This is how desperate are SMEs in Malaysia

This is how desperate are SMEs in Malaysia
Picture by Pixabay

The Small and Medium Enterprises Association of Malaysia (SAMENTA) calls on the government to prioritise the survival of our SMEs in the coming months.

It says this sector is still going through a steep and difficult recovery, facing a “triple whammy of rising costs, labour challenges and an unstable political environment.”

“Until and unless these are resolved or substantially mitigated, any hope of a full recovery to pre-pandemic level is an unrealistic illusion,” says Datuk William Ng, Chairman, Samenta.

Among the measures Ng says would help the SMEs are to halt the increment in electricity bill consider re-introducing the subsidy to commercial and industrial users.

“It is untenable to add this unnecessary costs pressure to our SMEs when Tenaga Nasional Berhad achieved a record 9.6 revenue growth in the first 9 months of 2021. The government should also consider re-introducing the subsidy to commercial and industrial users.

“Economists Paolo Casadio and Geoffrey Williams have suggested that by bringing back the subsidy, our inflation can be brought to below 1.5 percent, which would in turn ease the cost pressure on consumers and wage earners,” he says.

SMEs and wages

He says the market should be allowed to dictate the wages, including the minimum wage. “While SAMENTA do not object to any increment in wages, it is best left to the market to dictate wages for various industries and job roles.”

“Wages should be tied to productivity and output, A forced increment at this fragile stage of our economy is sending a mixed signal to businesses, especially SMEs, that any effort at recovery would be to dampen costs pressure on consumers,” he says.

On the banking system, the association chief says banks are tied down by rules set by the Bank Negara Malaysia which goes against the general trend towards market-led financing as championed by pee-to-peer players.

Hence, he urges the speeding up of the transition to market-led financing.

“While Bank Negara has been pro-active in supporting SMEs, we need the government to step in to take on more risks to allow more businesses to obtain financing through various sources.

“Our traditional reliance on collateral, rather than revenue or cash flow, is hampering growth at a time when SMEs are ready to grow but has exhausted their cash flow and disposed off some assets to weather the pandemic.

“Some of our P2P players are already dispensing short-term financing successfully via partnership with online marketplaces based on real-time revenue and cash flow data, so it makes sense to replicate this model to the larger SME community.”

On the other hand, he urges for the immediate reopening of borders and to declare the pandemic is already in the endemic stage.