Rising costs, competitiveness key concerns for SMEs ahead of Budget 2025

 

A business group is urging the government to help SMEs move up the value chain by offering more incentives for AI adoption, branding, digitisation and innovation in Budget 2025. (ETX pic)

PETALING JAYA: 

Two business groups are hoping Budget 2025 will deliver policies that help small and medium enterprises (SMEs) deal with rising business costs and an increasingly competitive marketplace.

They said despite the country experiencing strong economic growth over the last two quarters, profit margins of SMEs have been impacted by the rising costs of production, wages and rent, as well as a significant labour shortage.

SME Association of Malaysia secretary-general Chin Chee Seong wants the government to retain existing subsidies on RON95 petrol. He said SMEs are also hoping Budget 2025 will see the government raise the value of digitisation grants on offer.

Last year, the government provided a matching grant of 50% or up to RM5,000 for eligible micro, small, and medium enterprises (MSMEs) to help them adopt new technologies and improve business operations.

Chin also hopes to see an increase in the Malaysia External Trade Development Corporation’s (Matrade) market development grant from RM300,000 to RM500,000. Introduced in 2002, the grant is aimed at offering exporters assistance to market their locally-made products and services internationally.

SMEs are facing a lot of challenges, especially from the various international businesses. We have to assist SMEs to promote their products globally. Otherwise, they will lose out,

 he said.

We also hope the government can allocate funds to help SMEs learn and apply environmental, social and governance principles by organising courses or programmes.

Meanwhile, Small and Medium Enterprises Association (Samenta) president William Ng called for the country to assist SMEs sustain their businesses amid intensifying competition. He said many SME owners are presently unable to take risks, possibly due to a lack of high value-added capabilities.

Ng called for the government to help SMEs move up the value chain by offering more incentives for AI adoption, branding, digitisation and innovation in Budget 2025.

He also proposed that SMEs planning to expand overseas be granted a double tax deduction on expenditure of up to RM200,000 each.

Samenta’s other proposals for Budget 2025 include ensuring businesses are not saddled with additional taxes and costs. This, said Ng, would help provide 

breathing space

 for SMEs that are still facing low profits and high costs.

This includes directing local authorities and government agencies not to raise service charges for SMEs in 2025,

 he said.

Ng also called for a RM75 million fund to be set up to provide a matching allowance for students from private and public higher education institutions undergoing industrial training with SMEs. He said this could help match 10,000 SMEs with 50,000 local students, with the government and SMEs each paying every student an allowance of RM500 per month.

He also hopes the government will announce low-interest loans at a fixed rate of 4% for 5,000 SMEs, subject to a limit of RM1 million per SME, for equipment purchases and operational improvements.

The government must also ensure that these facilities are accessible to more SMEs, he said.

In last year’s budget, the government earmarked RM44 billion specifically for loans and financing guarantees for SMEs.

This included RM1.4 billion for micro loans from Bank Simpanan Nasional, RM720 million for women and youth entrepreneurs, RM330 million for small traders, and RM30 million for Indian businesses.

Bank Negara Malaysia was provided with RM900 million for loans to help SMEs digitise and automate, while another RM100 million was set aside for digitalisation grants (capped at RM5,000 for each entrepreneur) to help 20,000 companies upgrade their sales, inventory and digital accounting systems. - FMT