The budget for 2020 has been announced with benefits targeted at small and medium enterprises (SMEs). The new allocation and initiatives were designed to increase the contribution of SMEs to Malaysia’s economy, driving the overall GDP of SMEs from 38% to 50% by the year 2030.
Budget 2020 is a comprehensive blueprint that focuses on “equitable outcomes”, in which there is a greater emphasis by the current government on productivity-based policies.
To drive this productivity, the budget includes incentives to encourage SMEs to digitalise their operations and automate processes.
Furthermore, the budget includes incentives to attract global investors to invest in Malaysia, especially Fortune 500 companies. Investments by such high-tech global companies will have positive influences on Malaysia’s most promising SMEs businesses. In theory, high-skilled labour, competitiveness and overall economic growth should increase as a result.
Here are some of the key highlights for SMEs:
1. More entrepreneur funds from SME Bank
SME Bank will introduce two new funds that will provide an annual interest subsidy of 2% to reduce borrowing costs. They are a RM200 million fund specifically for women entrepreneurs, offering loans of up to RM1 million per SME, and a RM300 million fund to support Bumiputera SMEs with the potential to become regional champions.
2. SME funds from SJPP
Syarikat Jaminan Pembiayaan Perniagaan (SJPP) enables SMEs in priority segments to gain better loan rates from financial institutions. In the enhanced plan, Bumiputera SMEs who invest in automation and are export-oriented will receive a higher government guarantee of 80% (from 70% previously), and a lower guarantee fee of 0.75%.
For women entrepreneurs, SJPP promises up to RM500 million in guarantee facility. This will encourage more women participation in the labour force.
3. Technology grants
The government will provide a grant amounting to RM5,000 each for SMEs as an incentive to go digital and improve efficiency and productivity. Specifically, the grant is targeted towards ERP, e-POS and e-payroll services, common digital solutions that have a proven track record in improving business productivity.
4. Improving adoption of technology
The government will set up 14 “digital improvement centres” across all Malaysian states to provide advisory services, enhancement training, and direct financing to SMEs looking for guidance and resources.
RM10 million will also be allocated to MDEC to provide training to micro-entrepreneurs and technologists to leverage on e-commerce and e-marketplaces. (Note: Recommend.my is a leading e-marketplace in the home services sector).
Here is a visual overview of how Budget 2020 will impact you as an SME owner. (WhatsApp-Friendly images)
