Covid-19 Crisis Assessments

Targeted Support Needed to Keep Penang’s SMEs Afloat

By Timothy Choy (Senior Analyst), Yeong Pey Jung (Senior Analyst) & Yap Jo-Yee (Analyst)   |   Posted on

Executive Summary

  1. The Covid-19 pandemic brought about the necessary enforcement of a Movement Control Order (MCO) which shuts down the operations of non-essential businesses and services for its duration. Penang’s economy and SMEs have subsequently been facing significant challenges with loss of revenue and the rise of unemployment on the horizon.
  2. All businesses are expected to be hit negatively, with some subsectors expected to fare much worse than others. The key subsectors and industries identified as needing urgent intervention are as follows, in order of priority:
    1. Tourism industry;
    2. Wholesale and retail trade;
    3. Repair of motor vehicles and motorcycles (MSIC: G) and other service activities (MSIC: S);
    4. Real estate activities (MSIC: L);
    5. Construction sector (MSIC: F) and;
    6. Agriculture sector (MSIC: A).
  3. Intervention measures should be considered from the perspective of:
    1. Reducing credit risks;
    2. Reducing high fixed costs, and;
    3. Income replacement.
  4. As for workers, measures need to be taken to support continuous employment, including salary
    compensation. Migrant workers make up a significant proportion of SME employees. Therefore, they need to be included in all forms of worker interventions.