Keeping businesses flowing

Floods are becoming customary in this country. Each year from around November to March (although many claim that it is becoming more erratic these days), Malaysians have come to expect and learned to live with this predicament resulting from the tropical monsoons and arguably, increasing environmental deterioration.

In fact, so accustomed are our local entrepreneurs operating in these flood-prone areas that when the team of MALAYSIA SME™ journalists were recently there to ask these SMEs how they were faring amid the seemingly worrying situation, many simply remarked: “It’s normal (the annual floods). Just close shop for a couple of months and enjoy the holiday!”

Even before the northern states of Kedah, Perlis and Kelantan have barely recovered from the torrential rainfall three months ago, the country had to react swiftly to flooding down south in Johor, notably in Segamat, Johor Baru and Kluang where tens of thousands of residents were evacuated.

As school-going children enjoy the unexpected holidays and workers secretly pleased that the roads to their workplaces were submerged in water, business owners are however forced to put up the shutters until the water subsides.

While the unflustered children dangerously frolic in the surrounding floodwaters and workers assured of their salaries when work resumes, SME owners on the other hand are left to muse over their damaged premises, ruined inventories, and ensuing business sustainability.

Although it is commendable that the government and local authorities are often quick to provide food, medical and monetary assistance to flood victims, there is still an evident lack of prompt and coordinated assistance extended specific to the SME industry in the occurrence of floods in the country. It is a stark contrast to our neighbour Thailand’s remedial action from the same monsoon catastrophe.

Following severe flooding in several parts of the country including the southern province of Songkhla during the same period as its neighbouring Malaysian states, the Small and Medium Enterprise Development Bank of Thailand swiftly handed out financial help to SMEs to spur the recovery of the business sector.

Under a special loan programme intended for the rehabilitation of businesses, the country’s flood hit entrepreneurs received loans for a lower-than-usual fix interest rate along with an extended repayment period. In addition, SMEs did not need to post any collateral and would not have their credit history checked.

Across the border, it took almost two months before their Malaysian counterpart announced that affected businesses would have their outstanding payments of soft loans written off. But this was limited to material and machinery damaged or destroyed in the floods that were financed by micro-credit schemes provided by government agencies.

Similarly, back in 2007 during the destructive floods that hit the country particularly Johor, Malacca, Kelantan, Terengganu and Sabah, the Malaysian government had set up a RM500 million Special Relief Guarantee Facility to assist businesses affected by the floods. SMEs did not need any collateral to obtain loans from the fund while banks were required to grant approvals within two weeks.

Down south, immediately after the recent devastating floods in New South Wales, Queensland, South Australia, Tasmania, Victoria and Western Australia, the Australian government lined up a flood assistance grants to repair direct flood damage to business premises and put forward low-interest loans to fund the repair or replacement of damaged plant and equipment, buildings or goods.

Its banks readily chipped in with various support including allowing business owners to defer home loan repayments for up to three months, restructuring business loans without incurring fees, giving credit card holders an emergency credit limit increase, refinancing personal loans at a discounted fixed rate, and deferring monthly repayments on equipment finance facilities for three months.

The Australian taxation office promised SMEs on fast tracking refunds and allowing them more time to meet their activity statement, income tax and other lodgement obligations. Freight subsidies of up to 50% for primary producers were also allocated for business freight movement including foodstuffs, building materials and restocking of livestock.

In addition, Australian SMEs operating in areas outside of hand-held mobile phone coverage were also entitled to apply for a satellite phone subsidy scheme, designed to ensure that these businesses were able to resume business communication. Employers were provided essential business support such as employees’ salary entitlements, service leave provisions, special leave to support family members, and including community service leave eligibility for employees.

Although Malaysian SMEs’ casual reaction to floods has turned them into highly adaptable entrepreneurs, with increasing global warming supposedly bringing more unpredictable rainfall to this part of the world, it is time we give more emphasis to SMEs’ dilemma when faced with flood tragedies. I strongly do not think that our country can afford for our SMEs to be taking to many annual holidays!

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