SMEs getting desperate as cost rises

Corporate News

PETALING JAYA: The government must prioritise the survival of the small and medium enterprises (SMEs), which are currently going through a steep and difficult recovery.

In a statement yesterday, Small and Medium Enterprises Association of Malaysia chairman Datuk William Ng said the SMEs are facing issues of rising costs and labour challenges.

“Until and unless these are resolved or substantially mitigated, any hope of a full recovery to pre-pandemic level is an unrealistic illusion,” he noted.

Ng pointed out that recent policy announcements by the government have ignored not only the 5.6% negative growth in 2020 but also the compounding effect of that contraction to the country’s economy.

“In order to catch-up on this compounded loss in the next five years based on the average 4.8% gross domestic product (GDP) growth over the five years preceding the pandemic, we will need an average GDP growth of at least 7.5% over the next five years.

“That’s a tall, if not impossible order,” he added.

As such, the government must be realistic in trying to implement adjustments that would affect the SMEs.

For example, justifications that wages increment or electricity bill hike have been delayed for two years do not account for this compounded loss.

“It makes little sense for SMEs to be warned not to increase prices or lay off redundant workers when costs are spiraling, coupled with our inability to operate at pre-pandemic levels,” he noted.

While the SMEs are thankful for the various initiatives announced, including wage subsidies, re-hiring

initiatives and soft loans to help SMEs tide over the pandemic, Ng said there is a need for firmer policy interventions at this juncture “if we are serious about helping push our SMEs, and by extension, the economy, to pre-pandemic levels.”

To help save the SMEs, Samenta suggested an immediate halt to the increment in electricity bills, allowing the market to dictate wages, speed up the transition to market-led financing, re-opening the borders immediately and declaring an endemic stage.

The association also said it remained supportive of the government in helping the SMEs recover the pandemic and is working with various government agencies to help ease this transition.