2027 Budget aid must build lasting businesses, not just keep them afloat

Malaysia's 2027 Budget must prioritize building stronger businesses through microfinancing, according to an economist. Universiti Malaya's Dr Nik Zirwatul Fatihah stated that while financial assistance can help micro and small enterprises, it's not enough on its own to make them more profitable. She emphasized the need for improved financial management, profitability, and long-term sustainability.

The 2027 Budget allocates RM6.6 billion for microfinancing and RM200 million for Sejahtera Madani grants, targeting 40,000 recipients, particularly women, for equipment and training. Dr Nik Zirwatul cautioned that additional financing could increase operating expenses without improving profitability if not managed properly. She stressed the importance of tailored assistance for different types of businesses, such as home-based entrepreneurs needing basic equipment and guidance, versus established retailers requiring inventory management and financial planning.

The economist also called for more targeted entrepreneurship training, focusing on practical financial management skills, pricing, cash flow management, cost control, and preparing for unexpected disruptions. Beyond financial assistance, policymakers should reassess how entrepreneurship programs' success is measured, looking at whether profit margins improve, finances are managed better, and businesses can withstand challenges without needing more government support.

Dr Nik Zirwatul emphasized that business sustainability shouldn't be measured solely by expansion, as many small entrepreneurs prioritize stable incomes and financial security. The 2027 Budget offers an opportunity to strengthen Malaysia's micro and small enterprises, but its true impact will depend on whether recipients achieve sustainable improvements in their businesses and can face tomorrow's challenges with greater confidence.