Malaysia's small enterprise sector on brink of collapse, warns minister

The ministry of Entrepreneur Development and Cooperatives Minister Wan Junaidi Tuanku Jaafar (above) announced grim results from a survey conducted at the height of Malaysia's Covid-19 lockdown in June.
The ministry of Entrepreneur Development and Cooperatives Minister Wan Junaidi Tuanku Jaafar (above) announced grim results from a survey conducted at the height of Malaysia's Covid-19 lockdown in June.PHOTO: SINGAPORE INSTITUTE OF INTERNATIONAL AFFAIRS

KUALA LUMPUR - Malaysia's micro, small and medium-sized enterprise (MSME) sector - which makes up two-fifths of the economy - is on the brink of collapse, a Cabinet minister has warned in a plea against a prolonged lockdown.

If the sector collapses, 7 million people could lose their jobs and 14 million dependents affected, according to a survey.

The warning from Entrepreneur Development and Cooperatives Minister Wan Junaidi Tuanku Jaafar came on Wednesday (July 7) when his ministry announced grim results from the survey conducted at the height of the Covid-19 lockdown in June.

The ministry said almost half of the sector - or more than half a million businesses - are at risk of winding up by October if they are not allowed to reopen.

Under Malaysia's Covid-19 exit plan, most businesses will be allowed to reopen only in September or October when the outbreak eases.

The ministry said the closure of these businesses risks putting 7 million people out of job. Assuming each person has two dependents, a total of 14 million will be affected as well. 

"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," Mr Wan Junaidi said in a statement.

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

Mr Wan Junaidi was the second Cabinet minister to speak out against lockdowns, after International Trade and Industries Minister Mohamed Azmin Ali expressed similar sentiments in the past.

Malaysia is losing RM1 billion (S$323 million) a day under the current lockdown, the third since the pandemic started last year. It has been extended indefinitely in most parts of the country until certain threshold levels in case numbers, hospitalisations and vaccinations are met.

A full reopening of the economy is expected only in November at the earliest, but the country is still struggling to transition to Phase 2 of its recovery.

Malaysia recorded more than 7,000 daily infections on both Tuesday and Wednesday, an increase from the average of 6,000 daily cases in the prior week. It needs cases to drop to below 4,000 a day- a number last seen in May- before it can transition to Phase 2.

A coalition of business groups had already warned of mass unemployment if the government persists with its current strategy of indefinitely closing down the economy.

Last week, Datuk Seri Azmin, who is also a Senior Minister in the Cabinet, stressed on the economic damage of lockdowns - a day after the government announced an enhanced lockdown for much of Selangor and Kuala Lumpur, Malaysia's main economic hubs.

Mr Azmin cited a World Health Organisation report that highlighted the impact of lockdowns on low-income groups.

There is currently a white flag campaign which encourages Malaysians in need to hang white flags outside their homes to receive community-mobilised aid, an indication that hunger and unemployment is worsening during the lockdown.