In the aftermath of Budget 2024, Malaysia’s SMEs stand at a critical juncture, grappling with unexpected challenges and the tantalising prospect of new opportunities.
Datuk William Ng, the national president of the Small and Medium Enterprises Association of Malaysia (SAMENTA), articulates the collective sentiment of SME stakeholders who find themselves both surprised and disappointed by the introduction of the capital gain tax.
This move, aimed at bolstering tax revenue and reducing the national debt, carries a significant weight, particularly due to the absence of consultation—a decision that directly impacts the backbone of Malaysia’s economy, made without their input.
The core of SMEs’ discontentment lies in the disproportionate burden placed upon them. While global taxation norms are acknowledged, there’s a palpable frustration as full-time share punters, who contribute minimally to the nation’s economic and industrial growth, remain exempt from taxation.
In contrast, hardworking SMEs face the prospect of being taxed upon retirement, business sales, or when attracting new investors. This discord emphasises the need for a more nuanced approach, urging the government to consider alternative forms of wealth taxation such as inheritance or windfall taxes.
However, amid these concerns, a glimmer of hope emerges. Ng advocates for constructive dialogue between the government and SME stakeholders before finalising the capital gain tax details. Suggestions for exemptions on founder share sales and incentives for long-term investments underscore the imperative need for policies that nurture entrepreneurship rather than stifle it.
Yet, another disappointment lingers—the lack of emphasis on Research and Development (R&D) investments for SMEs. Despite government efforts in promoting automation and digitalization, the absence of measures to encourage SMEs to innovate and ascend the value chain raises concerns.
For SMEs to truly thrive, investments in innovation are paramount; a missed opportunity that Ng highlighted.
Budget 2024, however, isn’t devoid of positive strides. prime minister Datuk Seri Anwar Ibrahim’s announcement of RM900 million in loan funds from Bank Negara Malaysia offers a ray of hope amidst the challenges.
This substantial financial support is tailored to incentivise SMEs to enhance their business productivity through automation and digitization, aligning with the global trend of technological advancement.
Additionally, strategic initiatives such as the allocation of RM100 million for digitization grants and the introduction of the Shop Malaysia Online Programme, supported by a RM40 million allocation, signal a proactive approach.
These initiatives not only adapt to changing market dynamics but also empower SMEs, enabling them to thrive in the digital landscape. Furthermore, the allocation of RM25 million to strengthen the role of digital economy centers (PEDi) in each state legislative assembly represents a significant step forward. These centers, pivotal in the digital age, serve as crucial platforms supporting small entrepreneurs in selling their products online.
As Malaysia’s SMEs face these challenges and embrace new opportunities, the need for a balanced approach becomes imperative. The government’s proactive stance in supporting SMEs’ technological adaptation addresses immediate concerns and lays a foundation for long-term sustainability.
The ball now lies in the court of SMEs to seize these opportunities, embracing automation, digitisation, and online platforms to transform challenges into avenues for growth and innovation.
Budget 2024 paints a complex landscape for Malaysia’s SMEs, marked by both disappointments and promises. Ng’s comments are a reminder of the sector’s resilience and the expectations held by SMEs.
The path forward demands a delicate balance—one that acknowledges the fiscal needs of the nation while nurturing the entrepreneurial spirit propelling Malaysia’s SMEs forward. Fine-tuning these policies is imperative, ensuring that SMEs are not only supported but also empowered to achieve the goals set forth in the National Entrepreneurship Blueprint.
