BUDGET 2022 has many goodies for micro-, small- and medium-sized enterprises (MSMEs) but whether these will aid in their economic recovery depends on the execution of the aid measures, industry experts said.

They said while the credit facilities, tax breaks and wage subsidies look good on paper, the government will need to engage directly with industry to get a clearer picture of what the businesses are facing.

Others questioned whether credit facilities will really benefit small businesses who are already in the red and may face trouble securing the loans.

They also called it a populist budget that, in staying with tradition, fails to take into account the true effects of the Covid-19 health crisis.

SME Association vice-president Chin Chee Seong said there are good things in the budget but they are not much different from the measures in Budget 2021 or the existing eight economic stimulus packages.

“I wouldn’t say that we are happy with it nor are we unhappy with it. Businesses are still struggling and hopefully with this budget, we can overcome and get on the right track as soon as possible.”

Chin said the government’s effort to lower the unemployment rate through the JaminKerja initiative, while commendable, does bring up the question of how it is going to be implemented.

“A lot of people have lost their jobs. How is the government going to (guarantee) an increase in the number of jobs? 

“Hopefully, the government can engage with us and allow us to give our comments and get  There are a lot of things that they don’t know, (such as) the real industry needs, and hopefully we can tackle that part.”

To drive employment, Putrajaya has set aside RM4.8 billion of the RM322.1 billion budget to incentivise employers under the JaminKerja Scheme, which aims to give jobs to 600,000 people.

RM2 billion is allocated to encourage employers to hire jobless individuals for the benefit of 300,000 people.

Wage subsidies to raise employment

Under this initiative, the government will pay 20% of the recruit’s monthly salary of RM1,500 or more for the first six months and 30% for the next six months. 

For disabled and Orang Asli workers the government will provide a 30% wage subsidy for the first six months followed by 40% for the next six months for salaries above RM1,200.

For women workers, the government will provide a 30% wage subsidy for the first six months and 40% for the next six months for salaries above RM1,200.

The Malaysian Employers Federation (MEF) said employers approve of the initiatives in the budget which he said is in line with the country’s growth aspirations.

MEF president Syed Hussain Syed Husman said it is good that the government is giving tax breaks and funding to upskill workers along with wage subsidies.

“We look forward to the tax deductions of RM2,000 to RM7,000 to upskill employees not to mention the RM1.1 billion allocated to training and upskilling programmes for 220,000 trainees,” he said in a statement.

He said the budget initiatives would help curb unemployment which grew to 711,000 jobless in 2020 compared to 508,200 in 2019. Youth unemployment rose to 12%, or 314,000, in 2020 from 295,800, or 10.5%, in 2019.

Interest-free loans for MSMEs will also help kickstart businesses that have stalled due to a lack of capital but is important that th funds be disbursed quickly, he said.

“In many cases when they implement these programmes, when we apply for it, they will dilly-dally over the approval.

“Hopefully the application and processing is much easier and faster. We have no time to waste. The SMEs cannot wait.”

Companies in the red may not qualify for credit

Malaysian Association of Small and Medium Entrepreneurs president Mohd Ridzuan Abdullah was afraid many of the companies facing financial difficulties would not quality for credit.

He said that many small businesses have not been able to service their existing loans due to the impact of the epidemic on their business.

“Even if the loan is zero interest, will it benefit all of us? We need to take into account that many have been blacklisted by the banks as they have not been able to service their existing loans.

“They need to take this into consideration and make allowances for those who apply for the loans as with it, they can start their business and not be bankrupt,” he said, adding that at least 60% of the members of his associations have filed for bankruptcy.

Under the Tekun informal and micro financing scheme, small businesses are entitled to a loan of up to RM10,000 interest-free as well as a moratorium of 12 months.

BSN and Agrobank will also provide a loan facility of up to RM75,000 with zero interest for the first six months and a moratorium on interest for the remaining six months.

“MEF hopes that the implementation of the initiatives for Budget 2022 will be done in a clear and transparent manner.”

Alternative financing, automation

Wong Koh Meng, CEO of Funding Societies Malaysia, a digital financing platform, said alternative funding through peer-to-peer financing will help support businesses that have been severely impacted by the health crisis.

“The government’s decision to allocate more funds into alternative financing will further support the needs of MSMEs who are underserved by traditional financial institutions and open up opportunities for businesses who have been adversely impacted by the pandemic.”

Finance Minister Tengku Zafrul Tengku Abdul Aziz that peer-to-peer funding through equity crowdfunding grew rapidly to RM1.3 billion during the pandemic period.

Based on that, the government has decided to allocate RM80 million to the sector through the Malaysia Co-Investment Fund.

The RM45 billion allocated to spur automation, Wong said, will help MSME adapt to Industry 4.0 and allow them to compete in the global market.

Tengku Zafrul said the allocation will serve as incentive for SMEs and mid-stage companies in the manufacturing and services sectors to undertake a technological transformation. – October 30, 2021.