SMALL and medium-sized enterprises (SMEs) hope that Putrajaya would assist them in digitising and automating their production process in the upcoming Budget 2024.

SME Association of Malaysia national president Ding Hong Sing told The Malaysian Insight Putrajaya should look at the root cause of what ails the economy.

“The government should focus on reforming industries and assisting SMEs in digitising and fully automating their production processes,” Ding said.

“Our country has a serious inflation problem this year, and it cannot be solved solely by raising the minimum wage or implementing a gradual wage system.

“Giving more money to consumers and not doing anything to reduce the production costs of SMEs will not solve inflationary pressures as businesses will hike the prices of their goods and services.”

He hoped Budget 2024, which will be tabled in parliament next month by Prime Minister Anwar Ibrahim, could help SMEs undertake the reforms for the transition to a production process that adopts the latest technology.

As the industry moves to automation and digitalisation, skilled workers are required which would naturally lead to them commanding higher wages, he said.

Economy Minister Rafizi Ramli had last month said the gradual wage system policy had been approved by the cabinet, and the details would be presented in Budget 2024, adding that he expected the new wage system to be implemented in April or May next year.

Ding hoped the Market Development Grant (MDG) of the Malaysia External Trade Development Corporation would be increased from the current RM20 million annually to RM60 million.

The MDG is a support initiative in the form of a reimbursable grant. It was introduced in 2002 with the objective of assisting exporters in their efforts to promote Malaysian-made products or services globally.

It is specifically formulated for Malaysian SME companies, professional service providers, trade and industry associations, chambers of commerce, professional bodies and co-operatives.

Ding questioned how SMEs could go international with that paltry allocation.

“During the pandemic, the government reduced the allocation, and now that the economy is recovering, the allocation should be increased from RM20 million to RM60 million.

“At the same time, the relevant authorities should speed up the disbursement so that SMEs can receive assistance quickly.”

Ding’s SME peer, Koong Lin Loong, treasurer-general and chairman of the SMEs committee at the Malaysian Chinese Association of Commerce and Industry, said accessing loans is one of the difficulties they faced and hoped Budget 2024 has a solution to that.

“After the pandemic, the SMEs are still facing pre-pandemic problems, which are accessing funds to do business.”

He said the weak ringgit had also impacted SMEs by pushing up their operating costs dramatically.

Koong said Putrajaya should have “an effective loan scheme that is not one-size-fits-all” in Budget 2024.

Like Ding, Koong agreed that Budget 2024 “should specifically assist SMEs” in its transformation process with the introduction of automation and technology.

“Putrajaya should have a good model to lead or assist SMEs in this implementation,” he added.

The construction industry, on the other hand, said it hopes Budget 2024 will address labour shortages and unstable construction material prices.

Oliver Wee Hiang Chyn, president of the Master Builders Association Malaysia, said the fluctuating prices of building materials is of particular concern to them.

“The construction industry has not fully recovered from the forced shutdown due to the pandemic and the fluctuation of construction material prices could make or break us,” he said.

He gave a simple scenario to illustrate what contractors like him face.

“For example, when we bid for a project that uses a lot of steel, our budget for steel is RM5,000. But if the price of steel suddenly rises to RM5,500 after we start work, we have to bear the increase and that would have a significant impact on us.”

Wee said if the contract is for a government project, they are cushioned by the variation of price clause in the contract.

“This means if the price of construction materials suddenly increases, the developer will be compensated.

“There’s no such thing if it’s a project in the private sector.”

He said that is one of the reasons why some contractors are reluctant to take jobs in the private sector.

Wee hoped there is something in Budget 2024 that could assist the industry tackle the issue of fluctuating building material prices.

“That’s the industry’s biggest concern now.”

The Finance Ministry, due to the enthusiastic response to its feedback collection, will collect more input until September 22.

As of September 13, the Budget 2024 roadshow led by Deputy Finance Ministers Ahmad Maslan and Steven Sim Chee Keong, has visited nine states and conducted 24 consultation sessions.

Anwar will present the budget on October 13, which is expected to be in line with the goals he announced in July for a “Prosperous Economy: Empowering the People.” – September 20, 2023.