Pinnacle of Supplementary Stimulus Package for SMEs
The base of the Supplementary Stimulus Package for SMEs:
Prime Minister Muhyiddin Yassin has announced a supplementary stimulus package on April 6, 2020. The main focus of this additional stimulus package for SMEs is to support and help small and medium-sized enterprises (SMEs). This package is separate from the economic stimulus package of 250 billion RM, which is announced on March 27, 2020.
Critical points of Supplementary Stimulus package for SMEs:
- 9 billion RM were allocated additionally for three months package as a subsidy program for the companies on the bases of a number of employees. The wage qualification threshold for the qualification of this will remain the same 4000 RM and below that. Detail of that subsidy amount is given below:
- Companies which have a number of employees less than 75 will get 1200 RM
- For companies with employees between 75-200 will be eligible for 800 RM
- Companies with employees more than 200 will receive 600RM
Criteria for companies to become available for this fund:
Only those companies will get this funding, which was registered with SSM (Suruhanjaya Syarikat Malaysia) or other local authorities before January 1, 2020. They also have to be registered with SOCSO (Social Security Organization); it is compulsory for them to retain the employees for six months’ duration.
- 1 billion RM will be allocated for eligible micro-enterprises as a special PRIHATIN Grant
- For about 700 000 micro-enterprises companies, a grant of 3000 RM will be distributed for each one of them, and the only criteria is that company should be registered with IRB. List of eligible micro-enterprises will be provided to the government by SSM and local authorities
- On 500 million Micro credit scheme running under Nasional Simpanan Bank, there will be a reduction of interest from 2% to 0%.
- For micro-companies soft loan, the project is also extended to TEKUN Nasional with a 10,000RM loan limit at an interest rate 0%, 200 RM will be provided solely for this purpose.
- To benefit more micro-entrepreneurs, applicants have to choose only one scheme from both of them.
- Private business owners will get a further deduction in tax form April to June 2020, which will reduce the waiver of the rental to SMEs. For that particular period, the rental reduction should be at least 30% of the original rental rate.
- For all companies in which foreign workers are working will get a 25% reduction in levy payment from 1 April to 31 December 2020. Domestic workers are not applicable in this
- Negotiations between employees and employers regarding employment terms and the number of unpaid leaves and cuts have been encouraged by the government. All talks must be according to the regulations and laws of employment.
- The government has shown its consent to provide an automatic 30 days moratorium form the ending date of Mobility Control Order (MCO). This will become applicable to the companies from the end of the financial year from 30 September to 31 December 2019. However, companies will have to apply for the SSM extension, and no extra charges will be imposed for late application.
Challenges faced by SMEs in Malaysia:
In Malaysia and many other countries, SMEs have to face many problems regarding their survival and taking up competitive advantages. 50% of SMEs are collapsed during the first five years of operation due to shortage of resources. In the case of Malaysia, an estimate showed us that the failure rate is nearly 60%, which gives us the idea that to what extent SMEs are facing issues and hurdles to survive as competitive enterprises in the market. Malaysia is starting its journey as a knowledge-based economy.
Importance of SMEs in the economy of Malaysia:
It is pretty much clear that over the last few years economy of Malaysia has gone through a lot of transformation from agriculture-based to industry-based, and now the country is again shifting from industry-based to knowledge-based so they can achieve whatever goals they have set in 2020 to become a developed economy and country. SME’s role is regarded as the backbone of the economy of Malaysia. SMEs of Malaysia, particularly the manufacturing sector, are playing a big part in the development of the country’s economy. SMEs comprised 99.2% of a total established business in Malaysia and contributed 47.3% in the GDP of the country. They also have a significant role as a job creator. During 2006 they employed 65.3% of the national workforce in Malaysia. As an estimate, it is reported that several registered SMEs during the last decade ranged from 10,000-30,000 that’s why the government is doing so much to save this pivot of their economy.