40% of startups may fold if Covid-19 prolongs till Raya, says survey

The survey involved those from various industries, including education, IT solutions and food & beverages.

PETALING JAYA: A government agency that helps the development of startups and social enterprises today warned that 40% of such companies may fold if the Covid-19 pandemic drags on until Hari Raya Aidilfitri, which comes at the end of May.

The Malaysian Global Innovation and Creativity Centre (MaGIC) said this was based on a recent survey it conducted.

The survey saw some 239 respondents from various industries, including education, IT solutions and food & beverages.

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, or 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 a year.

MaGIC chief executive officer Dzuleira Abu Bakar also said 77% of those surveyed were heavily impacted by the movement control order (MCO), particularly those in the education, food and beverages, digital and IT solutions, media, merchandising and tourism industries.

The MCO, which was initially scheduled to end on March 31, was yesterday extended to April 14.

A pie chart of the survey.

“We also asked them what assistance they urgently need and, not surprisingly, a majority have requested some form of financial aid,” she said in a statement.

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 went on to say that while the majority surveyed wanted 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, Dzuleira said, was prepared to help them in opening up new markets, either locally or overseas, through digital and eCommerce platforms.

“We are also ready to provide entrepreneurs with networking opportunities and business matching with other startups so that they can pool resources.”

Dzuleira said the survey also found that while many respondents sought financial aid, 74.9% were 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 the central bank and MyCIF P2P by the Securities Commissions.