The government must demonstrate their commitment to offer serious assistance to SMEs in the 2023 Budget to be tabled this Friday in Parliament by adopting DAP’s 2023 Budget proposals to the Finance Ministry made during a dialogue led by DAP Secretary-General Anthony Loke Siew Fook. DAP had suggested reducing the lowest tax threshold for SMEs to 15% from 17% and the chargeable income subjected to this rate should be increased to the first RM1 million instead of the current RM600,000.
The government should also provide a RM1 billion matching grant on dedicated productivity solutions for SMEs to improve both labour productivity and capital utilisation efficiency, particularly to assist them to adapt to a digital future. The Business Recapitalisation Facility under Bank Negara should be raised to RM2 billion from RM1 billion to cater for the 1.3 million SMEs in Malaysia.
DAP had suggested an increase in Bank Negara’s Low Carbon Transition Facility (LCTF) financing size to a maximum of RM20 million per SME from RM10 million per SME to encourage the adoption of sound environmental practices. As SMEs comprise 98.5% of all business establishments, contribute 38% to the GDP and employ 60% of the national workforce, such concrete measures are needed to ensure that SMEs not just survive but also thrive. Any Budget that fails to promote and develop SMEs, runs the risk of damaging our overall economy.
The government must ensure that the severe labour shortages are resolved not by giving meaningless lip service of granting approvals for foreign workers that looks good only on paper, but also providing real effective action that sees urgently needed migrant labour entering the country. Then Entrepreneur Development and Cooperatives Minister Wan Junaidi Tuanku Jaafar had said that during the COVID-19 pandemic, some 580,000 businesses representing 49% of the SME sector, are at risk of failing in 2021.
In 2022, some SMEs face closure because of labour shortages. The soaring costs and a depreciating ringgit will only add on to the SMEs financial hardship. Budget 2023 must strengthen SMEs to ensure their survival to play a larger role in our economy.