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Monday, May 04, 2020, 12:39
SMEs in ASEAN get help in difficult times
By Prime Sarmiento in Hong Kong
Monday, May 04, 2020, 12:39 By Prime Sarmiento in Hong Kong

COVID-19 control measures in Southeast Asia test small businesses’ capacity to cope

Filipina entrepreneur Pacita Juan is relieved that she and her partners had the foresight to develop an e-commerce site for their organic-products retail chain.

The founder and chairwoman of ECHOstore said the online shop keeps her business afloat at a time when the novel coronavirus outbreak has pushed the government to lock down the capital region of metropolitan Manila.

But the higher online sales cannot compensate for the losses the company has incurred from the shutdown of all its physical outlets in mid-March under the Philippine government’s enhanced community quarantine measures.

Juan has also had to spend more for her business, since the absence of public transportation has compelled her to provide free shuttle service for employees who are part of the company’s e-commerce site.

“This will hit our annual revenues badly — maybe down by 75 to 80 percent, because we have had to close all the stores located in malls,” she said.

Juan’s plight reflects how the lockdown in Southeast Asia continues to challenge the owners of small and medium-sized enterprises. The situation is especially acute in countries that are enforcing social-distancing measures to help curb the further spread of COVID-19.

Brunei, Indonesia, Laos, Malaysia, the Philippines, Thailand, Singapore and Vietnam have enforced either a partial or total lockdown to contain the outbreak. 

With shopping malls and most public facilities closed, and customers forced to stay at home to avoid a spike in infections that could overwhelm healthcare systems, SMEs are barely coping.

Some, like Juan, are trying to get by with online shops and home deliveries, while others have been forced to retrench their staff amid a lack of revenue.

“Businesses are suffering as there are very few physical transactions, and so a lot of SMEs need subsidies to pay wages to weather these difficult times,” said Oh Ei Sun, a senior fellow at the Singapore Institute of International Affairs.

Oh said this has had a significant impact on the regional economy, since SMEs account for a huge percentage of each country’s GDP and are among the biggest employers in Southeast Asia.

SMEs also contribute more than 40 percent of the gross value added and 10 to 30 percent of the Association of Southeast Asian Nations’ (ASEAN) export revenues. Most SMEs are also involved in the retail, trade and services sectors — businesses that have suffered the most from the lockdown.

ASEAN governments have recognized the predicament that businesses face and have rolled out fiscal stimulus packages that include subsidies for SMEs.

In Singapore, the government has issued a comprehensive suite of measures to support businesses, including SMEs, according to Lawrence Low, the director of the Centre for Governance, Institutions and Organisations at National University of Singapore.

He cited a job support program under which the government will co-fund the first S$4,600 ($3,240) for nine months for every local employee.

To help with their cash flow, SMEs will also get a corporate tax rebate of 25 percent, capped at S$15,000 per enterprise, he said.

The government will also provide credit of S$1 million, with 90 percent government risk share, to SMEs under an enterprise financing program.

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