Masa calls for measures to strengthen local SMEs

PETALING JAYA: Institut Masa Depan Malaysia (Masa) has urged the government to undertake fiscal consolidation and introduce measures to strengthen small and medium enterprises (SMEs) under Budget 2023.

Masa CEO Azril Mohd Amin said Putrajaya must consider alternative approaches to managing Malaysia’s cash flow for healthy finances by reducing the implementation of insignificant projects and unnecessary spending and emphasise on elevating the standard of living as well as the wellbeing of the rakyat.

“The government should develop new revenue-generating strategies, with focus on raising national productivity. Tax alone constitutes 73.2% of total revenue.

“As such, the government needs to find new sources of revenue for the country. It should leverage the growth of digital economy and automation to enhance Malaysia’s competitiveness and productivity,” he said in a statement yesterday.

He added as a short-term approach, a tax mechanism to broaden the tax bracket for the top five to top 10 individuals and big companies should be implemented and recover any lost taxes from undeclared income.

For the long-term, the government must make big steps in huge revenue reformation and harmonise its fiscal policy for a better financial consolidation, he noted.

As it stands, the government’s operating expenditure is bloated, with emoluments accounting for 37% and retirement charges 12% of gross domestic product (GDP).

As of June 2022, Malaysia’s debt stood at RM1.045 trillion while the federal government’s debt service payment was RM43.1bil or 18.4% of national revenue. RM19.8bil was spent to pay interest on total debts over the period.

Azril urged the government to support SMEs at all costs as they make up 97.4% of all business establishments in this country and contribute 37.4% of GDP.

He said SMEs are struggling in facing global economic headwinds caused by inflation, rising interest rates, weakening of the ringgit and labour shortage.

“In helping the SMEs, banking institutions should allow flexibility in loan repayments and restructuring. The recommendation by the National Recovery Council for specific moratoria be made available immediately to businesses battling the pandemic, should be implemented without delay,” he said.

The process of bringing in foreign labour into the country should be accelerated through the use of technology to expedite recruitment.

Coordinated monitoring by the relevant government agencies and ministries must be intensified to ensure efficiency and transparency in bringing them to work in sectors in this country, he added.

Azril pointed out that the upcoming budget should incentivise digital transformation of the SMEs and digital technology applications such as mobile payment, eCommerce and cloud applications encouraged to build SMEs’ resilience and growth.