Why policy certainty is important in a world of hyper-flux

IN his essay "Thriving in the Age of Hyper-Flux" (The Star, Nov 4), Entrepreneur Development and Cooperatives Minister Steven Sim provided some sharp insight into the global economy. Between rapid AI breakthroughs, disrupted supply chains and geopolitical tensions, the old economic playbook is indeed gone. His point that successful businesses turn volatility into opportunity rather than wait for an easy ride is spot on.

He also brought up our conversation at the Penang Economic Forum, where I stressed that businesses need “certainty, certainty, and certainty.” That exchange raised a fair question: In a world changing this fast, is asking for certainty simply wishful thinking?

Not at all. The key lies in understanding what kind of certainty businesses actually need. Far from being an excuse to sit still, clear and predictable domestic policies are the exact foundation that gives business owners the confidence to take big commercial risks.

When we talk about risk in business, we have to distinguish between two completely different types. Entrepreneurs do not and should not expect the government to protect them from market risk, such as competition, shifting technology and changing consumer preferences. Dealing with competition and adapting to change is the entire job of running a business.

Where the government can come in is in minimising policy risks such as sudden changes in regulations, short compliance deadlines and bureaucratic red tape amid an already volatile market.

Unlike multinational corporations (MNCs) and Government-Linked Companies (GLCs), an SME does not have the same deep cash reserves to absorb expensive surprises. When an SME decides to invest in high-end automation, upgrade its machinery or adopt AI tools, the owner is usually putting their own savings and bank guarantees on the line.

Every business has a limited capacity for risk. If owners must constantly spend their time and cash reacting to sudden domestic rule changes, shifting deadlines or unclear guidelines, that capacity gets used up on basic defence. There is simply no energy or resources left to fund bold, innovative leaps into the unknown.

It is tempting to think that because the global market is fluid, policy at home should constantly shift as well. In reality, the opposite is true: the wilder the weather outside, the more solid your anchor needs to be.

In practice, long-term business investments such as upgrading a manufacturing line or building custom software take three to five years to pay for themselves. Business owners can only commit that capital if the rules around taxes, compliance and employment stay reliable over that horizon.

Global buyers are moving away from chasing the cheapest supplier; they want the most reliable one. A local supplier cannot promise reliability to an overseas client if we have to stop work each time an unscheduled public holiday is declared.

Last month, at the SME CEO Forum, I mentioned that the three main structural challenges our SMEs are facing are compliance burden, credit accessibility (not just availability) and capability erosion.

Navigating this fast-changing world is not a matter of risk-takers versus cautious observers. It is a partnership where both sides have a clear job to do.

Agility belongs to the entrepreneur. The market rewards businesses that learn quickly, run lean, adopt new tools, and find new customers.

Predictability belongs to the government. The state cannot stop trade disruptions or predict the pace of tech and AI, but it can provide clear runways, sensible transition periods and consistent policies at home.

In many ways, the Madani government is on the right track by reducing bureaucracy (the Government Service Efficiency Commitment Act 2025 and Bureaucratic Reform Initiative are two prime examples), supporting liquidity (both availability and accessibility of financing) and diversifying our markets (the upcoming Asean Digital Economy Framework Agreement, Malaysia-European Union Free Trade Agreement, and Malaysia-Gulf Cooperation Council Free Trade Agreement come to mind). But in many ways, we can do better in coordinating policy sequencing, industry outreach and reducing institutional silos.

It is true that many of our SMEs are in disrupted sectors and will need to pivot and be even more agile to survive. But just as many SMEs are highly competitive businesses that are not asking for permanent protection, nor are they afraid of competition.

To make that leap, they simply need the assurance of steady ground under their feet, reduction of bureaucratic red tape, and a financing regime that doesn’t work like pawn shops.

With the Minister’s clear vision for where our business community needs to go, many of our most progressive SMEs would be ready and eager to follow his lead into this new frontier.

DATUK WILLIAM NG

National President

Small and Medium Enterprises Association of Malaysia