More funds for small busi­nesses

But cor­po­rate tax rates re­main un­changed

The Star Malaysia - StarBiz - - Smebiz - By JOY LEE joylmy@thes­tar.com.my

BUD­GET 2018 main­tained a strong em­pha­sis on SMEs as in­dus­try ob­servers note a big­ger al­lo­ca­tion for the sec­tor com­pared with 2017. How­ever, many also note that a cut in cor­po­rate tax was sorely lack­ing.

“I think there is more al­lo­ca­tion than 2017. There were some good moves by the Gov­ern­ment such as the RM7­bil al­lo­cated un­der the Skim Jam­i­nan Pem­bi­ayaan Per­ni­a­gaan (SJPP), and more funds given for ex­port ac­tiv­i­ties.

“But the one dis­ap­point­ment is the lack of an­nounce­ment on re­duc­tion in cor­po­rate tax. We were ex­pect­ing a grad­ual roll­back of cor­po­rate tax of 1% per an­num from 2015 to 2020 fol­low­ing the in­tro­duc­tion of the GST. But there was none this year,” says As­so­ci­ated Chi­nese Cham­bers of Com­merce and In­dus­try of Malaysia na­tional coun­cil mem­ber and SME and HRD com- mit­tee chair­man Koong Lin Loong.

At the very least, he was ex­pect­ing the thresh­old of tax­able in­come for SMEs to in­crease from RM500,000 to RM1mil.

For 2017, SMEs with a paid-up cap­i­tal of RM2.5mil and be­low saw a cut in tax rate to 18% from 19% for tax­able in­come up to the first RM500,000. Cor­po­rate tax for SMEs was re­duced from 20% to 19% un­der Bud­get 2016.

In a state­ment, the Fed­er­a­tion of Malaysian Man­u­fac­tur­ers (FMM) adds that re­duc­ing the rates would make Malaysia, which has a cor­po­rate tax of 24%, as com­pet­i­tive as neigh­bour­ing coun­tries such as Hong Kong (17%), Sin­ga­pore (18%), Thai­land (20%) and Viet­nam (20%).

Nonethe­less, Bud­get 2018 pro­motes a con­ducive mar­ket for SMEs through eas­ier access to fund­ing and sup­port for ex­port and tal­ent devel­op­ment.

“The man­u­fac­tur­ing sec­tor is pleased that a lot of em­pha­sis has

been given to in­dus­try, trade, In­dus­try 4.0, the dig­i­tal econ­omy, ed­u­ca­tion and train­ing,” says FMM.

In­ter­na­tional Trade and In­dus­try Min­is­ter Datuk Seri Mustapa Mo­hamed said the em­pha­sis placed on SMEs would en­sure that the sec­tor would re­main com­pet­i­tive.

“The Bbud­get con­tin­ues to em­power our SMEs and for the first time ever, they re­ceive a big boost of RM23.7bil in terms of al­lo­ca­tion, grants, soft loans and guar­an­tees,” he said.

“This time, we can def­i­nitely see more fund­ing for SMEs. It is a good bud­get, it cov­ers ev­ery an­gle,” adds SME As­so­ci­a­tion of Malaysia pres­i­dent Datuk Michael Kang. Among the good­ies dished out for SMEs in­clude RM7­bil in funds un­der SJPP for work­ing cap­i­tal and ser­vices sec­tor and RM1­bil in gov­ern­ment guar­an­tee loans un­der SJPP to en­able SMEs to au­to­mate their pro­duc­tion.

There was also a no­table fo­cus on ex­ports with an al­lo­ca­tion of, among oth­ers, RM150mil to Ma­trade, Mida and SME Corp for ex­port and pro­mo­tional pro­grammes, in­clud­ing the much wel­comed Mar­ket Devel­op­ment Grant (MDG). This will help SMEs ex­pand their ex­ports and take ad­van­tage of the favourable ex­change rates.

Kang says these funds and in­cen­tives would help ac­cel­er­ate SME con­tri­bu­tion to the coun­try’s gross do­mes­tic prod­uct (GDP). It is tar­geted that SMEs would con­trib­ute 41% of GDP by 2020.

Last year, SME con­tri­bu­tion was about 36.6%, only a 0.3% in­crease from 36.3% in 2015. Kang es­ti­mates SME con­tri­bu­tion to GDP this year to be at about 37%.

“SMEs have been faced with chal­lenges over the last two years so the pre­vi­ous bud­gets for SMEs did not achieve as strong a growth as hoped for. So they will def­i­nitely need the boost,” says Kang.

One of the main is­sues faced by SMEs, he says, is the cost of labour.

“We hope this can be helped with au­to­ma­tion so that we don’t de­pend too much on labour. So it’s good that there are mea­sures for au­to­ma­tion and also the 70% guar­an­tee for loans by the Gov­ern­ment,” he adds.

Mean­while, Sec­re­tariat for the Ad­vance­ment of Malaysian En­trepreneurs (SAME) chief ex­ec­u­tive of­fi­cer Neil Foo says he was ex­pect­ing more funds for the MDG and more in­cen­tives to en­cour­age SMEs to go into e-com­merce, par­tic­u­larly with the up­com­ing launch of the Dig­i­tal Free Trade Zone.

“But this could just be a start to build up the in­fra­struc­ture for DFTZ and e-com­merce. There seems to be lit­tle con­crete things for SMEs in this re­spect at the mo­ment but it doesn’t meant that this is not a good start,” he says.

Foo, how­ever, wel­comes the ad­di­tional RM50mil fund­ing to Kop­erasi Jayadiri Malaysia Bhd (Ko­jadi) and the at­ten­tion on the tourism sec­tor.

“With the RM50mil, we now have RM200mil. We have helped about 800 SMEs. With ad­di­tional funds, we ex­pect to help more,” he says.

The Prime Min­is­ter has de­clared 2020 as Visit Malaysia Year and among the al­lo­ca­tion made for tourism in­clude RM2­bil for SME Tourism Fund with in­ter­est sub­sidy of 2% and tax in­cen­tive for in­vest­ment in new four-star and five-star ho­tels ex­tended for two years as well as tax in­cen­tive for tour op­er­at­ing com­pa­nies ex­tended to Dec 31, 2020.

“Bud­get 2018 is a con­tin­u­a­tion of the ‘SME bud­get’ since 2014. It’s a good con­tin­u­a­tion pro­gramme for SME.

“We en­cour­age SMEs to utilise any grant avail­able to dig­i­talise their com­pa­nies,” says Foo.

Needed boost: Kang says the bud­get will help grow SME con­tri­bu­tion to the GDP.

Good con­tin­u­a­tion: Foo wel­comes ad­di­tional fund­ing for Ko­jadi and tourism.

No tax cut: Koong notes that an­nounce­ment on cor­po­rate tax cut was miss­ing.

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