AFTER a brief respite following the initial Covid-19 recovery last year, businesses are now getting edgy and bracing for continued volatility from high commodity prices, supply chain disruptions and the ongoing Russia-Ukraine conflict.
During the tabling of the revised Budget 2023 last Friday, Prime Minister Datuk Seri Anwar Ibrahim said small and medium enterprises (SMEs) particularly, will need sustained support to ensure they remain resilient amid the uncertainty.
Therefore, Malaysia’s latest measures to help micro SMEs (MSMEs) tide over difficulties will strengthen their ability to overcome challenges and promote the high-quality development of these businesses, Anwar added.
The Entrepreneur and Cooperatives Development Ministry (MECD) applauded the overall allocation of RM40 billion for MSMEs under the budget.
The government has allocated RM732 million for MECD, segregating RM520 million for development and RM212 million for management.
MECD is confident that the implementation of Budget 2023, themed Developing Malaysia Madani, can develop its socioeconomy as well as provide solutions to help entrepreneurs and cooperatives towards the sustainability of their businesses.
Speaking to The Malaysian Reserve (TMR), Small and Medium Enterprises Association of Malaysia (Samenta) national secretary general Chin Chee Seong said the budget presented by the PM looked great and he is optimistic about the MSME’s future.
Chin shared his enthusiasm upon learning that Budget 2023 addressed Samenta’s request for an increase in the threshold for the proposed tax reduction for businesses.
“I am grateful that the government will lower tax for low-earning groups and low-profit-earning MSMEs, as requested by the industry previously,” he said.
Furthermore, he said it is great that the government is initiating the digitalisation grant and urged the government to provide additional funds for the matching grant.
Moreover, Samenta Johor advisor Teh Kee Sin said the RM10 billion would help MSMEs move forward after facing difficulties over the past three years as a result of the pandemic.
“Many of us in the non-essential services were struggling as we were not able to operate due to the Movement Control Orders (MCOs),” Teh said.
He added that with SMEs now back on their feet, most of them have plans to expand their operations but are having problems getting loans from financial institutions.
“They should have some peace of mind as Syarikat Jaminan Pembiayaan Perniagaan Bhd is ready to guarantee up to RM20 billion for SMEs involved in high-tech industries, agriculture and manufacturing,” he added.
On another note, fiscal consolidation is important to regain investors’ confidence and improve the country’s credit rating.
The Federation of Malaysian Manufacturers (FMM) fully supported a gradual reduction of the 2023 fiscal deficit to 5% from 5.6% in 2022 and the government’s firm commitment toward medium-term fiscal consolidation.
In addition, persistent inflationar y pressures are set to remain while economic uncertainties are likely to continue given the still challenging global economic and geopolitical outlook.
FMM felt that the scope for fiscal restraint is limited and a budget that protects the wellbeing of the people is warranted.
Hence, FMM applauds the government for unveiling a caring budget with a larger allocation of RM388 billion by striking a fine balance between fiscal discipline and helping the rakyat to cope with the rising cost of living.
BloomThis co-founder and CEO Giden Lim believed that the government is becom ing more committed to advancing the local start-up scene, which is evident through the multiple aid that is provided for start-ups and SMEs.
“This as a whole will ultimately contribute to the country’s economic state,” he said.
High Impact and Tech Investments to Further Spur Industrial Development
FMM welcomed the initiatives introduced by the government to further spur investments in the high-technolog y and high-impact sectors in line with the National Investment Policy.
The formation of the Invest Malaysia Council and the National Committee on Investment will spearhead the efforts to expedite the approvals of these high-potential investments.
Also, the government announced the New Industrial Master Plan 2030, which will be launched in the third quarter of 2023 (3Q23), and will set the direction for high-quality industrial activities. This will have a multiplier effect on the economy, including the creation of high-skilled jobs.
Human Capital Initiatives
Hiring platform Hiredly founder and CEO Derek Toh told TMR that based on a combination of its internal data and external market developments, it was previously predicted that 2023 would be a good year for the Malaysian employment market.
“Following the announcement of the inaugural Budget 2023 tabled by our PM, I firmly believe that the government is committed to advancing Malaysia’s job landscape, which will inherently contribute towards the country’s GDP,” he said.
He said this can be seen through the various initiatives that the government has targeted toward the new generation workforce and other minority groups.
Child Development and Care Services
The Women, Family and Community Development Ministry will establish a Child Development Unit under the Social Welfare Department to provide more comprehensive support services to children.
With this, Kiddocare Malaysia founder and CEO Nadira Yusoff looked forward to seeing an improvement in childcare regulations and standards in line with society’s current needs.
“We look forward to the government working closely with the private sector to enable partnerships that provide innovative solutions to the growing childcare challenges,” she told TMR.
She was also elated upon hearing the PM announcing that the Social Security Organisation (Socso) will offer 30,000 existing gig workers a RM4,000 subsidy for training programmes as this initiative will allow more people — especially women — to consider exploring job opportunities within the gig economy.
Green Practices in Businesses
In his preface for the Updates on Economic and Fiscal Outlook and Revenue Estimates 2023, Anwar announced that the government will also examine ways and means to reduce market disruptions, including streamlining business processes through the adoption of high technology and digitalisation.
On these initiatives, FMM said it would facilitate the business community in accelerating the transition towards sustainable practices and contributing to the national net-zero emission target by 2050.
“We applaud the RM100 million allocated under the SME and Micro-Traders Digitalisation Scheme and the matching grant of up to RM5,000 for the use of digital tools.
“It would be more impactful if a grant of at least RM200,000 per company could be allocated under this scheme and to as many SMEs as they have a very low level of digital adoption,” FMM said in a statement.
The federation also applauded Bank Negara Malaysia’s (BNM) financing of up to RM2 billion to support environmental, social and governance (ESG) start-ups and to assist SMEs to adopt low-carbon practices is a good move.
“We eagerly await the details. More tax allowance is also welcomed to help SMEs offset their ESG-related expenses,” it said.
Concurring with FMM, Lim expressed support for the government’s initiatives that not only supports carbon-free practices, but has given more attention to the start-up community that will benefit the country.
“We have already adopted environmentally beneficial practices in compliance with ESG, and through the government’s initiatives, we are well on our way to fully realise carbon-free practices,” Lim noted.
Malaysia Petroleum Resources Corp (MPRC) president Mohd Yazid Ja’afar said it welcomes initiatives such as approximately RM10 billion in financial assistance from BNM to reduce SMEs’ financial burden and support business growth.
He added that the loan guarantee for high-technology SMEs could benefit oil and gas services and equipment (OGSE) companies exploring new businesses related to the energ y transition. This could encompass renewable energies and low-carbon solutions such as hydrogen.
Mohd Yazid noted that this goes hand-in-hand with efforts under the National OGSE Industry Blueprint (OGSE Blueprint) 2021-2030 to maintain a sufficient talent pipeline for the industry to ensure the industry’s sustainability.
“Some prolific approaches to talent management include the government’s attempts to coordinate international collaboration with foreign multinational corporations to provide apprenticeship opportunities in host countries where scholarships are provided,” said Mohd Yazid.
He said this is also aligned with one of the OGSE Blueprint’s talent initiatives, namely the skilled worker retention programme.
Meanwhile, from a bank’s perspective, CIMB Group Holdings Bhd CEO Datuk Abdul Rahman Ahmad said the bank is encouraged to see financing support for start-ups as well as SMEs.
“These include, among others, RM2 billion in financing to support sustainable technology start-ups and to help SMEs adopt low carbon practices, as well as RM1 billion to help SMEs automate business processes and digitalise their operations,” he said in a statement.
Overall, however, the FMM is of the view that Budget 2023 is prudent and expressed its disappointment that it has not provided any assistance to support trade for industries to expand their market access due to the prolonged Ukraine-Russia conflict.
During the tabling of the budget, the PM also announced that electricity tariffs will be maintained for domestic users and SMEs.
Source: https://themalaysianreserve.com/2023/02/28/challenging-but-positive-budget-for-msmes/