Mini Budget causes major problem for SMEs

PETALING JAYA, March 15 – The RM60 billion mini Budget might provide guarantees for local businessmen but it has also brought on a  huge problem, crippling double levies for both new and existing foreign workers that keep Malaysian exports competitive.

The government imposed the levies in the mini Budget to encourage Malaysian small and medium enterprises (SMEs) to employ locals but factory managers and even restaurateurs say Malaysians ask for too much but produce too little, forcing them to rely on foreign workers.

The SMI Association of Malaysia is now appealing to the government to consider the double levy, to be paid by employers, only for new foreign workers and not for existing workers.

The association said the imposition of the double levy on existing foreign workers already in the country will cause the small and medium enterprises (SMEs) to be penalised and burdened with unexpected additional costs during difficult times.

It is estimated that 500,000 foreign workers are employed by the SMEs currently.

Its national president, Chua Tiam Wee pointed out that the SMEs are already feeling the pinch of the deteriorating economic crisis and most have limited resources and reserves to last for about six months.

Without the immediate government action to stimulate domestic demand strongly, Chua said, many SMEs will need to take drastic action to downsize or even see closure in the coming six months.

“When the budget was announced, we had simultaneous dialogue with the Ministry of International Trade and Industry (MITI) to give our feedback. We hope MITI will forward our feedback to the government,” Bernama quoted him as saying yesterday.

Currently, the SMEs employ 5.6 million or 56 per cent of the total workforce, a mere five percent closure by SMEs will mean over 250,000 workers will face retrenchment, he noted.

On the new RM5 billion Working Capital Guarantee Fund and another RM5 billion Industry Restructuring Loan Guarantee Fund announced in the second stimulus package, Chua said the speedy disbursement of such funds lie on the willingnes of banks to lend.

“To assist SMEs facing difficulties, a one year moratorium should be allowed for them to service their loan interest only,” he said.

He added the government should monitor the approval and disbursement closely to ensure banks act speedily and responsibly.

Meanwhile, The Sunday Star reported that the Home Ministry has seen the “locals first” policy result in work permit approvals for foreign workers cut by almost 70 percent.

In January and February, an average of 250 permits were approved daily compared to 800 last year.

Home Ministry deputy secretary-general Datuk Raja Azahar Raja Abdul Manap, who disclosed this to Sunday Star, added that there was a time when up to 2,000 approvals were granted daily.

He attributed the decrease to a more thorough vetting process by the ministry.

The ministry approved 301,682 foreign workers last year but is confident of achieving its target of reducing the number of foreign workers to 1.5 million by 2015.

Source: http://www.themalaysianinsider.com/index.php/malaysia/20397-mini-budget-causes-major-problem-for-smes