By Dr.ChinCheeSeong, SMEMalaysiaNationalPresident
KUALALUMPUR,10October2026–TheSMEAssociationofMalaysia(SMEMalaysia)welcomestheGovernment’sdecisionunderBudget2027toexemptmicro,smallandmediumenterprises(MSMEs)withannualsalesbelowRM50millionfromtheincreaseinminimumwagefromRM1,700toRM2,000,scheduledforJune2027.
TheAssociationexpressesitssincereappreciationtotheGovernmentforrecognisingthefinancialchallengesfacedbyMSMEsandprovidingmuch-neededbreathingspaceforbusinessestoadjusttheiroperations.
However,SMEMalaysiaremainsconcernedthatBudget2027doesnotprovidesufficientdirectrelieffromtherisingcostofdoingbusiness,whichcontinuestobeoneofthebiggestchallengesfacingMalaysianSMEs.
CostofLivingandCostofDoingBusinessMustBeAddressedTogether
SMEMalaysiaNationalPresident,Dr.ChinCheeSeong,saidthatBudget2027continuestofocussignificantlyonhelpingtherakyatcopewiththerisingcostoflivingthroughincreasedhouseholdassistance,personalincometaxreliefandmeasurestostimulatedomesticconsumption.
“WewelcometheGovernment’seffortstostrengthenhouseholdpurchasingpower,particularlyamongtheB40andM40groups.Whenconsumershavemoredisposableincome,localbusinessescanbenefitfromincreasedspending.
“However,higherconsumerspendingdoesnotnecessarilytranslateintohigherbusinessprofitswhenoperatingcostscontinuetorise.”
Dr.ChinpointedoutthatSMEscontinuetofacecumulativeincreasesinutilities,commercialrental,financingcosts,logistics,wages,SSTandregulatorycomplianceexpenses.
SMEMalaysia’sApril2026surveyfoundthat76%ofrespondentsweresignificantlyaffectedbyhigherfuelandenergycosts,while45%anticipatedcash-flowdifficultieswithinthreetosixmonths.
“Thesecostpressuresarenotisolated.Theyaffectbusinessessimultaneously,squeezingprofitmarginsandweakeningcashflow.
“Wecannotcontinueaddressingtherisingcostoflivingwithoutgivingequalattentiontotherisingcostofdoingbusiness.Botharecloselyconnected.”
MinimumWageExemptionWelcomed,butIndirectCostPressuresRemain
WhilewelcomingtheexemptionforMSMEswithannualsalesbelowRM50million,theAssociationcautionedthatsmallerbusinessesmaystillexperienceindirecteffectsfromthehigherminimumwage.
Dr.Chinsaid:
“Whenlargercompaniesincreasewages,smallerbusinessesmayfacedifficultiesrecruitingandretainingworkers.Theymayeventuallybepressuredtoadjusttheirsalarystructurestoremaincompetitive.
“Similarly,higherlabourcostsamongsuppliers,manufacturersandlogisticsprovidersmaybepasseddownthroughsupplychains,increasingcostsforsmallerbusinesses.”
SMEMalaysiathereforeurgestheGovernmenttoclarifythedurationandimplementationoftheexemptionwhilesupportingSMEsthroughproductivityincentives,skillsdevelopmentandautomationassistance.
“Wesupportbetterwagesforworkers,butwageincreasesmustbesustainableandsupportedbyproductivitygrowth.Higherwagesmustnotcomeattheexpenseofjobs,businesssurvivalandcompetitiveness.”
TaxReductionsandFinancingAreWelcome,butSMEsNeedMoreDirectCostRelief
SMEMalaysiaacknowledgesandwelcomesseveralmeasuresannouncedunderBudget2027,including:
- Theone-percentage-pointreductioninqualifyingMSMEcorporateincometaxrates,providingpotentialannualsavingsofuptoRM6,000.
- TheincreaseinbusinessfinancingandguaranteefacilitiesfromRM50billiontoRM57billion.
- Enhancedcapitalallowancesandtargetedsalestaxrefundsforqualifyingbusinesspurchases.
- SupportforAIadoption,automation,TVETandbusinessexpansion.
However,theAssociationemphasisedthatthesemeasuresprimarilysupporttaxsavings,financingaccessandinvestment,ratherthanprovidingbroad-basedimmediaterelieffromrecurringoperatingexpenses.
Dr.Chinexplained:
“Taxreductionsarewelcome,butbusinessesmakinglittleornoprofitmayreceivelimitedimmediatebenefits.EventhemaximumRM6,000annualtaxsavingrepresentsonlyRM500permonth,whichmaybeinsufficienttooffsetrisingoperatingexpenses.
“Financingfacilitiesareuseful,butloansmusteventuallyberepaid.Similarly,automationanddigitalisationareimportantforlong-termcompetitiveness,butmanysmallerbusinessesarestrugglingwithtoday’selectricitybills,rentalpaymentsandcash-flowrequirements.
“OurSMEsdonotmerelyneedmoreloansandincentives.Theyneedpracticalassistancethatdirectlyreducesoperatingcostsandimprovestheirfinancialsustainability.”
SMEMalaysiaCallsforTargetedOperating-CostRelief
TheAssociationurgestheGovernmenttoconsideradditionalpracticalmeasures:
- TargetedutilityandenergycostreliefforSMEsfacingsignificantincreasesinoperatingexpenses.
- TemporarySSTreliefoncommercialrentalandleasing,particularlyformicroandsmallenterprises.
- Affordableshort-termworkingcapitalfacilities,supportedbystrongerSJPPandCGCguarantees,simplifiedapplicationsandfasterapprovals.
- Moreaccessibleautomationandproductivitygrants,particularlyforsmallerbusinesseswithlimitedfinancialresources.
- AcomprehensivecumulativeSMEcostandregulatoryimpactassessmenttoevaluatethecombinedeffectsofgovernmentpoliciesonbusinesscosts,employmentandcompetitiveness.
SMEMalaysiaalsocallsforcloserconsultationwithindustryassociationstoensureassistanceprogrammesreflectactualbusinessconditionsandreachenterprisesmostinneed.
BusinessSustainabilityMustBeaNationalEconomicPriority
Dr.Chinstressedthatsupportinghouseholdconsumptionandstrengtheningbusinesssustainabilitymustgohandinhand.
“TheGovernmentisrightlyconcernedabouttherisingcostoflivingfacedbytherakyat.However,wemustbeequallyconcernedabouttherisingcostofdoingbusinessfacedbytheenterprisesthatemployworkersandprovidegoodsandservices.”
Hecautionedthatcontinuedoperating-costpressurescouldforcesomeSMEstoincreaseprices,freezerecruitment,postponeinvestmentsorscaledowntheiroperations.
“Ifbusinessescannotremainfinanciallyviable,theconsequenceswilleventuallyaffectworkers,consumersandthewidereconomy.
“Helpingconsumersspendmoreisimportant,butensuringbusinessescanaffordtooperate,retainemployeesandcreatejobsisequallyimportant.”
Budget2027MustBeMeasuredbyRealOutcomes
SMEMalaysiareiteratesitssupportfortheGovernment’seffortstostrengthenhouseholdpurchasingpower,promoteinvestment,developtalentandimproveproductivity.
However,theAssociationemphasisesthattheeffectivenessofBudget2027mustbeassessedthroughmeasurableoutcomesratherthanthesizeofallocationsannounced.
Dr.Chinconcluded:
“WesincerelyappreciatetheGovernment’sdecisiontoexemptMSMEsfromtheRM2,000minimumwageincrease.However,ourbiggestconcernremainsinsufficientlyaddressed:therisingcostofdoingbusiness.
“ThesuccessofBudget2027shouldbemeasuredbyhowmanySMEsgenuinelybenefit,howmanyjobsaresustained,andwhetherbusinessesachieverealimprovementsincashflow,productivityandcompetitiveness.
“Astrongdomesticeconomyrequiresnotonlyconsumerswhocanaffordtospend,butalsobusinessesthatcanaffordtooperate.BothmustbesupportedforMalaysiatoachievesustainableeconomicgrowth.”
