Better days for micro-SMEs, employment in 2022

The govt allocates RM40b for Semarak Niaga to help B40 and M40 individuals and businesses to ensure their continuity


THE year 2022 will put Malaysia on the path to recovery after two years of battling with the global Covid-19 crisis that has battered economies worldwide.

With the biggest budget in the country’s history earmarked for next year, the government has outlined various critical measures in the RM322.1 billion allocation that targets to resuscitate businesses, the labour market and the overall economic outlook.

Budget 2022 does not only help to meet the needs of the bottom 40% income group (B40), it also touches on assistance that will be made available for the medium 40% income earners (M40), given that the group accounts for a large chunk of business owners.

Without leaving anyone behind, the government ensures that the initiatives under Budget 2022 also provides employment opportunities to people from all backgrounds after the labour market was hit by the pandemic.

During the tabling of the budget in October, Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said the budget encompasses the spirit of Malaysian Family as it was formulated after discussions with focus groups and reviews of over 1,100 memorandums.

The government had received nearly 50,000 suggestions via the Budget 2022 portal. The process also involved cooperation with political groups to ensure the government had sufficient insights on the needs on the ground.

Semarak Niaga to Revitalise Businesses

Nearly 37,000 small and medium enterprises (SMEs) had gone bust because the periods of movement restrictions that had curtailed business operations.

Since the onset of the pandemic, the government had announced various initiatives via stimulus packages to support business continuity for entrepreneurs and minimise the direct impacts of Covid-19.

In efforts to put SMEs back on their feet next year and solidify their presence in the market, the government has announced a RM40 billion financing package under Program Semarak Niaga Keluarga Malaysia (Semarak Niaga).

The scheme involves direct loans, financing guarantees and equity injection that aims to benefit entrepreneurs from micro businesses to public listed companies.

The assistance has four main pillars that will enable micro-SMEs to recalibrate their operations during the economic recovery period.

The first initiative is a micro credit scheme where enterprises will be able to get micro credit of nearly RM1.8 billion from various agencies such as Agrobank, Bank Simpanan Nasional (BSN), Bank Kerjasama Rakyat Malaysia Bhd (Bank Rakyat), Tekun Nasional (Tekun) and Bank Negara Malaysia (BNM).

Informal and micro financing schemes under Tekun will offer loans up to RM10,000 at 0% interest and a 12-month moratorium. BSN and Agrobank will also offer micro financing up to RM75,000 with 0% interest rate for the first six months and a six-month moratorium.

In total, BSN will provide RM800 million worth of micro credit followed by Tekun and Agrobank that will allocate RM435 million and RM250 million respectively, while BNM will allocate RM200 million for microenterprise facilities and RM50 million will come from Bank Rakyat.

The government is also committed to expand the I-Tekad social financial programme that combines social finance instruments such as zakat, sadaqah and waqf to provide micro credit to kickstart businesses and skills training to micro entrepreneurs with an allocation of RM20 million.

The second pillar of Semarak Niaga focuses on equity or alternative financing. Tengku Zafrul had previously stated in his budget announcement that there has been a rapid growth in equity crowdfunding and peer-to-peer financing since the pandemic began which had garnered more than RM1.3 billion worth of fundings.

Therefore, the government continues to support such a method by allocating RM80 million in matching grants for the Malaysia Co-investment Fund.

SME Bank along with the Bumiputera Agenda Steering Unit and BSN will provide funds worth RM600 million, available to all, especially Bumiputeras.

Additionally, Bank Pembangunan Malaysia Bhd (BPMB) will offer Rehabilitation and Support Through Equity schemes amounting to RM500 million while the central bank will provide a Business Recapitalisation Fund totalling RM1 billion.

Semarak Niaga also enhanced the Syarikat Jaminan Pembiayaan Perniagaan (SJPP) scheme which facilitates SMEs to obtain financing during these difficult times.

As of October, the scheme has provided business financing guarantees amounting to more than RM46 billion to over 44,000 companies.

Under Budget 2022, RM22 billion is set aside for SJPP including RM2 billion special allocation for Bumiputera.

A total of RM14.2 billion has been allocated to provide easy financing for SMEs where participating agencies in the initiative include BNM, Agrobank, BPMB, SME Bank, Permodalan Nasional Bhd and MIDF Amanah Investment Bank Bhd.

The government is also planning to extend the tax cuts on refurbishment costs of premises up to RM300,000 until Dec 31, 2022, for enterprises that change their facilities to meet the requirements outlined in the standard operating procedures.

For companies registered under [email protected], additional tax cuts until RM50,000 on employees’ rented accommodation will be extended for another year.

Improving the Labour Market

The unemployment rate in Malaysia reached an all-time high of 5.3% in May last year.

As the economy gradually recovers, the jobless rate has been on a declining trend, although it has yet to return to pre-pandemic levels.

As of September this year, the rate stood at 4.5%, registering 729,600 unemployed persons as employment continued to increase.

To overcome unemployment issues in the country, the government will provide 600,000 job opportunities with an allocation of RM4.8 billion under the Jamin Kerja Keluarga Malaysia (Jamin Kerja) initiative.

The government via the Social Security Organisation will continue to encourage companies to hire with wage subsidy incentives worth RM2.5 billion with a target of 300,000 employees.

It will continue to offer the Malaysia Short-Term Employment Programme initiative that will provide 50,000 vacancies in the public sector and 30,000 jobs in government-linked companies, effective January 2022 through a RM1.8 billion allocation.

Budget 2022 also aims to provide 220,000 individuals with reskilling and upskilling programmes to increase their marketability.

Among the initiatives that will be implemented include the place-and-train programme, at an expected government expenditure of RM1 billion.

With the programmes planned under the Jamin Kerja initiative as well as economic recovery measures, the government expects the unemployment rate to drop to 4% in tandem with an expected uptick of economic activities.

According to the government’s 2022 Economic Outlook, the allocation in Budget 2022 will be 20.3% of the total GDP where RM233.5 billion or 70.3% will be channelled to Operating Expenditure, RM75.6 billion (22.8%) for Development Expenditure (DE) and the balance of RM23 billion for the Covid-19 Fund.