Its president Jacob Lee said the current threshold no longer reflected today’s industrial realities and risked classifying mid-tier manufacturers as large firms, potentially subjecting them to disproportionate regulatory and cost burdens.

“Mid-tier manufacturers are a vital part of Malaysia’s economy, contributing to employment, exports, innovation and domestic value creation, while linking small suppliers with multinational corporations,” Lee said in a statement.

He said raising the threshold would ensure mid-tier manufacturers were not excluded from support programmes.

“Such a revision would better align Malaysia with regional and global standards, reflect economic and currency changes since 2013, encourage scaling and consolidation among firms and strengthen the overall resilience and competitiveness of Malaysia’s industrial ecosystem,” he said.

Lee was responding to several government initiatives announced yesterday by Prime Minister Anwar Ibrahim, including the exemption from paying service tax for rental services for SMEs with annual turnover of up to RM1.5 million.

In welcoming the exemption, he said manufacturers of taxable goods should also be exempted from the tax on input services such as rental and logistics.

“(This is) to prevent compounding tax-on-tax effects that raise business costs. Relief from service tax and targeted sales tax exemptions provide much-needed headroom to manage cash flow, reinvest in productivity improvements, and support business continuity,” he said.