The government needs to provide more incentives and tax breaks for small and medium enterprises (SMEs) in the upcoming Budget 2022 to achieve income and job recovery.
Universiti Kuala Lumpur Business School Assoc Prof Dr Aimi Zulhazmi Abdul Rashid said SMEs will be the centre of the economic development in Budget 2022 as they contributed 38% of the GDP, employing 60% of the workforce and representing 90% of all registered Malaysian companies.
He expects Budget 2022 to have more emphasis on the digital economy to provide employment opportunities with more grants to SMEs and a blueprint for a local ecosystem that will create a strong value chain for local SMEs in e-commerce and logistics.
“The budget is anticipated to have a lot of incentives to private sectors from reduced tax rates and reinvestment tax allowance.
“The policy to attract foreign investors will be more aggressive and bold measures will be introduced from tax holidays, grants and many others,” The Malaysian Reserve (TMR) was told recently.
Aimi Zulhazmi sees the government collaborating with private companies, especially multinational companies to build mega projects, which are known to be a huge economic catalyst.
Meanwhile, Singapore Institute of International Affairs senior fellow Dr Oh Ei Sun told TMR that for that to happen, the government must give SMEs a boost, especially those that have suffered badly for almost two years now.
“In the upcoming Budget, the government should provide as many incentives and subsidies for SMEs as possible because of the number of jobs they generate in Malaysia.
“If SMEs stay afloat, then jobs would come back and so will income, which had been slashed during the pandemic,” he said.
Oh said if the government could not incentivise, they should offer more tax cuts instead because in any case, SMEs could not pay a lot of taxes nowadays without much business.
He prodded on how the government will encourage foreign investments namely big-time investors like major factories, data centres, service centres and so on in the country, while at the same time retaining local investments instead of them moving to other countries.
Besides offering tax breaks, Oh pressed that the “ease of doing business” is just as important to attract foreign investments.
“For example, if foreign or local investors want to open factories, the government should streamline the application process so that it does not take them two to three years or they will move elsewhere where it would take them only half a year.
“A combination of all these measures would help the SMEs and also retain local investors and attract foreign investors, only then we could have restoration of income and job recovery,” he said.
On the other hand, the Malaysian Employers Federation president Datuk Dr Syed Hussain Syed Husman called for the government to be more flexible in its labour legislations.
“As Malaysia is entering and living with the new norm, it is also critical for the government to embark on reforms of policies and the legislations, especially the labour legislations to cater for the new employment relations that require more flexibility so that Malaysia can be more productive and competitive,” he said.