News – Call for Government to solve lingering issues facing SMEs

“If the government subsidizes businesses, profits will increase. High profits will encourage more people to start new businesses, which will increase competition. Increased competition will force businesses to reduce prices, which will reduce profits.

So there is a TEMPORARY increase in profits whenever the government starts or increases subsidies to businesses. There is also a TEMPORARY decrease in profits whenever the government decreases or stops subsidies to businesses. Government subsidies to businesses do not cause any change in total profits.”

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The Government’s ambitious plans for the small and medium enterprises (SMEs) to be a significant contributor to the country’s economic growth could be hampered if it overlooks or fails to address some of the lingering issues in the sector, according to industry players and observers.

These include in the implementation of certain schemes, mismatch of funds, stronger emphasis on product-centric organisations rather than SME sub-segments, lack or absence of effective measures for start-ups like the self-employed and scarcity of funds for the SME services sector.

An industry player, who is a veteran in the area of SMEs but prefers to be anonymous, said although the Government had numerous SME assistance schemes, the measures had only been partially effective especially in its implementation for several reasons.

Some of these schemes such as those introduced by SME Corp on 1-InnoCERT, The National Mark of Malaysian Brand, are not widely participated when considering the number of SMEs who took part versus the total number of SMEs in the country, he said.

“There is also a certain amount of mismatch in terms of types and amount of funding.

 

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