Minister warns of imminent collapse of MSME sector that accounts for 40% of GDP if lockdown continues

KUALA LUMPUR (July 7): The Ministry of Entrepreneur Development and Cooperatives (MEDAC) warned today that the micro, small and medium enterprise (MSME) sector – which accounts for close to 40% of Malaysia’s gross domestic product – could collapse, should the current nationwide lockdown continue indefinitely.

Based on a survey conducted by the ministry, an estimated 580,000 businesses or 49% of the MSME sector, are at risk of failing by October, if they are not allowed to resume operations by then.

This would also mean more than seven million Malaysians may lose their jobs. And assuming each worker has an average of two dependents, it would mean some 14 million people will be affected by this situation.

MEDAC minister Datuk Seri Dr Wan Junaidi Tuanku Jaafar (pictured) said the situation is dire and there is an urgent need to come up with the right remedial actions to address the issue.

A failure to resolve the matter would result in a devastating impact to the country’s socio-economic landscape, which will subsequently affect the overall wellbeing and happiness of the rakyat.

“If we don’t do something to help them now, I am worried that many of these MSME will fail and will not be around to help rebuild the economy, once businesses are allowed to open.

“I am also worried that failure of these MSME businesses due to the prolonged lockdown will create a domino effect, hitting societies hard at the core, leading to a more serious social and economic impact,” he said in a statement today.

The survey was conducted between June 15 and 28, aimed at gauging the impact of the Movement Control Order 3.0 (MCO 3.0) on the entrepreneurship landscape.

A total of 6,664 respondents nationwide took part in the survey, which found that many businesses are suffering from “business fatigue” syndrome and declining confidence as a result of the lockdown.

One-third of respondents said they did not receive the various assistance introduced by the government.

The survey also found that mental issues were also among areas of concern, as nearly 60% of entrepreneurs were suffering from at least one form of mental health condition amid the lockdown.

Top three factors affecting their mental health include the decline and loss of income, debt and financing issues, as well as risk of business closure.

Many entrepreneurs are concerned about their future, thus contributing to higher stress levels, which affect their mental wellbeing.

“The impact of the lockdown is not only affecting the economic aspect but also the social aspect as well. I am concerned that the longer businesses are not allowed to operate, the longer it will take to recover.

“People are becoming increasingly unhappy. They are unhappy because of financial issues, as well as not being able to socialise. It is time we look at other holistic measures on how to deal with this, other than lockdown,” added Wan Junaidi.

Get the latest news @ www.EdgeProp.my

Subscribe to our Telegram channel for the latest stories and updates 

Click here for more property stories