Koong Lin Loong, Chairman, SMEs Committee, The Associated Chinese Chambers of Commerce and Industry of Malaysia, and Managing Partner, Reanda LLKG International Chartered Accountants, in Sin Chew Daily (May 30, 2020)
Summary by Alan Yang Gregory
Malaysia is slowly reopening its economy. But after such trauma, how can companies recover?
While the central bank has announced a six-month grace period to help SMEs with loan repayments, by October their cashflow will tighten up. Even if the economy recovers, Malaysians should be prepared to maintain social distancing in the medium and long term. This would make it impossible for companies to return to where they were before Covid-19.
While the situation may appear bleak, there are four things companies should do to prepare:
First, companies should reformulate a one-year financial budget for after this crisis, considering how to reduce fixed costs such as rent and salaries, while trying to maintain their original income and develop more sources of revenue. Second, companies should try and change their working methods (to video conferencing, for example), re-examine their products and services, and optimize productivity. Third, companies should focus on whether their services and products are truly in demand now. Society may need new things. Finally, companies should conduct mid- to long-term analysis of the productivity of employees, machinery and operating models.
Companies should also make good use of the tax incentives and allowances granted by the state to protect cashflow during this difficult period. Furthermore, the government should use this crisis to reform completely the domestic business environment to be more pro-business by reducing bureaucratic procedures, eliminating corruption and attracting investment. This would build a good foundation in the event of another wave of the pandemic.
This crisis has affected many companies, and some will not survive. There is no need to be pessimistic, however. This will pass and normality will return. In the meantime, companies should focus on reducing costs and protecting cashflow. After all, there is there is no such thing as outdated businesses, just outdated thinking.