MEDAC TO SPUR THE GROWTH OF MALAYSIA’S ENTREPRENEURIAL ECOSYSTEM

What comes to mind when you hear the word entrepreneur? To us it is a person who is fearless, tireless, relentless and resilient in the face of adversity.

The COVID-19 pandemic that has wrecked industries globally has brought these qualities to the forefront. The challenges and obstacles that have rained on the entrepreneurial landscape have been unprecedented. However, these trying times have proven to be an incredible learning experience for novice and established entrepreneurs alike.

In Malaysia, entrepreneurs have shown tenacity in spades. Rising up, against the odds and despite the pandemic.

More than 280,000 new enterprises have mushroomed just last year, far outpacing the number of businesses that have shuttered, at 32,469. For those who have just begun or for those surviving on, adapting their business models to suit these challenging times will be a must.

In order to ensure entrepreneurs continue their resilience during this pandemic and beyond, the Ministry of Entrepreneur Development and Cooperatives (MEDAC) has extended a hand of support towards local businesses.

In line with the National Entrepreneurship Policy 2030 (NEP 2030), MEDAC has also rolled out a string of initiatives and measures to spur the growth of a holistic and conducive entrepreneurial ecosystem that will champion the nation’s inclusive, competitive and sustainable entrepreneurship development agenda.

Challenges Faced by Malaysian SMEs and How MEDAC Seeks To Address Them

“When the COVID-19 pandemic hit, we knew outreach would be paramount. We conducted a series of online surveys, to provide us with a good overview of the predicaments faced by Small and medium-sized enterprises (SMEs). The results have helped us tremendously in planning and implementing more effective measures that have been critical for the survival of affected SMEs,” said the MEDAC Minister Dato’ Dr. Haji Wan Junaidi Tuanku Jaafar.

MEDAC’s survey found that:

Micro and informal entrepreneurs were the hardest hit
When the Movement Control Order (MCO3.0) was implemented, 3.15% of businesses permanently closed down their operations, 80% of entrepreneurs were severely hit and many have seen their cash flow decrease by more than 50%.
50% of Micro SMEs can only survive for three months, if the MCO is prolonged.
Businesses have reduced their number of workers as one of the cost-cutting measures with an overall 48.89% of workers being retrenched.
Entrepreneurs are experiencing a decline in their social & mental wellbeing, where they have developed anxiety, depression including loss of interest in their business.

In order to reduce the impact the pandemic has caused businesses, MEDAC has undertaken a number of measures to support business recovery and sustainability. Furthermore, in seeing the importance digitalisation has on businesses during the pandemic, MEDAC is pushing to narrow the digital divide through programmes that will foster digital usage, encourage innovations, increase e-payment adoption and many more advancements. These programmes will serve as an enabler, facilitating, and supporting micro-enterprises to embark on the digital transformation of their businesses.

In terms of healthcare, the Ministry is also mulling over the idea of prioritising COVID-19 vaccinations among entrepreneurs, especially for small hawkers and trades, as they are one of the most critically affected by the pandemic.

Collaborating with the National Population and Family Development Board (LPPKN), MEDAC will be providing the necessary support for socially and mentally affected entrepreneurs. This will present affected entrepreneurs a channel to share their problems with the suitable organisation through counselling.

In the long run, MEDAC will be looking at improving the regulatory framework or guidelines holistically for home-based businesses, a sector that is viewed as a new high potential economic opportunity. On top of that, a medium and long-term recovery action plan will be put in place, based on the Government’s National Recovery Plan (Phase 2 and Phase 3) , and specific budget allocation under the 12 Malaysia Plan (RMK-12).

Key initiatives that MEDAC has introduced and are currently pursuing in 2021

Moving forward from recovery measures in 2020, MEDAC has devised a new strategy, the Five Es approach. Namely Enculture, Enable, Empower, Energise and Engage for its focus in 2021.

MEDAC aims to promote better access to financing, digitalisation, grants for entrepreneurs, as well as upskilling and upscaling through training and mentoring opportunities, and other entrepreneurship programmes offered by MEDAC agencies.

“We will be utilising the special allocation of RM100 million to support MSMEs, especially micro and informal businesses in the non-essential sectors,” explained the MEDAC minister.

This allocation will be used for the ‘First to Close and Last to Open’ (FCLO) Programme to benefit entrepreneurs in the sub-services sector. The programme will include advisory services and structured negotiations, coaching and mentoring, training and hand-holding, financing and monitoring.

Furthermore, the Ministry will also be introducing the MEDAC 2021 Strategic Plan, the Malaysian Cooperative Transformation Plan 2021 – 2025 (TransKOM), and implementing new programmes under the Phase 2 of the Entrepreneur and Cooperative Recovery Plan (ECRP).

The MEDAC 2021 Strategic Plan is a one year plan, with an agenda of developing the inclusive, sustainable and competitive development of Malaysia’s entrepreneurial ecosystem. As of 31st May 2021, a total of 77 programmes have been implemented, benefitting over 24,580 entrepreneurs.

Meanwhile, through TransKOM, the Ministry aims to provide greater benefits to boost the wellbeing of the community, as well as establish a standard for competitiveness and sustainability. In addition to that, MEDAC will also be lending its support to transform the Malaysian Cooperative Institute (IKM) into a higher education institution that specialises in cooperative education and entrepreneurship.

700 Million Moratorium and Targeted Assistance for SMEs

In collaboration with the agencies under MEDAC, namely Bank Rakyat, SME Bank, TEKUN Nasional, SME Corp., Perbadanan Nasional Berhad (PERNAS), Cooperatives Commission of Malaysia (SKM) and UDA Holdings, the Ministry will be providing a moratorium of over RM700 million and targeted assistance for SMEs

“With this moratorium, we aim to benefit a total of 734, 707 borrowers and tenants of agencies, severely affected by the MCO 3.0”, said the MEDAC Minister.

By providing these assistance and support, MEDAC hopes that businesses are able to recover and achieve better resilience, preventing further business shutdowns and bankruptcy.

Finally, the Minster added “My advice to SMEs out there is to reach out to MEDAC via the website (www.medac.gov.my) or My Assist MSME (https://myassist-msme.gov.my/). Take advantage of the available supporting measures from the Government and learn how it can benefit your business. I also encourage businesses to take up digitalisation, and build their resilience, in the face of challenges.”

Through all these measures, MEDAC hopes more businesses will come forward and take up digitalisation as part of their business practice, as it will remain critical in the post-COVID-19 era.