KUALA LUMPUR: The Federation of Malaysian Manufacturers (FMM) has urged the government to act swiftly in enhancing small and medium enterprises' (SMEs) competitiveness and productivity, public service delivery and governance through 2023 Budget to be presented in Parliament on Feb 24.
Its president Tan Sri Soh Thian Lai said the revised national budget should focus on these areas for the sake of the national economy and business dynamism.
"For example, to encourage domestic investment, we propose further government support for made-in-Malaysia products in government procurement and the introduction of special tax rebates for projects using locally manufactured products," he said in an FMM pre-2023 Budget commentary video released today.
Given that government procurement accounts for one of the biggest purchases of domestic products, this could boost the industry as manufacturers would be willing to invest more when they are confident that the government is prepared to buy their products, Soh said.
"Is the government willing to look into a government procurement act so that government-linked companies and government-linked investment companies are buying locally-made products?" he asked.
In calling for greater support the SMEs, he said the government should consider lowering the corporate tax so that they can plough back their profits into further investments.
"We hope the tax rate would be between 13 per cent and 15 per cent," he added.
Soh expressed hope that the government would allocate enough funds for the SMEs, noting that they contribute nearly 40 per cent of the country's Gross Domestic Product.
"SMEs play an important role in the manufacturing and industrial services sector. Even during the Movement Control Order (MCO) period when we faced a lot of global logistics constraints, and the Ukraine-Russia conflict, the economy could still function smoothly with adequate food on the table and goods delivered on time.
"The credit is due to local companies. Our local SMEs, through their capabilities and agility, are the backbone behind the nation's (economic) resilience," he said.
The government, therefore, should not only focus on foreign direct investment but also on domestic direct investment, he said.
According to him, the domestic investment level has been declining over the past five years.
"Some domestic manufacturers felt that there was too much red tape, making them not confident to invest in new products," he said, adding that the government should therefore provide the right conditions and incentives to ensure they will continue to invest. -- Bernama