Address immediate and long-term viability of SMEs
The Small and Medium Enterprises Association of Malaysia, or SAMENTA, Malaysia’s oldest and largest association of SMEs, hopes that the government will take steps to address urgent issues affecting SMEs in the upcoming Budget 2023.
Datuk William Ng, SAMENTA chairman, said that while cost pressures and labour shortage remain the most urgent issues impacting the recovery of SMEs, longer term challenges such as low productivity, digital displacement, regional competition and ESG compliance must be addressed soonest possible.
“We are hopeful that the government will take both an immediate and long-term view at ensuring our SMEs remain competitive, which in turn will support our national aspiration to regain our status as an ‘Asian Tiger’. This requires more than fiscal intervention, and would need major reform of our economy. But let’s start with Budget 2023,” Ng said.
“In the immediate term, we need to shift governmental intervention from outright grants to tax rebate to encourage better financial discipline among SMEs. The wisdom of teaching our SMEs to fish rather than giving them fishes hold true here.
“For a start, we are asking for a double tax deduction for up to RM1 million per company for YA2023 for capital expenditure to automate businesses, adopt digitalisation and IR4.0 and to comply with ESG standards. This will be on top of expanding the scope of low carbon transition facility to include consulting and training as well as any upgrading of facilities and processes that could lead to higher productivity”, Ng said.
SAMENTA has also included in their wish list a lower tax bracket of 15% for the first RM500,000 taxable income for SMEs, to encourage them to reinvest the savings into growing their businesses.
Long Term Solution
“In the longer term, we need to help our SMEs raise their productivity rapidly to remain competitive in the face of digital displacement and regional competition. With the signing of CPTPP and RCEP, there will be more opportunities for our SMEs, but there will also be increased competition. Hence, we need a focused push, not just ‘encouragement’ to get our SMEs to move up the value chain”, Ng said.
Some of the other wish list of SAMENTA are:
- To address the labour crunch, allow double tax deduction for consulting, training, certification and software to help SMEs adopt ‘productivity-linked wage systems’;
- To reduce the scourge of illegal or overcharging foreign workers agent, to immediately ban and prosecute such agents through available laws such as the Private Employment Agencies Act 1981;
- To allow the use of HRDC levy for the hiring of interns and apprentices, capped at a maximum of RM 1,000 per month for up to 6 months, with no limit to the number of such interns and apprentices;
- To allow foreign students in Malaysia to work a maximum of 20 hours a week in professional services and retail sectors;
- To lower the cost pressures to SMEs, to announce and ensure that there is no hike of electricity tariff for all commercial and industrial users up to the first 1000 KWh, and for all water, sewerage and telecommunication bills for the rest of 2023;
- To provide a 50 percent rebate on internet bills for 2023 to all SMEs in rural areas (by postal code) to encourage telcos to extend services to low coverage areas and for rural SMEs to be digitally-connected;
- To set-up a register of SME Grant under SME Corp to limit any outright or matching grant from all government agencies to a lifetime cap of RM 500,000 per business and director to discourage ‘grant-prenuers’ and allow any financial assistance to benefit more SMEs; and
- To reduce direct competition from GLCs in non-strategic sectors and to encourage support for SMEs among GLCs, to mandate an annual ‘GLC for SMEs’ report to detail out the total amount of expenditure made to SME vendors, the number of such vendors, the average expenditure per SME vendor, and programmes and activities to support the capacity and capability building of SME vendors.
As the country’s first and largest association for SMEs, SAMENTA remains committed in supporting the over one million SMEs in Malaysia in partnership with various government ministries and agencies.
