1 week Ago By Samuel Aubrey
Datuk William Ng KUCHING (Oct 19): The small and medium enterprises (SMEs) in Sabah and Sarawak in particular would find it difficult to implement the revised minimum wage policy, said Small and Medium Enterprises Association of Malaysia (Samenta) president Datuk William Ng. Stressing this could potentially result in substantial job losses, he said Samenta is urging the government to refine the minimum wage to allow for lesser developed states to maintain the current minimum wage or to do away with the minimum wage altogether. “SMEs would be badly affected with the increase in minimum wage as announced by the Prime Minister.
The association agrees that wages in Malaysia are too low, and more must be done to lift the wages of Malaysians. However, the minimum wage is coming at a time of compressed margin for SMEs and would be disruptive to the operations of SMEs,” he said in a statement. Prime Minister Datuk Seri Anwar Ibrahim, who is also the Finance Minister, said in his speech during the tabling of Budget 2025 on Friday that the revised minimum wage policy of RM1,700 is set to come into effect on Feb 1, 2025, and would apply to employers with at least five employees.
Smaller businesses, or micro-enterprises with fewer than five employees, meanwhile, will be granted a grace period of six months to implement the new minimum wage. Ng also said automation is not an automatic answer for SMEs coping with severe margin compression, which would now be made worse by the minimum wage increment. He pointed out many multinational enterprises typically outsource their most labour-intensive work to SMEs, including such tasks as cleaning, maintenance, packing and logistics.
“There is very little that automation can do to substitute the headcount in such cases. Similarly, over 80 per cent of our SMEs are in the services sector, including the retail and food and beverage industries. Digitalisation may reduce the need for workers, but there is no direct substitute for workers in such industries,” he added.
On a related matter, Ng said the introduction of the two per cent tax on dividends will hurt SME owners disproportionately and said Samenta urges the government to consider exempting SMEs from such tax. “We must remember that in SMEs, the bulk of dividends would go to the SME owners, not some silent or random investor as in the case of listed companies. Many SME owners do not draw salaries due to the tight cash flow experienced by most SMEs in recent years.
“As such, taxing them on dividends from income that is already taxed is not only a form of double taxation, but will discourage SMEs from growing their business or turning in higher profits,” he said. On a positive note, Ng said Samenta applauds the Prime Minister for once again lowering the budget deficit and introducing a number of measures to reduce wastage including merging redundant agencies, as well as extending the subsidised funding and credit guarantees for SMEs. He pointed out in particular, the RM 3.
8 billion for automation and digitalisation will be helpful, while the RM 650 million allocated to support women and youth entrepreneurs is an inclusive strategy. “We are also particularly thankful for the matching grant for industrial training to be administered by TalentCorp, which will help to ease the talent crunch among SMEs, while allowing more students to gain practical experience,” he added..
