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CIX 2005 Entrepreneurship

Sem 2, 2019-20
The Covid-19 pandemic has significant implications for Malaysian small
business entrepreneurs. Discuss some of these implications and your
recommendations to the entrepreneurs

Tutorial class :1-2pm (Tuesday)

Lecturer : Profesor Madya Dr. Aida Binti Idris


Prepared by:

Tan Wei Jie 17122477/1

Ng Wai Keat 17160188/1

Chen Wai Chuen 17093182/1

Loo Hui Li 17166826/1


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Table of Content

No Content Page

1 Introduction to Malaysia Covid-19 1

2 Contents 2-4
- Implications for Malaysian small business entrepreneurs
- Recommendations to the entrepreneurs

3 Conclusion 5

4 References 6
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Introduction

The COVID-19 pandemic reached Malaysia in January 2020. The reported cases are still relatively
rare and are mainly limited to imported cases until localized clusters begin to appear in March. The
government of Malaysia declared a "Movement Control Order" (MCO), intended to mitigate the
spread of COVID-19 through social distancing between 18th to 31st March. On 8th May a total of
6,589 cases and 108 deaths. Close to 75 per cent of the patients have recovered. Across the country,
94.4 per cent of the areas are now categorised as green zones. With this MCO, causing many negative
impacts toward Malaysia such as Malaysia unemployment rose to 3.9 per cent in March, many
companies were forced to shut down due to insufficient funds. On April 6, 2020, the Malaysian
government issued 10 billion ringgit (US$2.3 billion) worth of funding to assist small and
medium-sized enterprises (SMEs). This measure was designed to help SMEs manage their cash flow
and to retain employees. However the Covid-19 pandemic has also significant implications for
Malaysian small business entrepreneurs although they have received a lot of aid from the government.
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Implications to Malaysian small business entrepreneurs

1. The startup becomes more vulnerable.


The Covid-19 pandemic will affect the confidence of entreprenuers to start-up their business. The
government had declared the Movement Control Order (MCO) when Malaysia was hit by Covid-19
pandemic and this affected many businesses face losses during this period and even worse some of the
small business entrepreneurs can’t survive. Malaysian Global Innovation and Creativity Centre
(MaGIC) estimated that some 40% of startups will not survive if the Covid-19 crisis continues after
May. These affect the confidence of entrepreneurs that planned to have start-up their small business.
Many entrepreneurs change their personality from risk-taker to risk-averse. Beside that, the creativity
and innovation of entrepreneurs may not have a chance to contribute to the economy. There are an
estimated 3,000 startups in Malaysia which makes up around 0.25% of the 1 million registered
enterprises in Malaysia. This figure is very small compared to Singapore at 9% of startup small
business entrepreneurs. However, this finger will become worse after this issue due to many
entrepreneurs' confidence being destroyed.

Recommendation
Entrepreneurs who plan start-ups post covid-19 need to scan the environment to search the
opportunity carefully. To reform the confidence of entrepreneurs, entrepreneurs might get some
entrepreneurs advisors in Malaysia to provide them with professional advice before start-ups post
Covid-19. Some of the organizations such as SME info, Masjid Amanah Rakyat provide business
directories and programmes for SMEs including infrastructure (premises, licensing), financing,
official advisory services, technology and human capital services. With this professional knowledge
and aid, entrepreneurs will have more confidence to apply their innovation and creativity to contribute
to economic post covid-19 Entrepreneurs also can attend some talks or programmes about how to
start-ups a business post covid-19.
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2. Financial crisis faced by the entrepreneur


Outbreak of COVID-19 forces the entire country to undergo a Movement Control Order (MCO) to
control the disease. This period causes many entrepreneurs that just started up their business to face
difficulty in operating and it will be a nightmare for them to balance their business’s account. For
instance, entrepreneurs that made loans from banks to invest in their businesses will need to repay
their loan and interest no matter how their businesses perform. When there is no income, they are
unable to meet the requirement to repay their debt and lead to insolvency for their businesses. Not
only looking at the financing parts, for those entrepreneurs who made contracts with those dealers and
suppliers, they are unable to break the contract from cancelling the supply of inventories. Thus, they
will be having hard times to commit to the payable for their creditors as they cannot convert those
inventories or products into money in order to fulfill their payment.

Recommendation
In order to help to get over this financial impact, Malaysia’s government has declared a Prihatin SME
Economic Stimulus Package worth RM10 billion to assist SMEs to remain resilient in facing the
COVID-19 crisis. ​There are also some loans that are being introduced by the financial institutions to
help entrepreneurs to cope with their financial difficulties. Although it is just a temporary relief for
entrepreneurs and they need to commit to the repayment’s duty, they should take it to ensure business
can continue operating. Furthermore there will be six-months reprieve on the loan-repayment of
individuals or businessmen which came in to help people that suffered repaying their loans. Corporate
sector could also discuss with the banks to restructure their loan repayment that was suitable for their
business1 and this is important so that the company can continue to operate without receiving pressure
from the financial issues. From the side of the entrepreneurs, they need to change their business
strategies to cope with the situation, either by going through websites or social media. Seizing this
moment, entrepreneurs should acquire knowledge on managing and operating their business through
online and further exploring the customers base.

1
​The Star​, 26 March 2020.
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3. Adaptive and innovative entrepreneurship manage to surge their revenue.


In general , it is undeniable that most of the businesses are currently slumped by the negative impacts
of Covid19 . However , there are some entrepreneurs that manage to adapt to the current situation and
even make their revenue increase. Under MCO, businesses there are non-essential are prohibited to
operate. Following that , the only way that consumers are getting their goods or services now is
through online and that is the opportunity. Suppliers in certain sectors are getting smaller results from
most small businesses that don't digitize their business. In that case , whichever entrepreneur that had
already digitized their business or acted quickly to digitize their business will benefit a lot from the
existing customer base. One of the most obvious businesses that will benefit from the current situation
is classes that are held online. As you can observe yourself that there are a lot of advertisements about
online classes across all the social platforms especially on Facebook. Innovative entrepreneurs who
previously provided their services (class) physically had now transformed to an online platform. This
not only reduces their rental cost but at the same time increases their customer base . Another example
of small business entrepreneurs who will benefit from the current situation are retailers who sell their
products or services across E-commerce platforms. Among all of them, electronic devices retailers
will benefit the most. MCO has changed the lifestyle of Malaysian’s citizen into E-learning and work
from home lifestyle. Following that , electronic devices retailers who had already digitized their
business will fulfil the demand for electronic devices such as smartphones and laptops. In conclusion ,
adaptive and innovative entrepreneurs take these challenges as an opportunity to increase their
revenue.

Recommendation
In order to follow the pace of current business trends, entrepreneurs should take this as an opportunity
to digitize their business which will benefit them in the long run. Small businesses should cooperate
with logistic companies to distribute their products. For example, Lazada has started offering logistics
assistance to help farmers in Malaysia sell their produce on its platform. On their part, customers have
resorted to shopping during the early hours to reserve delivery slots. Besides, the government has
already introduced a few stimulus packages that will benefit small business entrepreneurs. Firstly, the
government through the Micro-credit Scheme (Interest rate capped at two percent) had provided small
businesses with cheap loans and this could be the expenditure to digitize their business. Secondly,
“Telecommunication Service Incentive '' , free internet provided throughout the MCO, is directly
linking everyone to the online platform. With everything being digitized, this could be a huge chance
for entrepreneurs who are adaptive and innovative. In conclusion , Covid19 just speeds up the
digitization process and whichever entrepreneur fails to follow up the pace will be eliminated.
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Conclusion

In conclusion, the Covid-19 pandemic has significant implications for Malaysian small business
entrepreneurs. The Malaysian government also has taken initiative to combat the economic impact of
Covid-19 pandemic, this supports businesses especially small and medium-sized enterprises (SMEs)
with efforts to help them generate more income. With assistance from the government, entrepreneurs
can overcome all these challenges more easily. Although Covid-19 causes many challenges to
entrepreneurs, however, it is crucial for entrepreneurs to turn all that challenges into opportunities. As
being entrepreneurs, we have to be really creative and take advantage of opportunities, a strongly
developed crisis response capability is required to ensure the efficient management of incidents in
order to minimise those negative impacts.
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References

1. Benedict Leong (23 April 2020) C​OVID-19's Impact on Malaysia's eCommerce Market.​
Retrieved from ​https://janio.asia/articles/ecommerce-online-shopping-malaysia-covid-19/
2. Dorall, Anne (18 June 2019) ​Only 0.25% of Malaysian Companies Are Startups, Industry
Potential Untapped.​ Retrieved from
www.therakyatpost.com/2019/06/18/only-0-25-of-malaysian-companies-are-startups-industry
-potential-untapped/​.
3. Fong, Loh Foon (6 April 2020) ​MaGIC: An Estimated 40% of Local Tech Startups Will Not
Survive If the Covid-19 Crisis Continues after May.​ Retrieved from
www.thestar.com.my/tech/tech-news/2020/04/06/magic-an-estimated-40-of-local-tech-startup
s-will-not-survive-if-the-covid-19-crisis-continues-after-may​.
4. Ayman Falak Medina (15 April 2020) ​Malaysia Provides More Funding for SMEs​ . Retrieved
from ​www.aseanbriefing.com/news/malaysia-provides-funding-smes/.\
5. Mudassir, H. (16 March 2020). ​COVID-19 Will Fuel the Next Wave of Innovation​. Retrieved
from ​https://www.entrepreneur.com/article/347669
6. The Star (26 March 2020) ​Loan Repayment Deferred.​ Retrieved from
https://www.thestar.com.my/news/nation/2020/03/26/loan-repayment-deferred
7. Bernama (29 April 2020) ​SME Entrepreneurs need to seize opportunities offered by the govt
during MCO​. Retrieved from
http://english.astroawani.com/malaysia-news/sme-entrepreneurs-need-seize-opportunities-off
ered-govt-during-mco-240737
8. Sade Dayangku (April 2020) ​The Good, Bad & Ugly: 7 SMEs Reveal Honest Thoughts on the
Economic Stimulus Package.​ Retrieved from
https://vulcanpost.com/694246/economic-stimulus-package-smes-mco-covid-19-malaysia/
9. World Economic Forum.​ How global trade digitization could support COVID-19's economic
rebound.​ Retrieved from
https://www.weforum.org/agenda/2020/04/global-trade-digitization-covid-19-economic-rebou
nd-blockchain-toolkit/
10. EconomicTimes. ​For these 'Covid-proof' businesses, there's no better time to make some
money​. Retrieved from
https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/for-these-covid-proof-busi
nesses-theres-no-better-time-to-make-some-money/articleshow/75256923.cms?from=mdr