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Implemented in some countries to curb the infection

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implemented in some countries to curb the infection rate of Covid-19 had ground much economicactivity to a halt, with almost all tourists deterred from visiting, many events cancelled, and shops,
4restaurants and other venues struggling as people stay at home. While these measures may havecontributed to the successful of controlling the spread of virus, but at the same time thoserestrictions have hit business operations hard.The predictions varied on how deep or long-lasting that the economic impact will be dueto the heightened uncertainties. The challenge faced by Small and Medium Enterprises (SMEs)during Covid-19 is they are being affected on both the demand and supply side. On the supplyside, most companies experience a reduction in thelabor’s supply, as workers are unwell or needto look after children or other dependents while schools are closed, and movements of peopleare restricted. On the demand side, a dramatic and sudden loss of demand and revenue for SMEsseverely affects their ability to function and causes severe liquidity shortages. Furthermore,consumers experience loss of income, fear of contagion and heightened uncertainty, which inturn reduces spending and consumption.According to an online survey by the SME Association of Malaysia, only 37.8% havesufficient cash flow to sustain themselves through April 2020. The survey also indicated that SMEshave taken several measures in March to cope with the downturn in business including cuttingdown manpower-related costs, seeking cheaper raw material supply, as well as putting expansionplans on hold.During the Covid-19 outbreak, millions of workers are stranded far from their jobs whilethe workplaces were short-handed with workers.Because of the widespread low market demand,many SMEs in many industries are facing shortage in the capital chain and they have found thatreopening only means they continue to pay rent and salaries without revenue. Therefore, manyemployees are forced to take unpaid leave, or a pay cut or even face dismissal which can furtherreduce demand. The widespread outbreak, mass quarantine, and travel ban also had an impacton the confidence of both domestic business and international companies, according to a surveyof 761 business owners by the University of International Business and Economics in mid-February. Most of the business in the study fit the SMEs’s definition in China. The most challengingissue reported was the company’s cash flow. 30 percent reported that their company cash onhand could sustain their business for not more than three months and half of the businessexpected 10-30 percent loss of revenue this year.The longer the delay in returning to work, the bigger the impact on investor confidenceand consumer confidence. This could lead to largescale closures of SMEs. The increased
5unemployment rate will in turn further suppress demand and investment. The delay of factoryrecovery to full-capacity production will certainly have a significant impact on the exports and

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Term
Fall
Professor
NoProfessor
Tags
Business, Severe acute respiratory syndrome, SME

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