SMEs among the biggest winners, says think tank

PETALING JAYA: The small and medium enterprises (SMEs) emerged as one of the biggest winners in the 2019 Budget, said the Socio-Economic Research Centre (SERC) executive director Lee Heng Guie.

“I think the biggest surprise coming from the (tax) incentive, is the 1% cut in the corporate tax rate,” Lee told SunBiz.

“I don’t think anyone expect (that) but we from the ACCCIM (Associated Chinese Chambers of Commerce and Industry of Malaysia) proposed the measure for the reduction in the corporate tax rate in SME,” he added.

During the tabling of the 2019 Budget, Finance Minister Lim Guan Eng said the government proposed that the tax rate on chargeable income of up to RM500,000 will be reduced by 1 percentage point from 18% to 17% to enhance competitiveness of SME and boost economic growth.

To support the transition and migration to Industry 4.0, the government also allocated RM210 million from year 2019 to 2021 and will assist the first 500 SMEs to carry out the Readiness Assessment to migrate to Industry 4.0 platforms via Malaysia Productivity Corporation.

Lee, who viewed the overall measures announced for the sector as “very positive”, said that it is important for the government to consistently enhance the development of the SME.

He said this is because the industry contributes close to 95% of the manufacturing establishments and are among the major contributor to the country’s gross domestic products, exports as well as employment.

Asked whether the RM210 million fund to promote Industrial Revolution 4.0 (IR4.0) is sufficient, Lee said this is only the initial stage of the fund and he believes that the government will continue to review the fund’s size moving forward.

“They just launched the initial policy on IR4.0. We must understand that the IR4.0 is not something that we can achieved overnight as most of the companies are (now) stuck between IR2.0 and IR3.0 level. And if there is a need, I believe that they will review the fund (not necessarily in the next Budget,” Lee added.

Lee also advised the SME companies to participate in the Readiness Assessment programme to assess and facilitate their preparations for the IR4.0.

Nevertheless, the Malay Economic Action Council (MTEM) CEO Yazid Othman said the council is disappointed with the small allocation provided for the bumiputra economic agenda.

He said the amount of the allocation for the bumiputra agenda is only about RM3.6 billion out of the total amount of RM314.5 billion for the Budget.

“MTEM worries that the Bumiputera Economic Agenda is not given sufficient attention,” he added.

However, he said the council opined that the Budget 2019 is favourable taking into account the current economic and national debt conditions.

To note, the government reduced its allocation for National Entrepreneur Group Economic Fund (Tekun Nasional) to RM100 million under Budget 2019, from RM500 million in the previous Budget.

Source: TheSunDaily