In order to curb the spread of COVID-19 that struck nationwide, the government had imposed the Movement Control Order (MCO) on 18th March 2020 till 12th May 2020 (*at the time of writing). However, what stemmed from this economic wise is that the small and medium-sized enterprises (SMEs) were badly affected causing many business owners to shut down their businesses, or layoff staff. Some businesses had also experienced a slowdown at the onset of the pandemic itself due to lack of demand locally and globally. So what is being done to “safe” the day? Agensi Kaunseling dan Pengurusan Kredit (AKPK), an agency set up by Bank Negara Malaysia since 2016 is offering assistance to business owners and employees of SMEs affected by the business slowdown arising from COVID-19 pandemic in Malaysia.
SMEs are crucial in our country’s strategy to become a high-income nation. They contribute about 40% to the country’s Gross Domestic Product (GDP). Unfortunately, the SMEs are now adversely affected following the coronavirus pandemic.
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Laudably, the stimulus package announced by the Prime Minister is a great step to assist SMEs to stay afloat without substantial liabilities and without having to lay off employees. However, Nor Fazleen Zakaria, AKPK’s General Manager of Operations observes that it will take a while before the aid makes a real difference on the ground. While that happens, SMEs may not be able to pay salaries due to lack of sales and possibly closure of businesses. They may resort to use of credit cards to support their fixed costs, and only make minimum payments on the cards when due. The inevitable burden from the loans could be devastating down the road.
As a lead agency that oversees and rehabilitates financially distressed individuals, including sole-proprietors, AKPK is equipped to help individuals manage their money wisely, so that they spend within their means and achieve their financial goals—resulting in a positive lifestyle change.
To achieve this, AKPK outlines five (5) proposals to support financially distressed business owners and employees of SMEs:
Financial review and counselling
- Conduct a thorough review of the individual’s cash flow position to provide practical advice on money management to help control spending and debt management via financial counselling and advise services. During the counselling sessions, options will be made available for individuals to consider in managing their finances better.
Examples of counselling options include:
- recommending a change in lifestyle by reducing certain expenditure (such as entertainment) which is not necessary; and
- in extreme cases, recommending liquidation of assets to allow some extra cash during the difficult period.
AKPK leverages on its strategic partners, including governmental and non-governmental organisations, to offer counselling at workplace. For example, AKPK collaborates with Jabatan Tenaga Kerja Semenanjung Malaysia (JTKSM) and JobsMalaysia to identify new job opportunities for retrenched employees.
Enrolment in Debt Management Programme
- Enrol individuals into AKPK’s personalised programme, DMP, and provide eligible borrowers with solutions to their financial situation. From there, they will be able to reschedule and restructure their various types of loans such as housing, hire purchase and personal as well as any outstanding credit/charge card balances.
AKPK is tasked to proactively help individuals take control of their financial standing and gain peace of mind. Based on our statistics:
- A majority of people (69.9%) who seek help in regaining control of their finances are between 30 to 50 years of age. The remaining is made up of those below 30 years (13.7%) as well as those above 50 years (16.4%).
- Out of the approximately 315,000 individuals enrolled in DMP, 36.8% of them admit that they encountered money problems due to poor financial planning. This fact is a strong indication of the importance of financial education that we hope could create a more resilient household sector as well as a sound and robust banking system.
Delivery of financial education modules
- As the lead agency for financial education in Malaysia, AKPK has financial education modules that can be tailor-made to the needs of SME business owners and employees. Currently, there is the entrepreneurial module that was developed for AKPK’s partner, Amanah Ikhtiar Malaysia (AIM), to educate the ‘sahabat’ of AIM on prudent spending and careful budgeting that has helped them both personally and in business.
There is also a special retrenchment module in view of AKPK’s strong engagement with JTKSM for employees who have been made unemployed.
Voluntary Arrangement (VA) Service
- There is also an additional service called Voluntary Arrangement (VA) pursuant to the Bankruptcy (Amendment) Act 1967. This rescue mechanism acts as a final option for a debtor to negotiate a feasible repayment plan with creditors in order to avoid from being declared a bankrupt. The debtor will appoint a nominee to act as an independent professional to oversee and try to structure a debt arrangement compromise with all the creditors. In this ‘second-chance’ scheme, AKPK acts as a nominee which allows a debtor to enter into an instalment plan as agreed upon by all parties involved.
Lifestyle Change programmes
- Collaborate with the relevant authorities to develop and promote a lifestyle change for the business owners and employees. Over the years, AKPK partners with many governmental and non-government agencies to achieve its objectives in helping financially distressed individuals.
As an agency set up by Bank Negara Malaysia, AKPS’s main services are Financial Education, Financial Counselling and Debt Management Programme. You can obtain more information about AKPK at https://www.akpk.org.my.