Selangor Journal
— Picture by ALEX HUDSON / UNSPLASH

Most startups, social enterprises unaware of incentives to counter Covid-19

KUALA LUMPUR, March 27 — The majority of startups and social enterprises are unaware or unsure of the various support instruments or incentives available to counter the impact of Covid-19, according to the Malaysian Global Innovation and Creativity Centre (MaGIC).

While many respondents sought financial aid, only 12.1 per cent are aware and eligible for the Covid-19 Special Relief Facility offered by Bank Negara Malaysia (BNM) and MyCIF P2P by the Securities Commission.

This was part of the findings from a survey conducted by MaGIC over a four-day period from March 19, MAGIC said in statement.

The survey also found that about 40 per cent of startups and social enterprises may fold if Covid-19 drags on until the Aidilfitri festival, while only 2.9 per cent are confident of surviving if the present scenario continues for more than 12 months.

Some 239 startups and social enterprises from various industries, including education, IT solutions, merchandising, food & beverage, tourism, agriculture, and healthcare, took part in the survey.

MaGIC chief executive officer Dzuleira Abu Bakar said financial aid would greatly ease the cash flow burden of startups and social enterprises.

She said 77 per cent of those surveyed were heavily impacted by the movement control order (MCO), particularly those in the industries of education and learning, food and beverage, digital/ IT solutions, media, merchandising, and tourism.

“We also asked them what assistance they urgently need, and not surprisingly, a majority have requested some form of financial aid,” she said.

Dzuleira applauded BNM’s announcement on a moratorium on loans for a period of six months, adding that any further assistance such as additional grants or loans could be utilised for purposes of growing the business and setting off operational expenses.

“I am sure many are relieved with the loan moratorium which will help their cash flow position. Given the cut of the statutory reserve requirement (SRR) from 3.0 per cent to 2.0 per cent by BNM, effective March 20, this should add about RM14.4 billion worth of liquidity into the banking system.

“Hopefully, aside from the loan moratorium, the banks will be able to set aside some of this liquidity for startups and social enterprises,” she said.

In the survey, 15.9 per cent of the respondents said they would not be able to sustain for more than a month if the current situation persists, while another 24.7 per cent said they would not be able to survive more than two months.

Almost half (46.4 per cent) of the startups and social enterprises surveyed said they were able to sustain for the next three to six months,

According to the survey, some 35.1 per cent said they needed loans, while another 23.8 per cent sought grants or subsidies and 3.8 per cent asked for deferment in repayments.

Dzuleira said while many surveyed highlighted the need for some form of financial assistance to tide over the economic uncertainty, 20.1 per cent highlighted a need for assistance in marketing, business matching and market access, as well as capacity or capability-building programmes.

“MaGIC is ready to help them promote the concept of social enterprises among corporates and assist them to open up new markets either locally or overseas through digital and eCommerce platforms.

“We are also ready to provide entrepreneurs with networking opportunities and business matching with other startups so that they can pool resources,” she said.

Dzuleira added that MaGIC will help entrepreneurs leverage existing incentives, foster networking opportunities, while pushing on with its capacity building initiatives.

MaGIC is also offering a five-month rental waiver of its co-working spaces in Cyberjaya and Kuching to help ease the cash flow of entrepreneurs.

— Bernama

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