The Small and Medium Enterprises Association of Malaysia (SAMENTA) has expressed concern over the recent call for an increase in employers’ Employees Provident Fund (EPF) contribution. In a statement released today, SAMENTA calls upon the Cabinet to reject this demand, as it could do more harm than help to Malaysians.

According to SAMENTA chairman Datuk William Ng, the proposed increase in EPF contribution is not only counter-productive, but it comes at a time when the country’s economic recovery remains fragile.

While the economy has roughly recovered to its 2019 level, SMEs continue to trail behind larger firms in terms of growth. The latest available data for 2021 shows that SMEs only grew by 1 percent compared to 4.4 percent for larger firms.

Ng also highlighted that rising costs have hit SMEs as severely as they do consumers in general, stating that SMEs have had to endure two rounds of increments in minimum wages since 2020, despite the pandemic, a severe dip in the GDP, and a drop in labour productivity.

SMEs were also forced to adopt higher employee benefits, including longer maternity leaves and lower thresholds for overtime payment.

Ng added that SAMENTA is still waiting for a response from the government to their plea for these increased costs to be subsidised, as practised in Singapore and the UK.

Despite these obstacles, Ng pointed out that SMEs rose to the challenge when the government pleaded to keep employees employed despite the pandemic.

As a result, the number of jobs dropped by only 2.5 percent between early 2020 to mid-2021, despite the GDP shrinking by 5.6 percent and between 7 to 12 percent of businesses shutting down in 2020. Many SMEs had to dip into their reserves, children’s education fund, and sell properties and other assets to try to keep as many Malaysians employed as possible.

SAMENTA believes that the proposed increase in EPF contribution would only add to the burden of SMEs, and it is not the solution to the country’s economic recovery. Therefore, the association has urged the government to focus on creating higher value jobs for Malaysians and helping Malaysian businesses and workers to be more productive instead of giving in to opportunistic demands by fringe workers’ groups.

According to Ng, SAMENTA also rejected the proposal for a ‘stepped’ increase in employers’ EPF contribution and stated that there is simply no more money to give. He said that the government must increase the income of Malaysians by creating more high-value industries and jobs, encourage Malaysians to save more, and protect SMEs at all costs so that Malaysian jobs and livelihoods are safeguarded.


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