Setting up ministry for smaller businesses long overdue, says SME chief

SME Association of Malaysia president Chin Chee Seong says a fragmented policy regime has posed challenges for companies forced to operate within a confusing maze of different agencies, overlapping initiatives and scattered programmes.

Smaller enterprises come under the purview of four ministries, a situation that has been described as “a confusing maze”. (Bernama pic)

PETALING JAYA:

 The creation of a dedicated ministry for micro-, small- and medium-sized enterprises will allow for swift responses to their issues, says SME Association of Malaysia president Chin Chee Seong.

Chin said the setting up of such a ministry, proposed last week by Petaling Jaya MP Lee Chean Chung, was long overdue given the role of smaller enterprises in the economy and the sector’s struggle to recover since the Covid-19 pandemic.

“This ministry would create a clear central command structure capable of responding swiftly to issues such as digitalisation, financing, regulatory burdens and global competition,” Chin told FMT.

Economist Barjoyai Bardai also suggested that the minister for the proposed ministry be appointed from among accomplished entrepreneurs through a senatorial appointment. “I am sure they have all the strategies and ingredients to make MSME’s successful,” he said.

MSMEs are handled by the ministries of entrepreneur development and cooperatives; investment, trade and industry; rural and regional development; as well as domestic trade and cost of living.

Chin said the fragmented policy regime has posed challenges for MSMEs forced to operate within a confusing maze of different agencies, overlapping initiatives and scattered programmes. While SME Corporation Malaysia functions as the coordinating agency, the programmes are still spread across various ministries.

“This often causes MSMEs to spend precious time figuring out which agency to approach, rather than focusing on business growth and innovation,” he said.

Barjoyai said Malaysia’s habit of neglecting MSMEs and favouring large businesses has also widened the country’s income and wealth gap. “The one percenters own over 40% of the nation’s wealth, while over a million micro, small and medium businesses in Malaysia own very little wealth, less than 10%,” he said.

Barjoyai said as the MSME-dominated service sector is expected to contribute 65% of national GDP, it is time to give greater importance to such businesses, starting with a dedicated ministry.

MSMEs presently account for over 97% of businesses in the country, contributing RM652.4 billion, or 39-40% of the GDP, last year. They also employ 50% of the Malaysian workforce.

Making bureaucracy worse

However, William Ng of Small and Medium Enterprises Association Malaysia (Samenta) said while MSMEs deserve stronger policy direction, a standalone ministry is not the silver bullet to the sector’s problems.

Ng said the ministry may add more bureaucracy on top of the already-fragmented MSME ecosystem, and fail to solve the underlying issues.

He said MSMEs need less red tape and cannot be dragged down by unnecessary policies, many of which he claimed are redundant across ministries.

“What we (also) need is effective ministers and an effective civil service, regardless of which ministry carries the mandate. If you put a weak leader in charge of a new MSME ministry, you will still get nowhere.” - FMT