Cash flow constraints, lower sales poser

Datuk Seri Wan Junaidi Tuanku Jaafar

KUCHING: Among the main the challenges that entrepreneurs will face during the movement control order (MCO) 2.0 period are the cash flow constraints and lower sales volume.

The ones that are likely most affected will be the micro and informal business entrepreneurs.

Ministry of Entrepreneur Development and Cooperatives (Medac) called Malaysians to strictly adhere to the SOPs as a measure to drastically and effectively help flatten the curve of Covid-19 spread and would subsequently allow economic activities to operate as usual.

“There is no other way to sugar coat the situation,” said its minister, Datuk Seri Dr Wan Junaidi Tuanku Jaafar on Sunday (Jan 17) in a statement.

“Further extension of the MCO would affect the economy, and those who would be severely hit are the B40 group, including micro and informal business operators,” he pointed out.

While he agreed that many were somewhat prepared for this round of lockdown, the hard truth of the matter was that most of these small businesses had not fully recovered from the blow by the earlier movement restrictions.

The micro and informal business owners mostly do not have the financial muscle to absorb the financial losses due to the lockdown, he added.

“The longer the duration of the lockdown would mean the more these small businesses will suffer,” said Wan Junaidi.

There are close to 2 million microenterprises nationwide, where almost half are informal businesses, the minister stated.

“This is not a small number. It is important to take into consideration how the MCO 2.0 would affect this group of people” he said, adding that the low cash flow and sales volume are due to decline in customer demand and shorter business operation, logistical issues and delays in delivery of raw materials.

Wan Junaidi pointed out that the small businesses would be most affected by cash flow constraints as they do not have much savings to cover the cost of operating the business such as employee salaries, rental and utility bills.

Business activities that are expected to be significantly affected by the second round of MCO and nationwide state of emergency declaration are tourism, agriculture, wholesale as well as retail.

The emergency proclamation may cause unavoidable circumstances that prevent someone from fulfilling a contract, and would result in losses to entrepreneurs.

Investor confidence will have effects on the country’s business landscape, which could potentially result in a domino effect on the stock market as well as foreign direct investments (FDI).

Wan Junaidi said, however, he was optimistic of seeing the positive effects from the current situation namely in terms of increasing demand and supply of products and services online.

A total of 299,431 new businesses had been registered, of which 86,295 were online businesses based on SSM (Suruhanjaya Syarikat Malaysia) report from Jan until Sept 2020, the minister explained.

“We are now living in post Covid-19 era. Lots of things around us are changing and we have to accept and adapt to the new norm. In business, it is all about survival of the fittest,” he said.

He urged entrepreneurs to equip themselves with ne knowledge and skills for business survival and also take advantage of new opportunities.

“We would like to call on entrepreneurs to take full advantage of the various assistance, incentives and programmes made available by Medac and its agencies to remain competitive in today’s challenging business environment,” he added.

“For the informal businesses, we would like to encourage you to register yourselves with the relevant authorities so that we know who you are and we can channel all the available allocations as well as assistance to you,” he concluded.