A cat strolls past closed shops lining Jalan Masjid India in Kuala Lumpur April 2, 2020. — Picture by Firdaus Latif
KUALA LUMPUR, June 23 — The number one reason given by a total of 6,291 out of 6,294 companies that ceased operations between 2018 to May 2022 cited an inability to pay off debts for their closure, according to the latest statistics report on the Insolvency Department’s website.
The number of companies that were either forced or voluntarily registered to cease operations within the same period stood at 11,234 cases, the report showed.
Almost half of these or 3,086 businesses were in trading, whether wholesale or retail.
The other top two sectors were the financial services, insurance, property and investment amounting to 832 shuttered businesses; and construction with 820 companies closed since 2018.
Most of the businesses that were forced to shut down were based in the three Federal Territories of Kuala Lumpur, Putrajaya and Labuan (2,368), followed by Selangor (1,465).
Altogether they made up almost 61 per cent of all companies in the country that were forced to register their closure.
In a news report published today, Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) small and medium enterprises committee chairman Koong Lin Loong told The Star that it should not be assumed that these companies ceased operations due to bankruptcy.
“Some might have wanted to cut down their operating costs so they reduced the number of outlets; or maybe they started small businesses during the movement control order, so now that they can continue with their previous jobs, they decided to close down (those) businesses,” he reportedly said.
He also explained that ACCCIM had identified four main issues affecting businesses in a previous survey: shortage of labour and supply chain disruptions, increases in prices of raw materials, high operating costs and cash flow issues, and changes in consumer behaviour.
He advised businesses to take advantage of government assistance wherever possible, such as the wage subsidy programme, to reduce unnecessary expenses as part of a short-term measure.
“In the medium term, businesses have to explore and utilise digital technology and automation; examine their products and services to eliminate those with low margins and low demand in order to increase their cash flow with their existing resources; and analyse the efficiency of their human resources and machinery,” he was quoted as saying.