Pandemic Hit Chinese Firms Facing Cash Crunch 80pc Don T Have Enough To Last Six Months

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Customers pack food to go at an eatery in Kuala Lumpur March 24, 2020. — Picture by Miera Zulyana

KUALA LUMPUR, Mar 15 — Most local Chinese businesses and industries have insufficient cash flow to cover operations, inventory and staff costs for the next six months as the prolonged Covid-19 pandemic and movement curbs took a heavy toll on revenue.
The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) said today up to 80 per cent of its members reported alarmingly low levels of cash reserves, prompting concerns that many could be forced to fold by June if conditions fail to improve.
Credit and cash flow were among the main concerns of the coronavirus crisis, as supply disruptions and dampened demand made businesses more expensive to maintain, according to the ACCCIM’s latest survey that covers the second half of 2020 and 2021’s first quarter outlook.
“3Cs (Cost, Credit, Cash flow) were rated by 74.4 per cent respondents as their top concern under the prolonged impact of the pandemic, which has caused different magnitudes of demand retrenchment and supply disruptions as well as movement restrictions,” the chamber said in a statement to announce the survey’s findings.
“80.7 per cent of respondents indicated that their current cash flow level is unable to cover business operations/productions, raw materials/inventory and manpower for more than six months,” it added.
Businesses, still reeling from the domestic Covid-19 outbreak that exploded in the first quarter of last year, were pounded by yet another round of lockdown at the start of 2021 as public health authorities scrambled to contain a so-called third wave of the disease.
The ACCCIM said nearly half of total respondents had experienced worse business conditions in the second half of 2020, when restrictions in the country were far looser than in the first half
Only 26.9 per cent of respondents said they experienced better business conditions in the same period.
The National Security Council imposed travel restrictions under a second movement control order that began January 13 and lasted over a month.
While the second MCO was far more lax than the previous one, it still caused concerns that economic recovery could be severely hampered.
The ACCCIM said more than half of respondents in its survey were cautious about the country’s recovery prospects. Only 20.6 per cent gave a positive outlook. Those who felt the situation would worsen accounted for six percentage points more.
“While it is reckoned that the accelerated vaccination holds the key for economic recovery, the survey results revealed that businesses tread cautiously about economic prospects in 2021,” the chamber said.
Expectations for improvement were better for the second half of 2021 compared to the first on the hope that a higher share of the population could be vaccinated by then, with a fifth of respondents anticipating better economic prospects in the second half.
Only 9.5 per cent felt business conditions will improve in the first half of 2021, while a fifth more expected situation could worsen in the second half. Most respondents felt the prospects for recovery would be better by 2022.
“A large number of respondents (60.2 per cent) in medium enterprises and large enterprises (53.6 per cent) forecast better economic prospects in 2022, followed by small enterprises (41.2 per cent) and micro enterprises (39 per cent),” the chamber said.
Prime Minister Tan Sri Muhyiddin Yassin unveiled over RM300 billion in relief packages last year along with a record federal budget mostly dedicated to mitigate the effects of Covid-19 crisis, spur growth and aid economic recovery.
The ACCCIM had said it hopes that both the federal and state governments will continue to provide aid.
“Businesses need meaningful not piecemeal plans,” the chamber’s statement said.
“As soon as economic and business activities have returned to normalcy, our political leaders must play an active part in shaping a vision for the economy and investment so that businesses can once again have the confidence to invest now and for the future.” - malaymail

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