KUALA LUMPUR: Government assistance for small and medium-sized enterprises (SMEs) should be placed under the Ministry of Entrepreneur Development (MED) to allow for a seamless monitoring of its performance.
SME Association of Malaysia national president Datuk Michael Kang Hua Keong (pix) said this will enable Malaysian SMEs to achieve greater heights.
“This is how it is done in South Korea, under the country’s Ministry of SMEs and Startups.
“The main aim is to strengthen competitiveness and support innovations by SMEs and micro enterprises, and revolves around the government’s policies in promoting business growth, fostering business start-ups and supporting micro-enterprises,” he told Bernama.
By centralising it, the government could easily roll out programmes to assist different sectors of the SMEs and monitor the outcomes, he said.
Meanwhile, SME Bank Malaysia Bhd (SME Bank) group president/chief executive officer Aria Putera Ismail said entrepreneurs should participate in entrepreneurial coaching and training programmes to ensure the sustainability of their business.
“They should conduct research to understand market needs, to be aware of competitors and be in line with current trends.
“Many successful businesses enjoy longevity because their owners conduct regular market research,” he said.
Aria said financial management is also one of the most important responsibilities of SMEs as most companies experience losses and negative cash flows during their startup period.
“Financial management is about finding the proper source of funds at the lowest cost, controlling the company’s capital and not letting the balance sheet become too highly leveraged with debt which will have an adverse effect on its credit rating,” he added.
On the SMEs’ transformation in light of the Fourth Industrial Revolution (IR 4.0), Aria said the National SME Digital Platform — an initiative spearheaded by the SME Bank — aims to revolutionise the way SME entrepreneurs are being supported and developed.
“The access to financing issue will be addressed via the ScoreXcess initiative, one of the components of the National SME Digital Platform.
“It will sync and distribute the funds and financing provided by government agencies,” Aria said.
On Sept 25, the Ministry of International Trade and Industry (MITI) forwarded its 2020 Budget wish list to the government, asking the government to allocate more funds for SMEs to boost the sector’s adoption of IR 4.0.
Currently, a majority of SMEs are facing challenges that are hindering their IR 4.0 adoption, such as lack of talents, knowledge, financial stability and suitable sources, said Kang.
“Therefore, it is important that our government identifies these needs and fulfil them to achieve higher growth,” he said.
The SMEs’ contribution to the nation’s gross domestic product grew by 38.3 per cent to RM521.7 million in 2018 from RM491.2 million in the previous year.
On the 2020 Budget due to be tabled on Oct 11, Kang said the SME Association hopes the government would set up a special loan institute to finance SMEs’ businesses and start-up.
“The SMEs still needs financial assistance from the government like no collateral loans and low-interest rates of between two and four per cent.
“The commercial banks and private companies will not be able to do that to help the SMEs, hence we need the government to do it,” he said.
Kang also urged the government to consider giving special tax incentives for SMEs for investments and to help them embark on digital economy.
Meanwhile, the SME Bank expects the government to continue with its efforts to establish strategic funds and programmes for specific focus groups, including start-ups.
“This will help to increase the number of successful local entrepreneurs, especially from the B40 group, and to develop and promote key strategic sectors in the overall socio-economic development in order for the country to become a true entrepreneurial nation by 2030,” Aria added.