Samenta: Harmful for SMEs to raise EPF contributions

KUALA LUMPUR: The Small and Medium Enterprises Association of Malaysia (Samenta) has voiced opposition to the idea of businesses increasing their contributions to the Employee Provident Fund (EPF).

The suggestion was deemed unreasonable by the organisation's chairman, Datuk William Ng because it would be harmful given the weak economy at the time.

"An increase to EPF (contribution) at this juncture of the country's economic recovery is not only counter-productive but will do more harm than help to Malaysians.

"Therefore, we urge the Cabinet to reject this opportunistic demand by that fringe worker's group, and instead focus on creating higher value jobs for Malaysians and helping Malaysian businesses and workers to be more productive," he said in a statement.

Ng said that despite the economy having essentially returned to 2019 levels, small and medium-sized businesses (SMEs) still lag larger companies in terms of growth share.

For instance, according to the most recent figures for 2021, SMEs only increased by 1 per cent while larger companies expanded by 4.4 per cent.

"This uneven recovery is further compounded by rising costs, which hit our SMEs as severely as they do consumers in general.

"We are still waiting for an answer from the government to our plea for these increased costs to be subsidised as practised in Singapore and the United Kingdom," he said. 

Ng said Samenta has risen to the challenge after the government pleaded with SMEs to retain workers employed despite the pandemic.

Because of this, he said that although Malaysia's gross domestic product (GDP) shrank by 5.6 per cent and between 7 and 12 per cent of enterprises closed in 2020, the number of jobs decreased by only 2.5 per cent between early 2020 and mid-2021.

"Many SMEs had to dip into their reserves and their children's education fund, and sell properties and other assets, to try to keep as many Malaysians employed as possible.

"Even as our efforts were met with rounds of forced costs increment, we stomached it.

"For many SMEs, that's the price we pay to help Malaysia recover. But this call by that fringe workers' group is one that we cannot accept and must urge the government to flatly reject," he added.

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