PETALING JAYA: There is plenty to look forward to for small and medium enterprises (SMEs) and the semiconductor industry – but a lot will depend on the effective execution of these measures, say industry leaders.
Among the plans for SMEs under Budget 2026 is an additional 50% tax deduction for training expenses.
The training is related to artificial intelligence (AI) and cybersecurity, recognised by the MyMahir National AI Council for Industry (Naici), which is jointly led by Talentcorp and MyDigital.
Besides that, RM50mil will be allocated to Bank Simpanan Nasional (BSN) to provide business grants of up to RM10,000 to 1,000 potential micro-entrepreneurs as capital to buy business equipment.
While these measure are progressive, the execution will be the real challenge, said Nivas Ragavan, vice-chairman of the Federation of Malaysian Business Associations.
“Building future-ready SMEs by providing an additional 50% tax deduction for training is visionary,” said Nivas.
“It encourages SMEs to embrace digitalisation, automation and the green economy.”
He suggested that there be a call for faster and transparent implementation because many SMEs face hurdles not due to lack of funds, but due to slow and complex processes.
“The government should streamline and digitalise access through a single financing portal to ensure faster fund delivery,” he said.
Nivas pointed out that a stronger roadmap for export-oriented and Asean-focused SMEs is missing.
He also suggested that there should be long-term mentoring and scaling programmes for sustainable SME growth such as upskilling, reskilling and multiskilling.
SME Association of Malaysia president Dr Chin Chee Seong was more pessimistic.
He noted that the allocation is not going to SMEs that are struggling but rather to those that are doing well.
“Overall, Budget 2026 doesn’t carry any groundbreaking incentive or anything we can shout about,” he said.
“The government should come up with a system of low interest rate or a tiered interest rate to help solve problems related to cash flow.
“Every year we get money to help, but how many are successful?
“There should be data to track those who benefitted and how they used the money,” Chin stressed.
He added that application processes in commercial banks are usually roadblocks for SMEs.
The Small and Medium Enterprises Association of Malaysia (Samenta) said a consistent follow-through and execution is needed to ensure that announced initiatives reach SMEs.
“The expansion of credit guarantees to RM30bil via Syarikat Jaminan Pembiayaan Perniagaan Bhd (SJPP) and RM50bil for SME financing support directly address one of the top concerns, which is limited access to affordable credit,” said Samenta national president Datuk William Ng.
The Prime Minister announced in Budget 2026 the launching of SemiconStart, an incubator programme by the Malaysian Technology Development Corporation in collaboration with a global incubator.
This will help early-stage startups gain mentoring, access to global financing, discounted prototyping services and customer networks.
“SemiconStart is a positive and timely initiative to create Malaysian champions in the electrical and electronics sector,” said Malaysia Semiconductor Industry Association president Datuk Seri Wong Siew Hai.
“However, the journey from startup to global player is far from easy.
“Companies will need strong government support, a vibrant ecosystem and a culture of innovation to succeed.”
He also said the semiconductor industry requires depth, access and partnerships beyond government funding.
