Shift to outcome-based assistance for SMEs, says association

KUALA LUMPUR: The SME Association of Malaysia has called for the Malaysian government to pivot its support for small and medium-sized enterprises (SMEs) to a model focused on measurable outcomes, rather than merely announcing broad grant allocations in the 2027 budget. President Chin Chee Seong stated that government assistance must demonstrably enhance productivity, investment, growth, and competitiveness for SMEs.

Chin explained that the essence of the issue is no longer whether assistance exists, but whether it effectively reaches SMEs and yields tangible improvements. He suggested that the 2027 budget should allocate financial aid suited to each phase of a company's growth, encompassing aspects like cash flow management, plant enhancements, artificial intelligence adoption, green initiatives, and international market expansion.

The effectiveness of aid initiatives should be judged based on concrete results, such as a business successfully automating, boosting productivity, exporting goods, or venturing into regional markets, Chin emphasized.

To promote domestic direct investment, the association urged Putrajaya to encourage local businesses to reinvest and expand, and to facilitate co-investment between GLCs, government-linked investment firms, and institutional investors supporting promising SMEs. The association highlighted mounting operational expenses faced by local businesses, including increased labor costs, higher utility bills, financing charges, expanded sales and service tax, e-Invoicing mandates, licensing fees, and compliance expenses.

Chin proposed that the government perform a thorough cost and regulatory impact assessment before implementing policies that may elevate business expenses. These recommendations came in the wake of a recent survey revealing that 61.6% of SMEs respondents viewed the current business environment as deteriorating compared to the previous year, while nearly half opposed further wage increases until productivity enhancements occurred.