KUALA LUMPUR, Jan 30 (Bernama) -- Small and medium enterprises (SMEs) should capitalise on measures taken under the recalibrated Budget 2016 to boost market penetration and increase revenue contribution to the nation, an economist said.
Firdaos Rosli of the Institute of Strategic and International Studies (ISIS) said the government had listed down programmes to support the SMEs via its agencies, realising there are companies with the potential to market their products abroad but need a little nudge.
Under the recalibrated budget, Prime Minister Datuk Seri Najib Tun Razak announced several measures for the SMEs, including intensifying the Mid-tier and Go-Export programmes through two of its agencies, namely the Malaysia External Trade Development Corporation (Matrade) and SME Corp Malaysia.
"Resulting from the weak foreign exchange due to plunging global crude oil prices, the government is trying to look at ways to take advantage of the cheaper ringgit, especially for SMEs in promoting their products internationally," Firdaos told Bernama.
He said as such, now was the time for the SMEs to brush up on their expertise and be ready to offer competitive prices to the market, while increasing productivity to contribute to the nation's growth.
"While boosting their own growth, the SMEs could also improve their export contribution to Malaysia's gross domestic product to 23 per cent by 2020 from 17.6 per cent currently," he added.
Under the revised Budget, the government will provide a negotiation mechanism through the Small Debt Resolution Scheme and the Corporate Debt Restructuring Committee under Bank Negara Malaysia to assist SMEs that face financial problems due to the current challenging economic environment.
In addition, Exim Bank Bhd will increase funds for financing by RM500 million to enhance the credit guarantee facility for trade.
SME Association of Malaysia president Michael Kang welcomed the government's decision to increase financing, saying that it could be useful to small companies.
"This will definitely help some of the small companies, especially in terms of improving their capacity building.
"We have cases where companies joined some SME expos but failed to provide enough stocks as requested by their customers, causing them to lose the supply contracts," he said.
Kang said being in ASEAN and with the impending signing of the Trans-Pacific Partnership Agreement (TPPA), local SMEs stood to gain by not focusing solely on the domestic market.
Najib, in his budget speech, had also urged SMEs to explore new markets through participation in free trade agreements (FTAs) such as the ASEAN Economic Community and the TPPA, as well as the Regional Comprehensive Economic Partnership.
Meanwhile, International Trade and Industry Minister Datuk Seri Mustapa Mohamed when tabling a motion on Malaysia's involvement in the TPPA, said the government was committed to enhancing the participation of SMEs to help them expand business globally via the trade pact.
He said the government would engage with SMEs to ensure they can take advantage of the TPPA.
"The government is aware that a lot more programmes could be introduced for SMEs, particularly for Bumiputeras, so that they can join the global network by taking advantage of FTAs like the TPP," he added.
The TPPA motion was passed at the Dewan Negara on Thursday.
During the tabling of the Budget 2016 in October last year, Najib announced that the SMEs were among those to benefit from an allocation of more than RM1.3 billion.
These include an additional RM1 billion for the Shariah-compliant SME Financing Scheme until Dec 31, 2017, with the government subsidising two per cent of the financing profit rate.
The government will also allocate RM107 million in the SME Blueprint to provide funds for entities at various stages of business development and RM60 million for the Entrepreneurs Acceleration and SME Capacity and Capability Enhancement Schemes.