KUALA LUMPUR, April 7 – The government’s additional RM10 billion stimulus package for the small and medium-sized enterprises (SMEs) is comprehensive and will certainly go a long way in reducing the pains suffered by many entrepreneurs in the hard-hit sector, according to academicians.
University Malaya Faculty of Business and Accounting Prof Dr Mohd Nazari Ismail said the government has little choice but to extend assistance as many SME businesses are currently mired in trouble following the imposition of nationwide Movement Control Order (MCO) due to COVID-19 pandemic.
“If they are not helped, then the unemployment rate will be too high and it will cause many social and economic problems.
“Politically also, the government has to come up with this package in order to be in the good books of voters,” he told Bernama.
However, he noted this latest move will further add to the future economic burden and believed the government might eventually have to change the tax collection system, which may see the re-introduction of the Good and Services Tax (GST).
But even the re-introduction of GST he said, could cause problems because a high tax rate will dampen consumer demand.
“In short, this is only a short-term solution actually. It has long term repercussions down the road which we also need to address.
“Therefore, we also need a long term solution and part of that is we have to make sure that the debt level in our country is reduced in the future so that the country can be better able to absorb economic shocks such as the one we are experiencing now,” added Mohd Nazari.
Meanwhile, University Tun Abdul Razak’s Graduate School of Business lecturer Prof Emeritus Dr Barjoyai Bardai said the extra allocation rolled out by the government should be called ‘Humanitarian” package rather than a stimulus package.
“The grant and the loan package is meant for the microbusiness owners to plan for the next launch of their business.
“This is the time whereby SMEs, especially in the retails sectors and small producers need to re-examine, reflect and plan for a new re-invented business model to survive in the current or perhaps in the future economy when the environment is stable,” he said.
The capital and fund are just one part of the equation said Barjoyai as more importantly the SMEs must come out with a viable business model under the new economic model in tandem with today’s main theme of ‘Social distancing’.
“The challenge now is how to conduct business under a ‘psychological perspective of social distancing’ capitalising the Fourth Industrial Revolution (IR4.0) – as the MCO had actually acted as the catalyst to force us to migrate rapidly into IR4.0,” he added.
Prime Minister Tan Sri Muhyiddin Yassin yesterday announced an additional RM10 billion under the Prihatin Rakyat Economic Stimulus Package (Additional Measures) to aid the struggling SMEs, on top of the RM250 billion allocation unveiled on March 27.
The additional measures include increasing the allocation for the wage subsidy programme announced on March 27 by RM7.9 billion to RM13.8 billion.