PETALING JAYA: SMEs see the Regional Comprehensive Economic Partnership (RCEP) as a bright spot as it addresses market access issues faced by the community, according to Small and Medium Enterprises Association (Samenta), Central Region chairman Datuk William Ng.
He highlighted that non-tariff barriers will be an issue in the multilateral agreement as always, given the nationalistic movements in many of the participating countries.
“One of the things we hope Miti would work towards is to reduce the non-tariff barriers as soon as possible,” Ng told the media at the ‘Road to Recovery for Malaysian SMEs: The Roles of Cybersecurity’ webinar on Monday.
When asked about heightened competition resulting from the free trade agreement, Ng stated that Malaysia’s SMEs are by and large ready to “take on the world”.
The Samenta chairman elaborated that the community’s biggest issue has always been facilitation, and the government has worked aggressively to address matters related to that.
Furthermore, he pointed out that the country has been a trading nation for many years and has traded with the RCEP participating countries for some time; therefore he does not see any major changes in that regard.
As for the MyDigital and the Malaysia Digital Economy Blueprint (MDEB), Ng commented that this is the first time in many years that the government has put a lot of emphasis on the SMEs’ service sector.
He recommended that SMEs examine the blueprint and look into the areas that the government is focusing on.
“There are several low hanging fruits which the government is looking into and our suggestion is to pivot or realign their businesses along the MDEB, which is the best way for SMEs to benefit from the initiative itself,” said the chairman.
In respect of the RCEP and cybersecurity, Kaspersky’s Southeast Asia general manager, Yeo Siang Tiong, said a lot of the processes involved, such as trade financing and exchange of documents, could be done digitally.
He explained, businesses could see additional connections to suppliers and customers in the region, and in this instance they have to decide on what security posture to adopt, whether to trust every connection or screen everything that is coming through.
Yeo stated that SMEs need to embrace cybersecurity to prepare for such situations.
Meanwhile, Samenta shared the findings of a survey it had conducted in January this year, prior to the reimposition of the movement control order (MCO 2.0), which found 21% of the SMEs whcih responded anticipated business performance to be bad, 54% expected it to be fair and the remaining quarter expected it to be good.
Ng clarified that at the time of the survey, many felt that the vaccine would be fully rolled out by the end of the second quarter of this year.
However, SMEs now understand that the government’s vaccine plan estimates at least 70-80% roll out by end-2021.
With that assumption, the association revealed that 63% of the respondents stated there will be no retrenchment this year, against 7% of those who believed otherwise and the remaining 30% being uncertain.
As for cash reserves, Samenta disclosed that 45% of the respondents stated that they have cash for two months or less while 23% professed that they have sufficient cash for three to four months.
On the whole, the SMEs see sales and market access, cash flow and a higher operating cost as well as finding talent to be the key challenges in 2021.
Ng acknowledged that 2020 was a tough year for SMEs as many shuttered operations and those that are still in business face cash flow issues.
“Many of SMEs are still surviving because the business owners have dug into their own savings to try and sustain their respective businesses.”
Although the survey found that there are some opportunities despite the difficulties from the pandemic, such as the expansion to e-commerce by SMEs that was assisted by the digital matching grant introduced by Malaysia Digital Economy Corporation and Bank Simpanan Nasional, lower financing cost due to the current low-interest rate regime and the signing of the RCEP agreement last November that will foster regional market access.