Guan Eng reminds finance minister SMEs will collapse if remain shut for another month

KUALA LUMPUR — DAP’s Lim Guan Eng again warned about the inevitable collapse of small and medium businesses if they are forced to remain shut for another month, as he urged the government to reopen the economy fully by October.

Lim called for an immediate injection of RM45 billion in additional relief spending, and also urged Putrajaya to force banks to waive interest on loans placed under the three-month moratorium to support businesses, workers and the health services.

“Zafrul has confirmed our previous assertions that there is ample liquidity in the RM1.3 billion domestic debt market that the Federal government can tap into,” Lim the Member of Parliament for Bagan, said in a statement this afternoon.

Small, micro and medium businesses have been hit hard by Covid-19 containment measures, suffering a total loss of RM40.7 billion last year, according to then Entrepreneur Development and Cooperatives Minister Datuk Seri Wan Junaidi Tuanku Jaafar.

Wan Junaidi said some 580,000 businesses, representing 49 per cent of the SME sector, are at risk of failing by October if they are not allowed to operate by then.

“In other words, there is only one month left before the government must fully reopen the economy or else the SME sector will collapse,” Lim said, although he questioned if this is possible daily deaths and infections remain.

Up 330 Covid-19 related deaths were reported yesterday alone and 19,378 daily cases. The cumulative deaths now stood at 17,521 and daily infections getting close to the two million mark, at 1,805,382 infections total.

Close to a million SMEs account for 98.5 per cent of all business establishments and employ 7.3 million Malaysians in 2020, constituting 48.0 per cent of the national employment.

Lim said a three months’ interest waiver on loans and an additional RM45 billion fund injection could help to counteract the anticipated unfavourable business conditions in light of the severe and prolonged Covid-19 pandemic.

“The government must loosen fiscal restraints as well as shift from the old economic orthodoxy, of financial band-aid with occasional “one-off” assistance, to the regular, periodic, and recurrent payments to pull the country out of this once in a lifetime economic recession,” he said – MALAY MAIL

Interest waivers, fiscal injection, regular handouts only way out – Guan Eng

DAP has urged the government to implement a slew of measures to help small and medium enterprises (SME) stay afloat following warnings that nearly half of SMEs risk failing by October if they are not allowed to operate.

In July, the Entrepreneur Development and Cooperatives Ministry (Medac) had warned that 49 percent or 580,000 SMEs are at risk of failing if they cannot resume business by next month.

The Medac minister at the time, Wan Junaidi Tuanku Jaafar, said this will lead to the retrenchment of about seven million workers.

A solution, said Lim, was for the government to loosen fiscal constraints and help businesses regularly.

“The government must shift from the old economic orthodoxy of financial band-aids with occasional ‘one-off’ assistance, to regular, periodic and recurrent payments to pull the country out of this once in a lifetime economic recession,” he said.

Lim also repeated DAP’s suggestion of a three-month waiver of interest during the bank loan moratorium period and an additional RM45 billion direct fiscal injection.

Meanwhile, Lim said Finance Minister Tengku Zafrul Abdul Aziz has “finally accepted reality” by proposing to raise the statutory debt limit to 65 percent, up from 60 percent currently, of GDP.

“The new government has no choice but to do so, following the disastrous failure of the previous prime minister Muhyiddin Yassin to overcome both the Covid-19 pandemic and economic crisis that has destroyed countless lives and livelihoods,” said Lim.

In November last year, Zafrul said a 60 percent debt ceiling was “still sufficient”. However, as the Covid-19 pandemic got worse this year, Zafrul said he will propose raising the debt ceiling to 65 percent.

During the Najib Abdul Razak administration, the debt ceiling was set at 55 percent. It was “temporarily” raised last year by the Muhyiddin administration. MKINI