MSMEs must maintain good cash flow to survive post-pandemic - Azman Hashim

Azman, who is the chairman of Perdana Leadership Foundation's board of trustees, emphasised this is especially evident during the COVID-19 pandemic when businesses are affected by movement restrictions and the economic climate.

"Cash flow is important for small and big companies, and we can see during the pandemic, big businesses, hotels are closed down because they cannot sustain the business and resulting in asset disposal, thus it is crucial for businesses to look after their cash flow," he said in his welcoming speech at Perdana Leadership Foundation SME Leaders Programme 2022: Knowledge Exchange for Entrepreneurship Excellence here today.

Making his address on global business opportunities for MSMEs, Azman said the Regional Comprehensive Economic Partnership (RCEP), which entered into force on Jan 1, represented a significant advantage for the MSME growth agenda.

"The initial zero tariffs among RCEP nations is already a significant step and could have a tremendous impact on MSMEs," he said.

Meanwhile, Ministry of Entrepreneur Development and Cooperatives secretary general Datuk Suriani Ahmad said that MSMEs must continually upgrade themselves, particularly in terms of skills and knowledge, embrace new technology and adopt innovative business practices in order to sustain growth.

She said the COVID-19 pandemic has brought about compounding challenges for the Malaysian economy and exposed many weaknesses in the domestic entrepreneurship ecosystem and MSMEs are forced to acknowledge that this pandemic has brought about changes in consumer and business culture.

"The pandemic has highlighted the importance of embracing technology and post pandemic, MSMEs need to face the fact that technology and digitalisation are no longer differentiators, but rather necessities, in order to remain relevant and competitive.

"Technology and digital adoption will help accelerate MSME development in embracing new norms in business activities thus helping them to reduce costs, become more efficient and increase productivity," she said during the programme.

Suriani also emphasised that MSMEs are forced to step back, re-evaluate, readjust and reset the way they conduct business, particularly as the pandemic has caused SMEs significant losses due to restricted movement, partial or complete cessation of activities and disruption of the global supply chain, which caused an economic downturn.

"Challenges such as lack of access to working capital and inability to secure credit, poor productivity from inefficient processes, low research and development expenditures, difficulties in adopting technological solutions and lack of access to global market and knowledge networks have created barriers for MSMEs to grow and causing them to stagnate and in the worst-case scenario, lose everything they worked for," she added.

In Malaysia, more than 1.2 million or 97.44 per cent of total businesses in various sectors are MSMEs, generating a significant number of employment at 7.2 million workers and contributing 38.2 per cent to the country's gross domestic product.