RON95 rationalisation expected to have bigger impact on SMEs - SAMENTA

William: The requirements will stretch the ability of MSMEs to comply with the regime.

PETALING JAYA: The Small and Medium Enterprises Association of Malaysia (SAMENTA) expects that the rationalisation of RON95 will have a greater impact on small and medium enterprises (SMEs) compared to the rationalisation of diesel subsidies.

Its president, Datuk William Ng said this is because most vehicles, including commercial vehicles, will be affected, and the move will subsequently reduce the consumer purchasing power.

"I think generally, SMEs are not ready for a reduction or removal of the RON95 subsidy.

"Therefore, if possible, we ask the government to not remove the RON95 subsidy abruptly and to do it gradually instead so that SMEs can adapt and absorb the increased operation costs,” Ng said to media after a roundtable discussion on ‘Challenges and Opportunities for Malaysia’s SME and Retail Industry’ here today.

He said that if the government implements the RON95 rationalisation all at once, it will cause the prices of goods to increase by around 30 to 50 per cent.

Ng highlighted that the top three costs for retail in the food and beverages (F&B) sector -- raw materials, rental, and wages -- have increased by 40 to 70 per cent over the past three years.

If this continues, there will come a point where the retailers will not be able to fully absorb the additional costs, and this cost increase of between 30 to 50 per cent will have to be passed on to consumers, he said.

Currently, SMEs account for 97.4 per cent of total business establishments in the country.

On July 12, the Economy Ministry said that the government is still studying and reevaluating the subsidies and assistance provided to the people, including that for RON95.

The proposed implementation of the targeted RON95 subsidy will be finetuned from all aspects so that the initiative will run smoothly and increase the effectiveness of aid distribution to the people, it said.

Meanwhile, Ng hopes that the government will not impose or introduce any additional taxes.

He also said that SMEs will also need financial assistance for environmental, social, and corporate governance compliance in Budget 2025.

"In Budget 2024, the government raised the service tax from 6.0 per cent to 8.0 per cent, and that has had a significant impact on SMEs in general, especially in terms of margin compression,” he added. - Bernama