Microfinancing efforts give hope to SMEs

KUCHING: Microfinancing efforts introduced by the Perikatan Nasional-led government in its stimulus packages provide a ray of hope for businesses, particularly small and medium enterprises (SMEs), which depend on these financing options to survive, expand or even seek new opportunities for growth.

Sara Nadia Suib, director of Sarawak-based Mariadra Beauty, said the government’s efforts in giving out microfinancing had given hope to SMEs affected by the global economic slowdown.

“These microfinancing efforts have given small businesses an outlet to regain and sustain during this slowdown period,” she told The Borneo Post.

“Many businesses nationwide have been affected by the Covid-19 pandemic. Many have lost prospective sales planned for the year 2020, while those depending on physical stores have either slowed and even closed down.

“These companies were given chances by the availability of these microfinancing initiatives that had led them to upgrade from the brick and mortar establishments to click and mortar.”

Sara said due to this pandemic, some businesses may have even pivoted to a more technological stance so that they could become more relevant to the digital age.

“This move has greatly opened the eyes of traditional businesses all over Malaysia which mostly have adopted a new way of trading, knowing that society needs less physical contact to purchase goods within this period of time,” she observed.

Fellow beauty business entrepreneur Sulie Abell feels the same way about these microfinancing initiatives.

Her business assists rural farmers in her home village of Simanggang, Sri Aman, by contracting them to grow organic produce to be turned into skincare products under her brand name of Sluvi & Co.

“I am one of the business owners in Kuching who was affected, but we managed to survive after pivoting our business model,” she revealed.

“As an entrepreneur in Sarawak, I am blessed with all these microfinancing opportunities by the government.

“At least with the financial help, our small businesses can survive and recover from the pandemic.

“Then, we can go back to doing our business routine as usual,” she said.

Before the pandemic, Sulie said it was a common practice for SMEs like hers to participate in bazaars to create brand awareness, expand their customer base and boost sales.

However, all these have changed due to the pandemic, and entrepreneurs had to change their business models to suit to today’s pace of life with movement control orders (MCO) and standard operating procedures (SOPs) and social distancing in place.

“I feel bad to see fellow business owners with business activities at their rental shops like beauty salons and spas,” she mentioned.

“They are facing difficulties in paying rental fees where there is no steady income. These kind of businesses were affected greatly because of the tight MCO and SOPs as customers avoid coming to minimise contact. Eventually, they have to close shops.

“These microfinancing efforts can help them to restart or resume their businesses with new business model, parallel to the current situation.”

Sara from Mariadra Beauty thanked the government for doing its part in ensuring sustainability and growth of SMEs especially during these difficult times.

She said more exposure should be presented to SMEs who were still unaware of the available medium and opportunities to upgrade their businesses to digital.

“Reaching out to these businesses may be a lot challenging, but a proper education would help these businesses to prosper as it would lead to a more progressive and more informed communities of entrepreneurs,” she added.

A boon for employees

Microfinancing efforts can reduce unemployment and boost job creation as a category of financial services targeting individuals and small businesses who lack access to conventional banking and related services,.

Newday Pharmacy chief pharmacist Eileen Lau commented that the government’s microfinancing has helped the small and medium enterprises (SMEs) by subsiding employers with financial aid for part of their employees’ salaries.

“This, in turn, has reduced the possibility of employee retrenchment during the downturn of the economy during this Covid-19 pandemic,” she told The Borneo Post.

“On top of that, certain microfinancing packages encourage the employers to take in new employees by providing subsidies for the salaries of new workers.

“This is crucial as we slowly recover from the economic impact of the pandemic – by keeping unemployment rate among fresh graduates, retrenched employees, and even individuals above certain age group, as low as possible.”

Lau said businesses across all sectors were affected one way or another, with the tourism and event management industries taking the hardest hit from the pandemic since traveling and event organising have been limited or restricted for a prolonged period of time.

“These microfinancing packages and measures from the government are definitely of great help to all industries during these trying times,” she added.

“For any SMEs, financial aid will almost, all the time, be the backbone of the business operation. The financial aid from the government is surely a measure worthy to be praised.”