COVID-19 is threatening people’s health worldwide, but the damage done in the economic sector is also a silent killer. SMEs from Romania reported that the turnover dropped with 80% in the last 30 days. 72% of the companies don’t have an emergency plan to survive, while only 17% reported that the epidemic didn’t affected their businesses. For Roma business situation might be more grim than this. How many Roma owned SME’s can continue the activity and generate income by working from home? Yet to be answered. 8/10 Roma entrepreneurs are running small businesses that generate income just to feed the family, and most of them are being in segregated areas (villages or peripheral areas of towns). Also, it’s good to know that the first measures to save SME’s were submitted to the government.
Most companies in Romania do not have a risk strategy for situations such as the coronavirus epidemic. This is shown by the results of a barometer performed at the FACTORY 4.0 conference command. According to the research results, over 70% of the 300 companies surveyed expect negative economic consequences, from supply problems to price increases and financial blockages.
The epidemic of COVID-19 represents an unprecedented test for the Romanian economy, which is largely unprepared for such a situation. Beyond the fact that the epidemic has led to the closure of many Chinese factories, the spread of coronavirus in Europe, in countries such as Italy, one of our main trading partners, is likely to generate significant bottlenecks in the economic chain.
According to the barometer Factory 4.0 & Frames, 72% of investors said they did not have a risk plan for such a situation, while only 11% said they had developed a business continuity plan.
Even if the country is not yet in quarantine and no lockdown measures are in place, only 17% said that the epidemic, for the moment, does not affect their business.
Many of the Romanian companies do not have enough stocks to cover a possible syncopation on the supply chain from suppliers and this can have very serious consequences in carrying out the operations. The lack of managerial plans to respond to crisis situations, the weak digitalization of the operational processes of production and business that allow the remote control of the processes or the telemuncture, as well as the lack of financial reserves for such situations present on a large scale in the economy, are likely to lead to late payments and financial deadlock. The consequences are inevitable – suspension of activity, non-payment of wages, insolvency, etc.
Marius Hărătău – General Manager Industrial Academy
The National Council of SMEs in Romania requests economic support for the impact of COVID-19
SMEs are calling for rapid action by public institutions to avoid the crisis
As a result of intensifying the effects of COVID-19 in Europe and the measures taken to limit the spread, the National Council of SMEs in Romania (CNIPMMR) has received a number of information from its members that already indicate a growing impact on certain sectors of the economy, especially for SMEs. .
CNIPMMR welcomes the first efforts made by the public authorities through responsible communication actions, but I think that there is a need for rapid action in several areas:
1. The use of financial instruments to ensure liquidity and to provide working capital by using existing state aid rules. The possibilities are offered by the de minimis regulations or the rescue and restructuring schemes.
2. The allocation of available funds from the financial framework 2014-2020 to the provision of working capital to SMEs.
3. Creating mechanisms to provide assistance to SMEs in difficulty.
4. Orientation of Romania’s budget towards immediate investments in the economy by modifying the legislation on public procurement to allow SMEs to have easier access.
5. Modification of legislation on the Labor Code and flexibility of the legislative framework: temporary work, work from home, tele-work, etc.
6. Offering facilities by extending the deadlines with the payment of taxes and social contributions.
7. Operationalization of tools specific to the areas in difficulty at the moment:
– Immediate offer of holiday vouchers,
– Rethinking the schemes for exhibitions and fairs and providing working capital for SMEs that carry out export activities,
– Granting subsidies for the payment of salaries in the field of transport;
HOW TO ECONOMICLY TREAT THE CORONAVIRUS EPIDEMY
According to experts from Frames, given that the restrictive measures imposed by the authorities (transport, events, etc.) tend to tighten locally and internationally, and worldwide consumption is already showing the first signs of decline, the Romanian companies must take urgent precautionary measures.
The epidemic of COVID-19 represents a significant test for the world economy, one that, unlike the SARS episode, is now much more interconnected, with China as the main player on international trade chains. Increasing supply problems, especially from China, the world’s leading exporter, significant fluctuations in resource tariffs, such as oil, gas, copper, etc., are likely to generate the prospects for a potential crisis, accentuated by the significant drop in consumption. worldwide, the main economic engine
According to the experts, the precautionary measures aim, first and foremost, to provide a financial buffer that will allow companies to meet the challenges in the payment chain. Thus, the Romanian companies must monitor their expenses more closely, reduce the average duration of the receivables, which will be transposed proportionally to the decrease of the payment terms of the suppliers.
Another viable measure is the unlocking of money from non-core business assets, such as land, warehouses, commercial spaces, vehicles or equipment for secondary functions.
The emphasis on the economic effects of the COVID-19 epidemic is likely to trigger the entry into a new investment cycle, in which many businesses will insist on digitizing services, on innovation, on Industry 4.0. In an increasingly connected global economic environment, the difference between profit and loss will be made by the know-how, the knowledge that managers, employees of companies have regarding digitization, automation of production and services, to counteract effectively. situations such as climate change, pandemics, etc.
Sources: bursa.ro, factory40.ro, cnipmmr.ro, capital.ro, zf.ro. Photo: factory40.ro