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Can SME Survive During the Covid-19 Crisis?

Can SME Survive During the Covid-19 Crisis?

As the implementation of the Movement Control Order (MCO) that has been going on for almost 1 month, it might be extended another month. If the situation is not recovering, it is a worrying issue for many small scale & independent retailers. The affected industries are ranging from hospitality, F&B, retail, entertainment, tourism, real estate, finance and so on. They are expected to shut down in the next one or two months because these individual shop owners are most likely to be in negative cash flow due to the MCO.

 

SME Need More Practical Solution From Government

via GIPHY

With their staff wages have taken up about 30% of the retail business expenditure, it is expected up to 15% or approximately 50,000 stores to cease operations in the next 6-8 months, which will be affecting both small and national chains.

While the retailers are not against the MCO because this is a global health issue which affects the whole supply chain, they need a more direct & targeted help from the government out of the RM 250bil stimulus package to help them survive. They are helpless during this situation & unprepared for it, not knowing what to do during this MCO, which is now extended to April 14, and stuck with stocks that were unable to sell. This made them unable to generate enough income to pay salaries.

Applying Bank Loan To Cover Up Expenses

 

Most of the SME retailers occupy shop offices, which the landlords are unlikely to grant free rental or a reduction, unlike mall owners. While even they want to apply for a bank loan to save their companies, they will likely be rejected due to their limited resources. As rent makes up a third of their expenditure, some retailers might have a little room to move as they are only paying service charges but not rental. This happens especially when the industry is facing an oversupply of mall spaces and a weak economy.

We hope the MCO period will be lifted soon to avoid further damage to the economy. As Malaysians, we are encouraged to support the local businesses after the COVID-19 crisis. For now, let’s continue to stay at home & fight the virus to win the war. Be safe, be healthy, be at home.

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The Rock City Property Guru

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