Majority of Malaysian SMEs Expect Recovery in 2021: Mastercard

  • Impact Study for SMEs finds most well equipped to continue operations through 2021
  • 46% indicated intention to move towards using non-cash options for payment

Malaysian small businesses are facing perhaps their greatest economic challenge since the Asian financial crisis of 1997.

Despite still facing a number of challenges economically, more than two thirds of SMEs in Malaysia expect their businesses to recover from the effects of the pandemic by April, while 80 percent indicated they have sufficient resources to see out the rest of the year, according to the latest Mastercard Impact Study™ for SMEs by Data & Services, Mastercard’s professional services arm that encompasses the company’s offerings beyond the transaction.

452 small business owners were surveyed online in Q4 2020. Topics covered range from feelings, concerns, and confidence about the future as well as priorities for 2021.

The study is part of a series focusing on the sentiment of businesses during Covid-19, found positive levels of optimism among Malaysia’s SMEs. This optimism has been hard-earned, as many businesses have been continuously taking proactive measures to protect against the shocks of the pandemic. According to the survey, 31 percent of Malaysian SMEs were making investments around the period of the survey to ensure they’re prepared for an economic turnaround. Furthermore, over the course of the pandemic, 21 percent established an online presence for their business, and 39 percent enhanced an existing online operation in order to better reach customers.

In fact, between one fifth to one third of the businesses surveyed, depending on their industry, indicated that their operations had returned to pre-pandemic levels, with the manufacturing sector seeing the strongest return to form.

This is despite the fact that Malaysian small businesses are facing what is perhaps their greatest economic challenge since the Asian financial crisis of 1997. When asked about what issues they’ve found most pressing during the pandemic, respondents indicated labor, finance, and sales were their biggest concerns, at 74 percent, 64 percent, and 63 percent respectively.

In terms of support from financial institutions, 85 percent of the respondents felt that assistance from banks has been either good or excellent. When asked about what form of support would be most valuable to their operations, 66 percent of SMEs wanted lower interest rates on loans, while 52 percent wanted extended grace periods on debt repayment. Interestingly, only half of the respondents were fully aware of the extent of the financial support offered by banks, which indicates an opportunity for financial institutions to conduct additional outreach with small businesses to help them better understand their options.

Looking at how businesses expect to grow their operations moving forward, 46 percent indicated an intention to move towards using non-cash options for payments. This is most likely a response to the way in which the pandemic drove a marked shift towards digitalization, as contactless payments became safer for both consumers and employees, and electronic payments saw increased usage for online purchases.

“While there’s no doubt the Malaysian economy has been hit hard by the pandemic, the findings of this report give us cause to have optimism for recovery this year. The fact that so many SMEs have regained stability or are on the path to doing so is a testament to their strength and resolve in adopting new and more digital ways of doing business. Mastercard is working actively to support SMEs and businesses of all sizes as they adapt to a new normal, ensuring that they have the technologies and business insights they need to thrive in an economy that’s becoming ever more digital by the day,” said Perry Ong, Country Manager, Malaysia and Brunei, Mastercard.

Mastercard is committed to supporting businesses accelerate their digital transformation. In January 2021, Mastercard launched the Digital Acceleration for Small Businesses microsite across most of its Asia Pacific websites, including Malaysia, with information and resources on how to digitalize and run businesses more efficiently. 

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