Initiatives to help micro businesses, SMEs recover lauded

PETALING JAYA: Some Budget 2022’s initiatives are seen as instrumental to the recovery of local small and medium enterprises (SMEs), namely microcredit loans at a 0% interest rate, deferment of income tax instalment payments, Reinvestment Allowance (RE), and the RM40 billion Semarak Niaga.

Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) treasurer-general and SMEs committee chairman Koong Lin Loong said the microcredit loans up to RM75,000 at 0% interest rate for the first six months of the loan tenure, with a six-month moratorium, is a good initiative by the government and a beneficial move to support and assist micro businesses. It is a continuity of last year’s Prihatin SME Plus.

Besides, under Bank Negara Malaysia’s Funds for SMEs, the Targeted Relief and Recovery Facility has been upsized by RM2 billion from RM6 billion.

“It is a popular demand by SMEs. I think RM2 billion is too low because SMEs has entered the recovery phase. It is an important phase for SMEs to go forward. If the government can assist SMEs, they can go forward then there will not be more retrenchment and bankruptcy,“ Koong told SunBiz.

He said the ACCCIM had been fighting for postponement of income tax instalment payments, which the government finally approved.

“Businesses should apply for a deferment of income tax instalment payments for MSMEs (micro, small and medium enterprises) for six months until June 30, 2022. It is a good way to save cash flow. The revision of monthly tax payment is a laudable move by the government, in which, all businesses are allowed to amend the estimated income tax payable on the 11th month before Oct 31, 2022,“ he said.

During the pandemic, many businesses incur losses. Previously, an accumulated unabsorbed business losses tax treatment could be carried forward for seven consecutive years of assessment. Now it has been reviewed to a maximum of 10 consecutive years of assessment.

“This means businesses can set up future taxable profits for 10 years. It is beneficial to businesses.”

He advised SMEs to be aware of the tax benefits made available by the government.

“If SMEs take this opportunity to automate and modernise the business facility, they will be entitled to RE, the RE has been extended for two years. I advise SMEs to apply for all the funds and tax benefits announced in the budget. If SMEs go for renovation or refurbishment of premises to comply with Covid-19 SOPs, they will be entitled to a maximum of RM300,000 tax deductions.”

He said several funding measures for startups announced by the government were innovative.

“For example, the government’s support for crowdfunding and peer-to-peer lending platforms with an allocation of RM80 million in matching grants for the Malaysia Co-investment Fund. In addition to the investment by Bank Pembangunan Malaysia Bhd totalling RM100 million.

“Besides, fundings for high gearing businesses or companies facing leverage problems are innovative moves such as the allocation of RM2.1 billion to support equity and quasi-equity investment schemes led by SME Bank in collaboration with Teraju and BSN with a fund worth RM600 million for all businesses. However, we have yet to know the execution processes for these funds,“ he said.

Malaysian Associated Indian Chambers of Commerce and Industry secretary-general Datuk Dr AT Kumararajah said while the budget has been expansionary, it will only succeed if applied to the most needed, the boost that SMEs were hoping for.

The RM40 billion Semarak Niaga which includes the RM14.2 billion will hopefully be targeted towards the SMEs that need the cash flow urgently. The RM14.2 billion out of the RM40 billion for SemarakNiaga is another welcome shot for the SMEs to bounce back in 2022. The government has managed an expansionary budget in the immediate term and coupled it with necessary structural reforms like fiscal discipline and public sector expenditure reforms in the medium term is a step in the right direction.

The establishment of the new SPV for the big companies for recapitalisation is hopefully not a rescue but will capitalise high impact companies.

“The SPV must also be created for MSMEs as they need it most. Besides, we need a new credit evaluation system,“ he told SunBiz.

Other laudable initiatives are the six months tax relief which will give businesses the needed cash flow ease. The tax relief for SOP compliance is welcomed as the cost of doing business will be less. The Syarikat Jaminan Pembiayaan Perniagaan is a good move with wider coverage.

“The government must look at a new paradigm in reaching out to the businesses especially the SMEs and micro-business community,“ he said.

Without pandering to the conventional thought of fiscal discipline, he said, continued support must be made available to the business community with targeted reliefs and the susceptible individual with an adequate support system. He said SMEs needs single-window support which has been done partially with the SPV for recapitalisation.

“Government must do more towards building consumer confidence as 70% of our GDP is domestic driven. The very fact that the fear is lingering, the threat that there is an unyielding wave coming is not good for business and consumer sentiment, because as far as big decisions are concerned, on the spending as well as on investment, this kind of environment creates fear and does not give confidence to consumers as well as businesses.

“Also, the public-private partnership 3.0 must be enhanced and less reliant on the government. The post-covid economy must be led by the private sector and powered by the government,“ he said.

He said the distress financing model from the government must be re-evaluated and come up with a new financing model that rules out banks as the solution.

Small and Medium Enterprises Association Malaysia central chairman Datuk William Ng said the budget is pro-growth and is timely in supporting businesses, especially SMEs, in recovery post-pandemic.

“We’re glad that the government has heeded our plea for a wage subsidy for the rehiring of workers. This is crucial as most SMEs who are in a recovery mood are cash strapped to procure raw materials and to re-hire workers. This has now been announced as JaminKerja with a subsidy of up to 30%.

“For SMEs who are cash strapped, we are happy that the government has announced measures such as instalment for corporate income tax, as well as additional funds of up to RM40 billion under the SemarakNiaga initiative,“ he said in a statement.

Business communities heaved sighs of relief that there were no new taxes imposed on businesses when most businesses are struggling and are only now getting on their feet.

“However, we remain hopeful that our proposal for 30% of government procurement to be allotted to SME vendors will still be considered by the government for implementation in 2022. This would not involve additional budget or funds from the government as the procurement is for products and services required by the government,“ he said.

Malaysian Industrial Development Financial Bhd group managing director Datuk Charon Wardini Mokhzani said supporting and boosting business activities especially for the MSMEs has been given strong emphasis.

“Access to financing with various loans and financing and credit guarantee schemes have been made as one of the key initiatives to ensure businesses especially MSMEs will be able to recover and thrive after enduring a difficult period this year.”