SMEs, micro firms still need financial help to stay afloat: RAM

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Kuala Lumpur, 22 September 2020 – Small and medium enterprises (SMEs) and micro businesses still need supportive policies to stay afloat, RAM Holdings Bhd’s Business Confidence Survey revealed.

The economy remained fragile with uncertain prospects through the next three months, RAM said.

The overall RAM Business Confidence Index (RAM BCI) for the third quarter of 2020 hit a low of 33.7.

The online survey was conducted between July and August this year.

“This is substantially below the neutral point of 50, and reflects the disruptions plaguing small businesses amid the Covid-19 pandemic.

“Almost 90 per cent of the survey’s respondents cited weak economic conditions as their most significant challenge in the next three months,” it said.

RAM said a targeted approach by the government, based on firm size and sector, was the best way to assist firms.

The BCI survey suggests that the extension of the loan moratorium was most useful to bigger SMEs as they may have heftier loan commitments.

Up to 85 per cent of larger SMEs needed an extension, as opposed to 69 per cent of microenterprises.

However, it said the impact of not having an extension was more detrimental to the latter.

RAM said in terms of the type of assistance needed, a respective 79 per cent and 75 per cent of medium and small firms had indicated the need for wage subsidies to continue, as opposed to 51 per cent of microenterprises.

In contrast, microenterprises expressed their preference for subsidised loan schemes.

RAM said amid the gloom, a silver lining emerged in that the survey had revealed the resilience of SMEs and microenterprises.

Majority of firms surveyed wanted to keep their businesses at status quo instead of scaling down through the next three months.

It also indicates that businesses are hopeful demand will eventually recover in the medium term.

“To this end, we urge policymakers to keep engaging with SMEs and microenterprises.

“They need to understand the specific requirements of and provide the necessary targeted financial aid to SMEs and microenterprises – the backbone of Malaysia’s economy – to tide them over the current crisis,” it said.

-New Straits Times