Chambers: SMEs should leverage on incentives

PETALING JAYA: Small and medium enterprises (SMEs) should take advantage of several incentives offered by the government in Budget 2018, through various schemes, loans and grants to grow and expand their businesses, business chambers said.
Prime Minister Datuk Seri Najib Abdul Razak announced that RM7 billion will be made available through Syarikat Jaminan Pembiayaan Perniagaan(SJPP), of which RM5 billion is allocated for working capital and RM2 billion with 70% guarantee by the government for services sector, including Industrial Revolution 4.0.
Under SME Corp, RM200 million has been earmarked for training programmes, grants, and soft loans. On top of that RM82 million has been allocated through various agencies for the development of halal products and industry while RM500 million has been earmarked for micro-sized enterprises under the National Entrepreneur Group Economic Fund (Tekun Nasional).
“This improvement will certainly encourage SMEs to look big and outside Malaysia. They can become producers, manufacturers, exporters and importers,” Perdasama president Datuk Haji Moehamad Izat Emir told SunBiz.
SMEs especially those who serve as small scale vendors in morning and night markets should look for ways to graduate and become cottage industries, he added.
Citing countries such as South Korea, China and Japan, where cottage industries are thriving, Moehamad Izat said Malaysian SME entrepreneurs should also look at operating through small factories.
One industry, he recommends for SMEs to venture into is the sports industry which involves the manufacturing and selling sports equipment and outfits. According to him, given the less competitive nature of the industry and the government’s support towards national sports, the industry holds “plenty of scope”.
Also welcoming these incentives, The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) chairman of SMEs and human resource development committee Koong Lin Loong said SMEs should aggressively leverage on these grants and tax incentive to explore new horizons, especially in terms of exports.
“All this can help SMEs if they become more aggressive and go towards all these grant and tax incentives. The grant and the soft loans for exports and all those things… they explore,” said Koong, who also sits on the board of directors of SME Corp.
Najib also announced that RM150 million will be provided to Malaysia External Trade Development Corporation (Matrade), Malaysian Investment Development Authority(Mida) and SME Corp to implement promotional programmes and expand export markets.
“We are very happy that the market development grant has come back,” Koong said.
The grant was reinstated after applications were suspended in January.
He said as the nation gears towards Industry 4.0, the grant of RM245 million available under the Domestic Investment Strategic Fund to upgrade Smart Manufacturing facilities and the RM1 billion available under SJPP to companies with 70% guarantee by the government to automate production processes and reduce employment of foreign workers are crucial.
On top of that, Koong said SMEs could also benefit from several incentives offered across industries such as tax incentives extension for tour operators until 2020, capital allowance for ICT equipment and manufacturing as well as the RM100 million provided as loan with 70% guarantee by the government to automate production of local furniture for exports.
He did however express regret and disappointment that the 18% corporate tax on the chargeable income up to RM500,000 was maintained.
Koong said no reduction on the corporate tax could be due to the government wanting to focus on reducing the budget deficit, which is targeted to be reduced to 2.8% next year.
“We look forward to that (reduction) in the next budget, especially with the stabilisation between Goods and Services Tax collection and crude oil price,” he added.
He anticipates the corporate tax to be reduced between 0.5-1.0% in the next three years.