The Small & Medium Enterprises Association Malaysia (SAMENTA) has expressed hope that Budget 2023, being the last budget before the next election, will pay attention to the plight of the one million micro, small and medium enterprises (MSMEs) in the country.
The association said in a statement yesterday that it has submitted its proposals to the Ministry of Finance for its consideration, and is hopeful that they will be adopted.
“Our SMEs are emerging from the pandemic strongly, but there are many obstacles that we need to clear for us to recover to pre-pandemic level. In 2021, the GDP of SMEs grew by 1 percent, versus 4.4 percent by larger companies.
“This clearly shows that more needed to be done to help our SMEs navigate the tough recovery ahead and to regain the lost ground since the pandemic,” SAMENTA chairman Datuk William Ng said.
SAMENTA’s proposals to the Ministry of Finance include:
- Relieving The Labour Crunch
We continue to face a shortage of workers – both local and foreign. SMEs are seen to be less attractive employers compared to larger companies. We proposed an additional 1% payment to the EPF of local employees who chose to work for SMEs. This will also help create a stronger safety net for Malaysians, as reports by PIDM indicated that Malaysians have among the lowest savings rate in the world.
- Stimulating Business Growth
Despite the re-opening of the economy, many SMEs are hesitating to invest in replacement of machinery and upgrading of plants and processes, due to the continued political and economic uncertainty. To stimulate business growth and to encourage SMEs to fully capture the recovering market, we proposed that capital expenditure, up to RM 1 million or 50 percent of the taxable profit of the year, be exempted from tax.
To support SMEs to go global and back into the disrupted global supply chain, we proposed that all expenses for YA 2023 for R&D, IP protection and commercialization, ESG standards compliance and digitalization and automation be accorded a double tax deduction.
“We have also proposed for a flat 15% income tax for SMEs with taxable income below RM 1 million for YA 2023 to give our SMEs an opportunity to recover their losses from 2020 and 2021 and to use the profits to pay our employees more and upgrade our operations,” said Ng.
SAMENTA has also urged the Minister to direct LHDN to refrain from any mass tax operations against SMEs for the next one year to give SMEs some reprieve – especially as the pandemic has not only caused many to incur unprecedented losses, but also disrupted operations and administration.
- Overcoming Digital Disruption
Most businesses, especially SMEs, continue to be disrupted by the digital economy. While we are supportive of efforts to move our SMEs into the digital economy, we need to urgently support digitally disrupted SMEs and intervene to create a fair playing ground for all.
“As such, we proposed that the digitalization grant via MDEC to be continued in 2023. Additionally, we are hopeful for monopolistic disruptors, such as p-hailing players be better regulated, so that SMEs are not forced to pay commissions beyond their affordability.”
- Preparing for the Future
The skill gap between the talents that the industry require and what is produced by our education system continue to be very wide. As such, we proposed for funds to be allocated to trade associations such as SAMENTA, to form industry-led academies or ‘finishing schools’, to allow fresh graduates to be equipped with the latest industry-specific know-how.
“We have also proposed that the government set a lifetime limit for grants to businesses and their directors, to prevent a small group of business people from hogging all the grants – effectively creating a pool of ‘grant-preneurs’ that add little value to the economy or our aspiration to be a high income economy,” he said.
More importantly, Ng pointed out that SMEs and SAMENTA will be watching the Budget 2023 closely for clues on the strategy and policy direction of the government in helping our economy recover from the pandemic, and to tap into the small window of opportunity that we have to win against our regional competitors.
As Malaysia’s oldest and largest association for SMEs, SAMENTA remain supportive of any government’s effort to help our SMEs narrow the productivity and digital-readiness gap.
