid-19 pandemic.

With the latest announcement of a RM1,200 wage subsidy per month, it gives them a good reason to retain their workers, which is what the government wants to see.

In the first stimulus package of RM250bil, the government effectively put money into the hands of the people directly.

It was a combination of direct financial assistance of up to RM1,600 and a reprieve from paying their loans and hire purchase instalments for six months.

However, it did not assure them their jobs.

Those employed in events management companies, for example, did not have much work to do for some time now since the outbreak.

The second stimulus helps employers in a large segment of SMEs to keep their workers.

If after this latest package, the employer decides to let go their workers, it is probably due to a change in the business model after the pandemic.

Now that the grouses of the SMEs are addressed to a large extent, the big businesses that employ more than 200 workers should also be given attention.

Some of the big Malaysian brands that employ thousands of locals are affected by the standstill in the economy and will not benefit from the stimulus packages.

For instance, a local hypermarket chain such as Mydin will not benefit much from the first and second stimulus packages.

It employs 10,000 workers, hence will only get some RM600 wage subsidy from the government.

On top of that, it has to continue paying all the benefits for employees.

Mydin’s managing director Datuk Wira Ameer Ali Mydin said that their portion of the EPF contributions amounted to some RM1.3mil per month.

Towards this end, he said some reprieve for employers of big businesses such as exemption from having to pay EPF for the next six months would help them with their cash flow.

“The MNCs have deep pockets and are able to survive this storm.

“Banks will only help big businesses that have certainty of cash flow.

“So exemptions from some payments will go a long way to help big businesses to keep going,” he said.

Apart from measures to help with cash flow, manufacturers are also seeking relief from the government to help resume operations.

Towards this end, the signal coming from the International Trade and Industry Ministry so far is mixed.

A company manufacturing hard disk drives was given the green light to go ahead with operations but confined to 50% of its workforce.

However, the same is not accorded to brewery companies.

Why the differentiation?

The second stimulus package is proof that the government is listening to the woes of the business community.

They probably already have feedback from the big businesses and are likely to come up with more measures in these extraordinary times.

Hopefully, the measures address the woes of all big businesses without discrimination of what they produce. After all, the government gets a slice of tax revenue from their profits, which is revenue that they can do with.

The views expressed here are entirely the writer’s own.

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small and medium enterprises , SMEs


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