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FMM: Govt must act swiftly to enhance SMEs' competitiveness

FMM In The News: NEWSWAV, KUALA LUMPUR, Saturday, February 18, 2023 - The Federation of Malaysian Manufacturers (FMM) has urged the government to act swiftly in enhancing small and medium enterprises’ (SMEs) competitiveness and productivity, public service delivery and governance through Budget 2023 to be presented in Parliament on Feb 24.

FMM president Tan Sri Soh Thian Lai said the revised Budget 2023 should focus on these areas for the sake of the national economy and business dynamism.

“For example, to encourage domestic investment, we propose further government support for made-in-Malaysia products in government procurement, and the introduction of special tax rebates for projects using locally manufactured products,” he said in an FMM pre-Budget 2023 commentary video released on Saturday (Feb 18).

Given that government procurement accounts for one of the biggest purchases of domestic products, this could boost the industry, as manufacturers would be willing to invest more when they are confident that the government is prepared to buy their products, Soh said.

“Is the government willing to look into a government procurement act, so that government-linked companies and government-linked investment companies are buying locally-made products?” he asked.

In calling for greater support for SMEs, he said the government should consider lowering the corporate tax, so that SMEs can plough back their profits into further investment.

“We hope the tax rate would be between 13% and 15%,” he added.

Soh expressed hope that the government would allocate enough funds for SMEs, noting that SMEs contribute nearly 40% of the country’s gross domestic product.

“SMEs play an important role in the manufacturing and industrial services sectors. Even during the movement control order period, when we faced a lot of global logistics constraints, and the Ukraine-Russia conflict, the economy could still function smoothly, with adequate food on the table and goods delivered on time.

“It was due to local companies. Our local SMEs, through their capabilities and agility, are the backbone behind the nation’s [economic] resilience,” he said.

The government, therefore, should not only focus on foreign direct investment, but also domestic direct investment, he said.

According to him, the domestic investment level has been declining over the past five years.

“Some domestic manufacturers felt that there was too much red tape, making them not confident about investing in new products,” he said, adding that the government should therefore provide the right conditions and incentives to ensure that they will continue to invest.

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