Shift to outcome-based assistance for SMEs, says association

KUALA LUMPUR: The SME Association of Malaysia has demanded a shift towards outcome-based assistance for small and medium-sized enterprises (SMEs) in the 2027 budget, rather than simply announcing large grant allocations. Association President Chin Chee Seong emphasized that government support must yield measurable improvements in productivity, investment, growth, and competitiveness.

He noted that the real questions are whether assistance reaches SMEs and whether it leads to tangible benefits. Chin suggested that the 2027 budget should offer financial aid customized to each phase of a company's growth, encompassing aspects like daily cash flow, factory upgrades, AI adoption, green practices, and global expansion.

The success of aid initiatives should be assessed based on concrete operational outcomes, such as operational automation, productivity enhancement, international trade, or regional market penetration. To bolster domestic direct investment, Chin urged Putrajaya to incentivize local businesses to reinvest and expand, and to encourage government-linked investment companies and institutional investors to co-invest alongside promising SMEs.

The association warned that SMEs are currently grappling with escalating operational costs, including high labor expenses, increased utility bills, higher financing charges, expanded sales and service tax, e-Invoicing mandates, licensing fees, and compliance expenses. To avert further disruption to business operations, Chin recommended that the government undertake a thorough cumulative cost and regulatory impact assessment for SMEs prior to implementing policies that inflate business expenses.

These calls follow a recent survey by the association, which revealed that 61.6% of surveyed SMEs perceived current business conditions as worse than a year ago, while nearly half opposed further minimum wage increases until productivity improves.