MaGIC Survey: Startups, Social Enterprises Need Support to Ride Out Covid-19 Impact
By Digital News Asia March 27, 2020
- Less than 3% expect to survive beyond 12 months if current situation persists
- MaGIC to help entrepreneurs leverage existing incentives, push capacity building
About 40% of startups and social enterprises may fold if the Covid-19 pandemic drags on until Hari Raya Aidilfitri. This was part of the findings from a survey conducted by Malaysian Global Innovation and Creativity Centre (MaGIC) over a four-day period from March 19 to 22.
Some 239 startups and social enterprises from various industries, including Education, IT Solutions, Merchandising, Food & Beverage, Tourism, Agriculture and Healthcare, took part in the survey.
In the survey, 15.9% of respondents said they will not be able to sustain for more than a month if the current situation persists, while another 24.7% said they would not be able to survive more than two months. Almost half (46.4%) of the startups and social enterprises surveyed said they were able to sustain for the next three to six months, while only 2.9% are confident of surviving if the present scenario continues for more than 12 months.
Dzuleira Abu Bakar, chief executive officer of MaGIC said financial aid would greatly ease the cash flow burden of startups and social enterprises.
77% of those surveyed are heavily impacted by the movement control order, particularly those in the industries of Education and Learning, Food and Beverages, Digital/ IT Solutions, Media, Merchandising and Tourism.
“We also asked them what assistance they urgently need, and not surprisingly, a majority have requested some form of financial aid,” said Dzuleira, who presented key highlights of the survey to senior management of the ministry on March 25.
According to the survey, some 35.1% said they needed loans, while another 23.8% asked for grants or subsidies and 3.8% asked for deferment in repayments. She applauded Bank Negara’s announcement on March 24 regarding a moratorium on loans for a period of six months, adding that any further assistance such as additional grants or loans which can be utilised for purposes of growing the business and setting off operational expenses, would be greatly appreciated.
“I am sure many are relieved with the loan moratorium which will help their cash flow position,” she said.
“Given the cut of the statutory reserve requirement (SRR) from 3% to 2% by Bank Negara effective March 20, which should add about US$3.27 billion (RM14.4 billion) worth of liquidity into the banking system, hopefully, the banks will be able to set aside some of this liquidity for startups and social enterprises.”
Interestingly, while many respondents sought for financial aid, a large majority (74.9%) was unaware or unsure of the various support instruments or incentives available during this period. Only 12.1% were aware and eligible for the COVID-19 Special Relief Facility by Bank Negara and MyCIF P2P by Securities Commissions.
Dzuleira said MaGIC will help entrepreneurs to leverage on existing incentives, foster networking opportunities while pushing on with its capacity building initiatives.
Initiatives to Foster Networking and Financial Opportunities
While many surveyed highlighted the need for some form of financial assistance to tide over the economic uncertainty, 20.1% highlighted a need for assistance in marketing, business matching and market access, as well as capacity or capability-building programmes.
“MaGIC is ready to help them promote the concept of social enterprises among corporates and assist them to open up new markets either locally or overseas through digital and e-Commerce platforms.
“We are also ready to provide entrepreneurs with networking opportunities and business matching with other startups so that they can pool resources,” said Dzuleira.
Capacity Building To Continue
MaGIC is also offering a five-month rental waiver of its coworking spaces in Cyberjaya and Kuching, to help ease the cash flow of entrepreneurs.
“At MaGIC, our programmes are tailored to build high economic and social impact. In these challenging times, it is imperative that we have a vibrant and sustainable ecosystem for startups and social enterprises to ensure they soldier on and thrive,” Dzuleira said.
As such, MaGIC continues to facilitate startups in capacity building programmes during the Covid-19 pandemic and Movement Control Order by enabling e-learning. Two bootcamps in May will now be hosted on online platforms, while two more bootcamps in June may also be carried out online.
Online sessions held in April will be free of charge.
A full list of online programmes is available on MaGic’s website