Grim Outlook For Startups If Pandemic Continues Past Hari Raya

With the Covid-19 pandemic continuing its stranglehold on the global economy, many businesses are facing the challenge to sustain.

According to a survey conducted by Malaysian Global Innovation and Creativity Centre (MaGIC), about 40 percent of startups and social enterprises may fold if the global pandemic continues on until Hari Raya Aidilfitri.

The four-day survey was conducted on 239 startups and social enterprises from various industries, including Education, IT Solutions, Merchandising, Food & Beverage, Tourism, Agriculture and Healthcare.

MaGIC chief executive officer Dzuleira Abu Bakar commented that 77 percent of those surveyed are heavily impacted by the movement control order (MCO).

In the survey, 15.9 percent of the startups and social enterprises said they will not be able to sustain for more than a month if the current situation persists, while another 24.7 percent said they would not be able to survive more than two months.

Dzuleira highlighted that a majority of the respondents requested some form of financial aid, of whom 35.1 percent said they needed loans, while another 23.8 percent asked for grants or subsidies and 3.8 percent asked for deferment in repayments.

She commended Bank Negara Malaysia’s latest measures to assist borrowers/customers experiencing temporary financial constraints due to the COVID-19 outbreak.

“I am sure many are relieved with the loan moratorium which will help their cash flow position,” Dzuleira said.

“Given the cut of the statutory reserve requirement (SRR) to 2 percent by Bank Negara effective March 20, should add about RM14.4 billion worth of liquidity into the banking system.”

She hopes the banks will be able to set aside some of this liquidity for startups and social enterprises.

“In addition, MaGIC will help entrepreneurs to leverage on existing incentives, foster networking opportunities while pushing on with its capacity building initiatives,” Dzuleira added.

Though majority surveyed highlighted the need for some form of financial assistance to tide over the economic uncertainty, 20.1 percent need assistance in marketing, business matching and market access, as well as capacity or capability-building programmes.

She said 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.”

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

Their programmes are tailored to build high economic and social impact.

“In these challenging times, it is imperative that we have a vibrant and sustainable ecosystem for startups and social enterprises to ensure they soldier on and thrive,” Dzuleira said.

As such, MaGIC continues to facilitate startups in capacity building programmes during the COVID-19 pandemic and Movement Control Order by enabling e-learning.

Two bootcamps in May will now be hosted on online platforms, while two more bootcamps in June may also be carried out online.

Online sessions held in April will be free of charge.

A full list of online programmes is available on MaGic’s website

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