Budget 2019 allocation for SMEs a 'step in the right direction', say industry players

The SME industry was one of the main focus in Malaysia's latest Budget 2019, offering loans and subsidies, as well as allocating RM2 billion under the Business Loan Guarantee Scheme to incentivise SMEs to invest in automation and modernisation. The government said it will aid SMEs in carrying out the Readiness Assessment to migrate to Industry 4.0 platforms, as well as allocate RM100 million to upgrade the capability of SMEs in the halal industry via various programmes.

According to the government's mid-term report, SMEs in Malaysia form 98.5% of the total establishments and the government aims to increase SMEs' GDP contribution to 41% in 2020 from 37.1% last year. The budget allocation for SME development in 2019 has been well-received by industry players, with some calling it a welcomed move and a step in the right direction.

SME Corporation Malaysia described the budget allocation as a "further boost" that is welcomed, especially in the areas of access to financing which will continue to be given an important emphasis, export promotion, entrepreneurship and various programmes under the SME Masterplan. It added that the estimated allocation of RM17.94 billion for SME development across all economic sectors is expected to produce an additional RM3.8 billion of SME value-added next year, an increase of 0.3 percentage point in share of SME GDP to total GDP.

To help with the transition towards Industry 4.0, the government also allocated RM210 million from 2019 to 2021 in the recent budget. The move is in line with its Industry 4.0 blueprint, “Industry4WRD”, which aims to make Malaysia the prime destination for high-tech industries. An RM3 billion Industry Digitalisation Transformation Fund will also be created to accelerate the adoption of smart technology consisting of driving automation, robotics and AI in the industry.

Gartner's research vice president, Tervinderjit Singh saw this as a reinforcement of the government's commitment to upskilling the workforce and driving the country's digital journey. Quoting Gartner's 2018 CIO Agenda, Singh said that CIOs listed the lack of talent and skill shortage as one of the main barriers to digital transformation within organisations.

"SMEs want to digitise but the lack of financial resources is hindering progress. This assistance, if channelled and utilised properly, is a positive step towards driving Industry 4.0 in Malaysia and supporting SMEs as they continue embracing digital transformation," he said.

In the meantime, Azrin Abd Shukor, NetApp country manager of Malaysia and Brunei, called the Industry Digitalisation Transformation Fund and the High Impact Fund by the Malaysian Investment Development Authority a "timely move" as big data analytics, AI and machine learning become more pervasive in Malaysia.

He added that it is important that the rakyat, businesses and government place data at the heart of their digital transformation efforts, in order to succeed collectively. "This is even more so as innovation and the explosion of devices have resulted in data becoming more dynamic, distributed and diverse. Budget 2019 recognises this and have placed us on the right path to achieve this and more and at NetApp we look forward to becoming a significant contributor to Malaysia’s transformation," he said.

(Read also: SME growth in Malaysia: Overcoming ‘long unsolved’ problems to reach the top)

While not an SME, commenting on the issue was also Ooi Chooi Lee, head of commercial, DHL Express Malaysia who said the move will assist SMEs in Malaysia to become more competitive in an increasingly challenging business environment. She also urged local SMEs to look at optimising the initiatives to broaden their horizons beyond the local market and explore opportunities to export their products worldwide.

"We believe that National Budget 2019 is a good step forward in creating opportunities for local businesses to increase export capacity and readiness. The logistics industry will continue to grow alongside them as we move together towards Industry 4.0," she said.

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