THE government’s recently announced stimulus package has been greeted with joy, particularly by the B40 (lower income) group. However, the government must urgently also consider small and medium enterprises (SMEs).
Today, a large part of our GDP hinges on the productivity of half a million SMEs that are already struggling, saddled with debts and cash flow problems. These companies are not allowed to cut staff salary even though employees receive benefits from the stimulus package while staying at home. This obviously poses a great burden for many SMEs.
In principle, the companies can claim reimbursement of up to RM600 for every staff member for three months. To be eligible, the business has to have had a 50% dip in earnings since January 2020 – yet the most affected period for these companies is from mid-February to April and beyond. That means few companies will be eligible to receive this reimbursement.
Since SMEs today account for a large part of our GDP, this segment must be helped to sustain the economy now and in the future. Do not ever overlook this aspect. If SMEs were to fail, the vicious cycle of losing jobs and income and, subsequently, purchasing power will set off long-term repercussions that will affect everyone. Con-versely, with jobs and income saved, liquidity will return.
It does not need a Keynesian theorist to understand that the flow of money will stimulate demand. A single RM1 changing hands 10 times is equivalent to RM10 of goods and services.
This is how the economy should be revived. Tackle the medium-term aspect by saving SMEs, which will, in turn, save jobs. Not to take a short-term view, given the size of this stimulus package, it should have the coverage for the government to look beyond the critical period, a period far beyond the Covid-19 outbreak.
TAN SRI LEE LAM THYE
Kuala Lumpur
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