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THE Small and Medium Enterprises Association Malaysia (Samenta) has called on the government to immediately pause all new and planned cost increases impacting SMEs, warning that even marginal hikes could push thousands of small businesses toward insolvency in the wake of escalating global trade tensions.

While commending the government’s rapid response to US-imposed reciprocal tariffs – particularly the RM1 billion boost in SJPP guarantees, RM500 million in soft loans, and RM50 million in additional MATRADE funding – Samenta president Datuk William Ng stressed that the vast majority of SMEs are not exporters and risk being left out of the relief framework.

“The vast majority of Malaysia’s SMEs – over 84% – do not export and are not in manufacturing. These businesses, which include our domestic-facing services, retail, logistics, construction, trading and F&B sectors, will be equally impacted as input costs rise, supply chains tighten, and consumer spending begins to contract.”

In addition to urging a pause on SST expansions and fee increases by local councils and government agencies, Samenta is calling for a temporary freeze on new licensing and compliance requirements that could further burden already strained small businesses.

“In the current environment, even marginal cost escalations could tip many SMEs into insolvency,” said Ng. 

Similarly, Samenta is advocating for a temporary freeze on new licensing and compliance requirements that impose additional burdens on SMEs already under strain.

Ng also flagged persistent labour shortages, especially in the services sector, as a critical issue. He urged the government to ease restrictions on the hiring of foreign workers in sectors like tourism, logistics, and food services, where local manpower remains limited.

“We are hopeful that the government will consider easing current restrictions on the hiring of foreign workers, particularly in food services, tourism, and logistics – sectors where local hiring remains a challenge and operational capacity continues to lag,” he said.

 The survival of many of these SMEs, he noted, hinges not just on access to capital, but on access to a stable and sufficient workforce.

Another pressing concern is the anticipated entry of foreign players into Malaysia’s services sector, as multinational corporations seek refuge from uncertainties in their own export markets.

Samenta is urging the government to level the playing field through stronger enforcement of competition laws, local equity mandates, and safeguards against predatory pricing.

“We urge the government to take proactive steps to ensure a level playing field for local SMEs, including stronger enforcement of fair competition laws, local equity requirements for foreign entrants in strategic service sectors, and safeguards against predatory pricing practices that threaten to displace local SMEs,” Ng stated.

To stimulate domestic demand and support local SMEs, Ng proposed incentives for consumers to buy local, as well as encouraging GLCs and large corporations to increase procurement from domestic suppliers.

“In the face of weakened consumer sentiment, the government should also consider stimulating domestic demand by offering incentives for consumers to support local SMEs, and encouraging GLCs and large corporations to procure more goods and services from domestic suppliers.”

Samenta also called for more targeted support to enhance SME resilience, including grants and tax incentives for digitalisation and automation, and zero-interest or deferred-payment working capital loans, especially for urban businesses grappling with cash flow and high rental costs.

“Finally, many small businesses, especially in urban centres, continue to struggle with cash flow and rental pressures. We urge the government to consider zero-interest or deferred-payment working capital loans to keep these businesses afloat in the coming months,” Ng said.

Ng noted that the recent tariff shock exposes deeper vulnerabilities within Malaysia’s SME ecosystem.

“As Samenta has noted in a recent commentary, the real paradox of our economy lies in our ability to show headline growth while most SMEs are left behind, squeezed by structural imbalances and rising operating costs.”

“This latest tariff shock is yet another reminder that Malaysia’s economic model must be recalibrated, not around the needs of a few large corporations, but around the 1.5 million SMEs that drive employment and domestic economic activity.”

Samenta said it remains committed to working closely with the government to ensure that support measures are deployed swiftly and equitably. — TMR

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