Set up green lane to address labour shortage, govt urged
17 Oct 2022 10:24am
National Recovery Council (NRC) member Datuk Kang Hua Keong - BERNAMA photo
NRC member Datuk Kang Hua Keong said most SMEs were facing difficulties in demand, liquidity issues and revenues and all these have severely affected their ability to function.
"I highlighted two main topics during the council meeting - labour shortage and financial issues facing SMEs. During the two-year lockdown, I always communicated with the government on how we could help the SMEs in facing financial challenges as their workers were laid off and companies were unable to pay their employees’ salaries.”
Kang expressed hope that the government could come out with a policy to assist SMEs to survive bankruptcy and disruption in operations.
At a media briefing on Friday, Kang said most SMEs faced legal action as soon as the government announced the resumption of all economic sectors’ operations.
"It is the council’s hope that the government can come out with a policy to overcome legal action taken against SMEs who are facing financial difficulty in terms of loan repayment. At least, provide them with a one or two years cooling period as this will aid them to recover, albeit slowly,” he said.
"There have been lots of reports on companies going bankrupt during the pandemic, with financial institutions taking legal action against those who were not able to pay back. Until today, many businesses are still facing cash flow issues while some have received bankruptcy notices as there is no policy plan to back them up,” Kang said.
The problems of cash flow and SME financing have been the main focus of NRC.
The Entrepreneur Development and Cooperatives Ministry (Kuskop) in a report based on Firms’ Recovery From Covid-19 in Malaysia, Business Pulse Survey, February-March 2022, stated that 39 per cent of firms in Malaysia had cash that could last them less than one month while 23 per cent faced problems with overdue payments.
The report also said 75 per cent encountered delayed payments by customers while 11 per cent had filed for incapacity to make a repayment (insolvency).
Kang added that the council had submitted two recommendations to the government to deal with SMEs’ cash flow and financial problems through the establishment of a Special Action Committee On The Issue Of Cash Flow Constraints and Financing under Kuskop.
"The council also recommended that banks be given permission to proceed with rescheduling programme or financing restructuring (moratorium) for SMEs,” Kang said.
On the supply side, he said SMEs experienced a significant reduction in the foreign workforce as most of them had gone back to their countries following the lockdowns.
Kang also said the problem of labour shortages in various sectors especially plantations saw losses amounting to almost RM20 billion in 2021.
The council was informed that some 1,152,276 foreign workers' quota applications were received for all sectors until September 2022. However, only 467,223 (40.5 per cent) had been approved.
"Until Sept 12, 2022, only 76,000 foreign workers have been brought into the country,” he said, adding that the supply chains were interrupted leading to shortages of parts and intermediate goods and services.
Kang said the government should provide blanket approval for the labour force. For example, applications for foreign workers should get at least 50 per cent approved by the relevant authorities without delay.
In this respect, he said a one-stop centre to reduce bureaucracy and expedite approvals should be established so that SMEs could operate and slowly recover from the aftermath of the pandemic.
Kang added that political instability has affected the process of recovery in this country, with many policies still not being able to be implemented due to the change in the government.
Hence, the government’s policy is needed as a platform for businesses to recover and to help boost the country’s economy.
"We are not really relying on financial assistance but we (SMEs) are looking more for policies or measures that can help address the labour shortage and other financial issues. If these are addressed, only then can the SMEs move forward,” he added. - BERNAMA
