Two-thirds of small and medium enterprises do not see their business surviving beyond this year, under the circumstances brought about by the COVID-19 pandemic, according to “shocking” survey results.
The biggest concern of 230 businesses that participated in a survey by the Malta Chamber of SMEs is the low sales levels (26%). This concern was followed by worries about cashflow (17%), and difficulty in collecting payments (15%).
Asked how long they think their business can survive in the current situation, taking into consideration the government’s aid, only a third said they believe they will last longer than 12 months.
A total of 13% said they will only last three months, while another 28% hope they will survive until summer.
A further 27% believe they will survive up to 12 months. According to deputy president Marcel Mizzi, this is among the most worrying feedback by businesses.
Addressing the media on Thursday, Mizzi said the results of the yearly survey, which was carried out between January 18 and 24 were shocking.
He warned that unless businesses continued to be supported, several enterprises will not survive.
He added that increased bank charges, red tape and new fines imposed by the government, among others, could spell the death for some.
The chamber’s president Paul Abela also sounded the alarm.
Chamber of SMEs survey results'Several ready to buy out Maltese businesses'
Calling on banks and the government to continue supporting businesses, he warned of “several sharks abroad ready to pounce and buy out Maltese businesses”.
He urged businesses to be brave and face the challenges, criticising the recent government decision to put the onus of public health guidelines on self-service owners.
On Wednesday, Prime Minister Robert Abela said inspectors from the Malta Tourism Authority would be inspecting rental accommodation and warned operators that they must ensure that no more people than allowed by their licence are staying at their premises.
Robert Abela said there would be fines and added he believed the measures were "balanced".
But, on Thursday, Paul Abela said this was “madness”.
Are owners expected to sit outside the farmhouse and check how many are indoors?
“Owners provide a service, and it is up to the service providers to follow the rules. Are owners expected to sit outside the farmhouse and check how many are indoors,” he asked.
The president said the chamber will hold discussions with the government about solutions for businesses: "we are not saying that the situation is disastrous and there is nothing to do. We need to sit around a table to find the solutions.”
Chamber of SMEs survey results'Extend bank moratorium'
According to the survey results, three-fourths of businesses did not make use of the bank moratorium on repayment of bank loans, however, nearly one of 10 respondents are still using this facility.
Half of them believe they will need this aid for another year.
CEO Abigail Mamo expressed concern about what will happen to these businesses unless the moratorium is extended further.
“The future looks murky - there is no visibility - and businesses cannot plan ahead,” she said, insisting businesses could not have another year of uncertainty.
Asked about the government's decision to delay the distribution of the €100 vouchers, Mamo said the chamber believed that handing out the vouchers now could backfire.
“Health and commerce should go hand-in-hand, and we see little scope for their distribution at a time when people are scared to go out.
“At the same time, if they do go out, the number of COVID-19 cases could increase. We can afford to wait a little bit.”
File photo: Times of MaltaChristmas season
While a quarter of businesses were satisfied or very satisfied with their Christmas turnover, when asked how their business fared compared to the previous year, 38% said they saw a drop of 50% or more in sales, while another 18% saw a decline of 18%.
In numbers
- 82% saw a decrease in sales in 2020 over 2019
- Two-fifths said their sales decreased by 50% or more
- Nearly one out of every five linked improvement in their sales to online presence
- A quarter blamed the effects of the pandemic to a drop in sales
- Another 15% linked it to a decrease in customer spending power
Who are the respondents?
A quarter of respondents are retail businesses, while a fifth are business to business enterprises. Another 15% are linked to the imports industry, and a further 9% are businesses that provide wholesale services.
Most rely on the tourism industry, followed by the personal care and the arts and entertainment sectors. Nearly half employ up to nine people.
While 44% of the respondents were ordered to close to help curb the pandemic, another 8% decided to close even though they had not been asked to.
Two-thirds of businesses are currently benefiting from the government’s wage supplement. Some 69% of those receiving this supplement believe their business will need this support for at least another year. A quarter would need it for another six months.