In Malaysia, the 2021 budget was announced in the midst of a global contagion and political uncertainty. Finance Minister, Tengku Zafrul states that the Government has made protecting the Rakyat’s lives its utmost priority.
The allocation of RM9.4 billion announced in Budget 2021 will develop the national digital strategy across industry sectors. It is capable of closing the digital gap and helping businesses better equip themselves towards recovery and resilience. During this period, many companies are starved for cash and available credit terms can mean extending their lifespans.
RM1.2 billion is set out for microcredit schemes that would greatly aid more fragile businesses, whose financial resources or credit history would preclude their eligibility for traditional business loans. Seeing as most of them can only survive two months at most without revenue, this would lighten their cash flow burdens.
A business’ cash flow model is a picture of its assets, investments, debts, income and expenditure, projected forward using data points such as overheads, income, inflation, wage rises and interest rates.
These many figures are fast changing given unexpected world events, and cash flow modelling tools allow businesses to have big-picture visibility before it’s too late. They are like the instrument indicators on a vehicle. Businesses must pay attention to them.
By pivoting towards the adoption of digital payments, businesses can increase and speed up cash inflows, via e-payments instead of traditional invoices. The Targeted Assistance and Rehabilitation facility worth RM2 billion under BNM is to be introduced through loans from banking institutions ー a welcome boost that makes funds available to cash-strapped SMEs.
Government stimulus to optimize e-commerce and e-wallets with frictionless spending platforms is at its most critical juncture. Their allocation of RM150 million in training programmes and digital equipment to 100,000 entrepreneurs will quicken adoption under the e-Commerce SME and Micro SME Campaign. E-commerce would enable SMEs to look for business beyond their local borders and expand into international business.
As reported by a research carried out by Ernst & Young in the midst of the pandemic, 53% of SMEs have been disrupted by poor internet connectivity. The Malaysian Communications and Multimedia Commission (MCMC) allocation of RM 7.4 billion to build and upgrade broadband services will contribute to a spur in virtual services whilst meeting the needs of a world digitalising faster each day.
The RM1.5 billion figure is matched by telecommunication companies with benefits such as free data. This means that the estimated 8 million eligible individuals in the B40 category will now have access to e-commerce, spurring the growth of digital transactions and local consumption.
These concerted efforts, when implemented effectively, will continue to support SMEs along their recovery path while fastening the pace of their technological adoption and digitalisation. The government is setting its sights on transforming our economy into one of higher income, sustained through long-term productivity and the use of new technologies such as automation and digitalisation.