The Prime Minister and Finance Minister, Dato’ Sri Najib Tun Razak is expected to table the Budget 2017 in parliament on 21 October 2016.
- Given the uncertain economy and the fact that this might be the last budget before the next general election, it is widely speculated that it will be people-friendly, populist budget. Any help for the rakyat, especially those in the least-advantaged tier are much welcomed, but this should not come at the expense of our small and medium enteprises (SMEs).
LOWER CORPORATE INCOME TAX
- When the GST was first announced in Budget 2015 and subsequently implemented on 1 April 2015, the general consensus is that corporate income tax will be lowered from 25 percent in 2015 to 22 percent by 2018, in view of higher revenue from GST. We hope to see a further reduction in corporate tax to account for the higher costs and lower margins that many of our SMEs have been experiencing over the past three years.
TALENTS SHORTAGE AND MARKET DISRUPTION TOP SMES CONCERNS
- Contrary to popular belief, SMEs are not looking for more financing, but rather, to solve critical operational issues such as talent shortage and the changing market. On the one hand, we are seeing a freeze on the hiring of foreign workers, while on the other, local graduates prefer to work for larger and multinational companies. This severely limits the growth of our SMEs and is coming at a time when costs are rising and margins are razor-thin.
- This is further exacerbated by the rapidly shifting market. We are seeing how new technology and apps are disrupting traditional businesses, and many of our SMEs are simply not ready and not prepared to counter these threats. Combine this with the liberalisation of markets and regional competition, and we have a perfect storm brewing right now that could very well push one out of five SMEs out of business within the next one year.
- To provide relief to SMEs, we hope that the Budget 2017 will consider a matching grant for SMEs who invest in training and development of their employees, up to a maximum of 5 percent of their turnover. Further, we propose a matching grant of an additional 2 percent of payment to the EPF account of employees of SMEs to encourage our local talents to choose to work for smaller companies.
- We trust that the Government will remain fair to both wage-earners as well as job-creators.
by Dato’ William Ng
Editor-in-Chief, SME Magazine / Business Media International