‘Macau should live with Covid-19. If not, SMEs will die’

Rui Carreiro

What the government considers helpful for struggling small and medium enterprises (SMEs) might end up being just another burden for business owners, as they are faced with mounting debts and insufficient income to make repayments. 

Several local business owners have said they fear applying for government loans due to the unpredictable state of Covid-19 in Macau.

Amid the economic fallout caused by the pandemic, the government has launched a new set of support measures for struggling SMEs and low-income residents.

One of the programs – the Bank Credit Interest Rebate Plan for Small and Medium Enterprises – is temporarily open, providing an interest rebate of up to 4% in the form of bank credits to SMEs for three years. Applications for the scheme are open for 12 months. SMEs that have been in operation for less than one year are eligible to apply for an eight-year government loan of up to MOP600,000.

However, as the Covid-19 pandemic continues to threaten local businesses, business owners have expressed to the Times a view that government support is insufficient to keep their businesses viable, and they have had to find alternatives to gain income in order to survive. 

Chief Executive Ho Iat Seng has encouraged workers to adjust their mentality, so as to “try a different profession according to their own aptitudes.”

This comes after local workers have reported difficulties in finding a new career. 

Heeding the CE’s call is Rui Carreiro – a former vegetarian restaurant owner who is now an exclusive barber.

Carreiro told the Times that he had to close the restaurant because of the pandemic’s impact upon Macau. While subsidies were available, an SME loan was not an option for him because he did not want to risk being unable to repay the loan should the return on investment in his business be too low. 

Another factor is Macau’s stringent border measures.  

“The government does not give any funds to SMEs, we need to pay back, it is debt. I don’t know when Covid will end unless Macau lives with it and opens the border,” said Carreiro.

“If we applied for the loan, we only could survive for one year […] The government should help to reduce the rent, as the rent in Macau is too expensive,” the entrepreneur added. 

His vegetarian restaurant paid MOP30,000 per month in rent – a whole month’s profits. 

Currently, his barbershop costs MOP10,000 in rent – which he says is “manageable.” 

“Before the pandemic, we had many customers [and] lots of tourists, from the mainland, Taiwan, Korea and Japan,” Carreiro recalled.

“The border has been closed for two years, and last year many people left Macau. People got fired; the whole crew of [water-based stage production] The House of Dancing Water was closed; and locals don’t spend too much anymore,” he said, suggesting that “Macau should live with Covid-19. If not, SMEs [will] die.”

Cristiana Figueiredo

Another entrepreneur, the former owner of CuppaCoffee Cristiana Figueiredo, said that the pandemic is one of the reasons that she changed her profession. Currently, she is exploring a career in interior design.

Last year, after struggling financially since the start of the Covid-19 pandemic, CuppaCoffee café announced that it would close its doors on December 30.

However, new entrepreneurs bought the business.

Figueiredo said that CuppaCoffee had previously applied for government funds over the past few years. But, amid the pandemic, she decided not to apply for further funds, as she did not want to be left with more debt as sales decreased. 

“Before we needed the business to grow, [and] we could pay it back. But for the last year, to have [less] business [than] you want, and then to get more debt [for] the business, we couldn’t see it was the right policy for us,” Figueiredo said.

The staple coffee shop in Taipa — which has a branch in the Macau Peninsula — has been operating for 14 years. Although the coffee shop mainly catered to locals, the store saw a decline in revenue during the second year of the pandemic.

She said that the store was not getting enough income in the second year of Covid-19 due to many of her regular customers leaving Macau, salary cuts among locals and an increase in the unemployment rate.

“When you work a lot, you want reward for your work. In terms of finances, all the work that I was [doing], it was too much for the reward what I was getting,” she lamented. 

“All the work, all the puzzles, such as license renewals, the issues you need to solve when you have a business, I was not getting enough income,” Figueiredo added.

Macau is implementing a “zero-Covid” strategy, hence border measures remain strict and there is a requirement to quarantine despite being vaccinated – unlike other countries, which are aiming to “live with Covid.”

NelsonRocha

The strategy is one of the reasons why Nelson Rocha, manager and co-owner of Mariazinha, did not apply for an SME loan.

Rocha explained to the Times that Mariazinha catered mostly to locals, with 75% to 80% of its revenue coming from the local community.

However, following the pandemic’s fallout, “we found that a lot of our regular customers don’t come as frequently, or when they come, they don’t spend as much because the middle class is struggling. They had salary cuts by half — or some even got fired — so people are not as keen to go out and spend money,” Rocha said.

“We have been losing money every month. We may [have to] close the restaurant […] soon. If we applied for the loans, we only could keep the business for [another] three to four months,” he said.

The government says that the SME support “will help to enhance the liquidity of SMEs and at the same time effectively reduce their interest burden.”

However, entrepreneurs such as Rocha feel otherwise, due to the burden of repaying debt while having little revenue.

He called on the government to support the workers’ salaries as has happened in other countries, relieve the pressure on small businesses struggling to pay their monthly expenses, and regulate rent increases to reasonable amounts.

According to the Monetary Authority of Macao, in the second half of 2021, new SME credit approved by Macau banks totaled MOP12.1 billion, a drop of 37.5% from the first half of the year.

Since the start of the pandemic, authorities have repeatedly made adjustments to the budget, using some MOP100 billion from the vast local financial reserves to compensate for increased expenses in the form of economic stimulus aimed at countering the impact of the pandemic.