Rising operating costs could trigger SME closures without urgent aid, warns MCA leader

 

THE government must urgently introduce more targeted measures to help small and medium enterprises (SMEs) cope with rising fuel and energy-related costs, says MCA Economic and SMEs Affairs committee chairman Datuk Lawrence Low.

He warned that delays in assistance could trigger a wave of business closures that would negatively affect jobs and the broader economy.

“As fuel and energy-related costs continue to rise, the government cannot afford to delay action. More targeted and timely measures are urgently needed to ease the growing burden on SMEs and prevent closures that could destabilise the national economy,” he said in a statement.

The MCA vice president said SMEs were facing increasingly severe operating conditions, citing a nationwide survey conducted in April which found that 76% of SMEs had been significantly affected by rising costs.

“No sector has been spared. More than 80% of SMEs are experiencing double-digit cost increases, with some reporting increases exceeding 20%,” he said.

He added that 45% of SMEs expected to face serious cash flow pressures within the next three to six months.

“SMEs form the backbone of our economy, comprising over 90% of businesses and providing substantial employment. If they are forced to scale down or cease operations, the impact on jobs and economic resilience will be immediate and far-reaching,” he stated.

Low urged the government to introduce short-term operational support, expand access to low-interest financing, and temporarily defer or reduce selected taxes and statutory charges.

“At the same time, application processes must be simplified to ensure assistance reaches those in need without delay,” he added.

Low further pointed out that it was unrealistic to expect businesses to absorb rising costs indefinitely, warning that passing these costs on to consumers would worsen inflation.

“Timely intervention is essential not only to support businesses, but also to stabilise the market and protect livelihoods,” he argued.

Low also called on the government to strengthen engagement with industry stakeholders and regularly review the effectiveness of existing policies.

“Measures must be practical, targeted and responsive to the real challenges faced by SMEs,” he said.

Beyond immediate relief, he said the government should accelerate the adoption of digitalisation, automation and energy-efficient technologies to reduce dependence on high-cost inputs and improve competitiveness.

On a related matter, Low noted that the government should address the challenges faced by padi farmers by expanding the scope of diesel subsidies.

“Padi farmers play a critical role in ensuring national food security. However, the current assistance of RM200 per hectare is clearly insufficient, given that diesel costs alone can reach approximately RM700 per hectare,” he explained.

He added that fuel costs now account for about 80% of total cultivation expenses, placing heavy pressure on farmers and threatening the stability of the food supply chain.

Low proposed the introduction of diesel subsidy fleet cards for padi farmers to ensure subsidies are distributed in a targeted and efficient manner.

“Safeguarding farmers is essential to safeguarding national food security,” he continued.

He described the situation as a critical moment requiring decisive action from the government to support SMEs and farmers, stabilise the economy, and strengthen the foundation for recovery. ‒  Focus Malaysia