The Small and Medium Enterprises Association of Malaysia (Samenta) and SME Association Malaysia said easier access to funding was needed as many SMEs are struggling with tight cash flow and high compliance costs.
Samenta chairman William Ng said incentives for digitalisation, including the adoption of artificial intelligence (AI), should be platform-neutral and scaled up so that SMEs of all sizes and sectors are able to choose the tools best suited to their needs.
He said the RM5,000 digital matching grant previously introduced by Putrajaya was helpful but far too small for meaningful automation or AI adoption.
“We suggest expanding both the scope and the quantum. Similarly, while large financing allocations were announced, many SMEs struggled to access them due to stringent collateral requirements,” he told FMT.
Ng called for the matching grant ceiling to be raised to RM10,000, and for past recipients to be allowed to reapply.
He also said that more SME-friendly tools were needed, including revenue-based financing instruments and stronger government-backed guarantees.
Access to financing was important, Ng said, as the Samenta SME Outlook Survey 2025/2026 found that 70% of SMEs had less than six months’ worth of cash reserves, with many still depending on retained earnings or traditional bank loans.
“Nearly 30% of SMEs still operate manually, and for those attempting to adopt environmental, social and governance (ESG) solutions, 38% cited cost and 36% cited lack of knowledge as key barriers,” he added.
To give SMEs some breathing space, Ng suggested that the government freeze all new compliance-related fees and charges for at least 24 months.
“We also propose the creation of a dedicated SME Trade Contingency Fund offering financing at around 2% interest to help SMEs cope with global tariff retaliations,” he said.
Ng also called for government incentives to boost intra-Asean trade, noting that the “Made by Malaysia” label — applicable to Malaysian intellectual property, design and knowhow, even if manufactured elsewhere — could help expand regional market reach.
Separately, SME Association Malaysia president Chin Chee Seong called for a minimum RM100 million allocation to support e-invoicing adoption, warning that implementation would be costly without grants or matching incentives.
He also urged the government to work with banks to provide SMEs with low-interest short-term financing for terms of between 12 and 24 months to help them cope with the additional costs arising from the sales and services tax expansion and the global downturn.
Chin explained that while some government grants were available, many came with restrictive guidelines that limit accessibility. For example, the digital transformation grant was confined to certain categories of business, such as accounting and marketing, he said.
“The scope (of the digital transformation matching grant) should be broadened and the amounts increased. For instance, instead of a matching grant of RM5,000, raising it to RM10,000 would make a meaningful difference,” he added.
He also suggested a one-stop centre for SMEs and projects that could indirectly strengthen SME supply chains and spur the local economy.
Tax reforms, sustainability and trade incentives
The Malaysian International Chamber of Commerce and Industry (MICCI) has urged the government to prioritise tax rationalisation in Budget 2026, starting with SST standardisation and the removal of double taxation on delivery services.
MICCI president Christina Tee warned against further excise duty hikes on products such as beer. She said stronger enforcement against illicit trade would instead result in the recovery of billions in revenue while ensuring a fairer environment for legitimate businesses.
She said sustainability measures should include tax exemptions for recycling, phased reporting requirements, extending compliance obligations to importers, and targeted incentives for green technology investments.
For the shipping industry, she said allocations for maritime training and scholarships would strengthen the talent pipeline.
“Trade-related incentives can help retain more value in Malaysia. For instance, encouraging shippers to transact in ringgit through incentives or digital platforms would strengthen the balance of payments while supporting local financial markets,” she added.