Samenta: Funds for startups better off given to SMEs

KUALA LUMPUR: Small and Medium Enterprises Association of Malaysia (Samenta) is lobbying the government to divert funds allocated for startups to small and medium enterprises (SMEs).

"While we can understand the government's obsession with start-ups, some of these funds and intervention may bear better fruit if they are funnelled to high growth, high impact SMEs," its president Datuk WIlliam Ng said in a statement today following the tabling of the 12th Malaysian Plan (12MP) Mid Term Review (MTR).

He said, ensuring export-ready SMEs are better facilitated, through focused market-linkage and branding and packaging design, was an example of how funds from the government can be used.

Venture funds and GLCs should also be encouraged to co-finance SMEs in merger and acquisition (M&A) activities to better integrate their supply chain and create more SMEs with sufficient size to compete regionally and globally.

"Established SMEs are not only less risky investments, but also have stronger footing in global supply chains, compared with start-ups with unknown future affiliations" he said.

Ng said, there have been many examples of facilitation provided to the start-up ecosystem, only to see these efforts benefitting regional neighbours as they get sold to larger players, and if and when they turn profitable, these profits are expatriated overseas.

"Given the increased significance of the SMEs as part of the ecosystem of every piece of the new economic narrative, from the National Energy Transition Roadmap to the New Industrial Masterplan, we urge the government to think beyond the 'WEF-hype' and focus on turning our many SMEs into the next unicorns and quasi-unicorns like MyNews, Top Glove, Inari and Vitrox – all of whom started off as SMEs," Ng said.

Overall, Samenta welcomed the announcements made during the 12MP MTR, agreeing with the "course correction"l for the economy and industries.

Ng said the government is right in focusing on high growth, high value industries, which will have spill-over effects to the SMEs and the rakyat as these clusters take off. SMEs will benefit from being part of the enlarged supply chain.

"We also applaud the plan to focus on the creative industry and design-led SMEs. We again suggest that the government consider a matching grant for packaging design and branding, to help our SMEs migrate from being mere OEMs to brand owners, while supporting our creative industry," Ng said.

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