Malaysia will relax all requirements for the issuance of licences and permits to small and medium enterprises (SMEs), Malaysian news agency Bernama reported on 29 April.
The agency report quoted Prime Minister Datuk Seri Najib Tun Razak as saying that the move was following an analysis by the World Bank that found that Malaysian SMEs need to have too many licences and permits to run their businesses. The report continue that "this thing also has some something to do more or less with corruption," Razak added .
Tuesday, May 3, 2011
Wednesday, March 16, 2011
From creation to consumption - SME perspective
By Dr. Tan Thai Soon
The person who creates goods/services should get tax break or lower tax (CT)
The person who consumes goods/services should get tax (GST)
Malaysian SMEs create more goods/services, jobs and national income, but get tax and face many challenges.
Wealthy citizens generally consume more goods/services, but without paying consumption tax.
GST provides a fair and broad-based consumption tax.
The person who creates goods/services should get tax break or lower tax (CT)
The person who consumes goods/services should get tax (GST)
Malaysian SMEs create more goods/services, jobs and national income, but get tax and face many challenges.
Wealthy citizens generally consume more goods/services, but without paying consumption tax.
GST provides a fair and broad-based consumption tax.
Wednesday, March 9, 2011
Malaysian SMEs -The external and internal challenges
By Dr Tan Thai Soon
The Definition of SMEs
The definitions for Small and Medium Enterprises (SMEs) in Malaysia was first approved for adoption by National SME Development Council on 9 June 2005. The definition was subsequently adopted by various government agencies and private enterprises to include the two main categories as follows:
1. Manufacturing (including agro-based) and manufacturing-related services enterprises with full-time employees not exceeding 150 or with annual sales turnover not exceeding RM25 million.
2. Service, primary agriculture and information and communication technology (ICT) with full-time employees not exceeding 50 or annual sales turnover not exceeding RM5 million.
Application for Approved SME Definitions
1.The above definitions are to be adopted by the Government Ministries and Agencies, including Statutory Bodies, local authorities and financial institutions
2. The scope of application includes and encompass data collection; formulation of SME policies and programmes; and identification of eligibility status for SME financial assitance and support programmes.
3. The purposes is to harmonise their data collection procedures based on the size and sectoral classifications above.
The Role of Malaysian SMEs
Malaysian SMEs play an important role in the Malaysia economy in terms of economic growth and providing employment. They have become the prime mover and also the backbone of industrial development in Malaysia.
The Malaysian government is aware of the importance of SMEs and the importance of private investment enterprises.The setting up of Small and Medium Industries Development Corporation (SMIDEC) in 1996 was an early initiative by the Malaysian government to promote SMEs, while the Multimedia Super Corridor (MSC) in 1996 was developed with them very much in mind. According to recent report, SMEs in Malaysia contributing to 32% of the gross domestic product, accounted for 56.4% of the total workforce, contributing to 19% of total exports.
In this modern challenging economic environment, it has also become evident that the contribution of SMEs has become even more important. It is recognized that they can be leaders in exploring new opportunities, and in becoming creative and innovative in new product development, packaging and branding, new services in ICT and outsourcing sector.
The External Challenges of Malaysian SMEs
In the face of the new challenges posed in the global economy, Malaysian SMEs need to perform, compete and survive in the following challenges.
The Internal Challenges of Malaysian SMEs
Malaysian SMEs face many external challenges, as well as many internal challenges. It is particularly challenging especially for the start-up business in Malaysia.
The following are some internal challenges for Malaysian SMEs:
In his budget (2010) speech in 2009, the Prime Minister and the Minister of Finance, Dato' Sri Najib Razak emphasized that "the Government continues to focus on the development of local entrepreneurs, particularly in small and medium enterprises."
In the recent budget (2011) speech in 2010, the Prime Minister and the Minister of Finance, has again emphasized the importance of private investment, but without using the words Small & Medium enterprises directly. Perhaps, the 1st budget strategy "reinvigorating private investment" refer to and focus on the large firms and large development projects.
The recent budget (2011) has fall short of and fail to provides a clear direction to the SMEs. As the commentator puts it, it is a misopportunity for the SMEs.
Summary
Malaysian SMEs play an important role in the Malaysian economy in terms of economic growth (gross domestic product), providing employment (skills and non-skills, and knowledge worker), national revenue (direct tax and indirect taxes), and corporate social responsibility.
The success of Malaysian SMEs will depends on an integrated approach of all Malaysians, both public sectors and private sectors. Any fractional and racial approach is not suitable in these global competitive economic environment, further more it will delay the success of Malaysian SMEs.
Finally, the Government agencies must not only be efficient (KPI) but also be effective in solving SMEs problems and challenges.
The Definition of SMEs
The definitions for Small and Medium Enterprises (SMEs) in Malaysia was first approved for adoption by National SME Development Council on 9 June 2005. The definition was subsequently adopted by various government agencies and private enterprises to include the two main categories as follows:
1. Manufacturing (including agro-based) and manufacturing-related services enterprises with full-time employees not exceeding 150 or with annual sales turnover not exceeding RM25 million.
2. Service, primary agriculture and information and communication technology (ICT) with full-time employees not exceeding 50 or annual sales turnover not exceeding RM5 million.
Application for Approved SME Definitions
1.The above definitions are to be adopted by the Government Ministries and Agencies, including Statutory Bodies, local authorities and financial institutions
2. The scope of application includes and encompass data collection; formulation of SME policies and programmes; and identification of eligibility status for SME financial assitance and support programmes.
3. The purposes is to harmonise their data collection procedures based on the size and sectoral classifications above.
The Role of Malaysian SMEs
Malaysian SMEs play an important role in the Malaysia economy in terms of economic growth and providing employment. They have become the prime mover and also the backbone of industrial development in Malaysia.
The Malaysian government is aware of the importance of SMEs and the importance of private investment enterprises.The setting up of Small and Medium Industries Development Corporation (SMIDEC) in 1996 was an early initiative by the Malaysian government to promote SMEs, while the Multimedia Super Corridor (MSC) in 1996 was developed with them very much in mind. According to recent report, SMEs in Malaysia contributing to 32% of the gross domestic product, accounted for 56.4% of the total workforce, contributing to 19% of total exports.
In this modern challenging economic environment, it has also become evident that the contribution of SMEs has become even more important. It is recognized that they can be leaders in exploring new opportunities, and in becoming creative and innovative in new product development, packaging and branding, new services in ICT and outsourcing sector.
The External Challenges of Malaysian SMEs
In the face of the new challenges posed in the global economy, Malaysian SMEs need to perform, compete and survive in the following challenges.
- The emergence of China as the world's leading manufacturing power house, especially, has posed new challenges to Malaysian SMEs in manufacturing. China is famous for its mass production with cheap and competitive products. This will require Malaysian SMEs to change from a traditional manufacturing industries to a knowledge based industries, and to adapt their traditional management processes to knowledge creation processes.
- The emergence of India as the new ICT super power in the region. This has prompted many Malaysian SMEs to change their strategic approach by incorporating information technology into knowledge management system, and information management into knowledge management.
- The emergence of Vietnam and other Asean countries as new international Foreign Direct Investment (FDI) destination. This has prompted Malaysian government to relax many restrictive old economic policy. The perception of the New Economy Model will take time, both by the local businesses and the foreign investors. The local political factors play an important part to the success of the New Economic Model. The continuation of existing racial policy and the newly set up racial non-government grouping may acted as a detrimental and damaging the effort of the New Economic Model. Malaysia FDI is falling and the time is a critical factor.
- Malaysian SMEs are far behind, in terms of innovation, compared to advancing Asian economies like South Korea, Taiwan and Singapore. The setting up of Cradle Fund and Cradle Investment Programme provide the incentive to Malaysian SMEs to further enhance their technology capability and commercialization, thus to compete in the global technology environment.
The Internal Challenges of Malaysian SMEs
Malaysian SMEs face many external challenges, as well as many internal challenges. It is particularly challenging especially for the start-up business in Malaysia.
The following are some internal challenges for Malaysian SMEs:
- Registration of licenses are subject to many regulations, policies and conditions;
- Compliance of returns and forms require too many information and too detail, sometime duplicating the initial information already provided in the registration stage. In this aspect, the government has set up ePortal to facilitate such returns;
- The registration fees for companies have been relatively high compare to registration of business. In addition, the penalties imposed on the SMEs incorporated for non compliance with the annual filing of returns and accounts have been harsh (the penalty imposed on SMEs incorporated must not be compared with that of the public listed companies). In Singapore, the authority have waive the external audit requirement for private limited companies of SMEs ;
- The tax rate of 20%-26% for SMEs (with paid-up capital of below RM2.5 million) have been challenging, compare to that of Singapore (17% tax rate with certain tax exemption on low chargeable income of upto S$300,000) and Hong Kong (15%), and in additional, under the self-assessment system, the tax payers are required to make advance monthly installments toward the payment of profit (the tax authority have waive the payment CP207 for the newly incorporated companies for a period of two years), irrespective of collection from the trade debtors. The current tax guideline on bad debt written off are relatively rigid;
- The cost of running the business in respect of fees, rate, assessment, tolls, utilities, sewerage charges, are relatively challenging although not the highest in Asean.
In his budget (2010) speech in 2009, the Prime Minister and the Minister of Finance, Dato' Sri Najib Razak emphasized that "the Government continues to focus on the development of local entrepreneurs, particularly in small and medium enterprises."
In the recent budget (2011) speech in 2010, the Prime Minister and the Minister of Finance, has again emphasized the importance of private investment, but without using the words Small & Medium enterprises directly. Perhaps, the 1st budget strategy "reinvigorating private investment" refer to and focus on the large firms and large development projects.
The recent budget (2011) has fall short of and fail to provides a clear direction to the SMEs. As the commentator puts it, it is a misopportunity for the SMEs.
Summary
Malaysian SMEs play an important role in the Malaysian economy in terms of economic growth (gross domestic product), providing employment (skills and non-skills, and knowledge worker), national revenue (direct tax and indirect taxes), and corporate social responsibility.
The success of Malaysian SMEs will depends on an integrated approach of all Malaysians, both public sectors and private sectors. Any fractional and racial approach is not suitable in these global competitive economic environment, further more it will delay the success of Malaysian SMEs.
Finally, the Government agencies must not only be efficient (KPI) but also be effective in solving SMEs problems and challenges.
Monday, November 1, 2010
Malaysian SMEs - The Internal Challenges
By Dr Tan Thai Soon
Malaysian SMEs face many external challenges, such as global competitiveness, as well as many internal challenges. It is particularly challenging especially for the start-up business in Malaysia.
The following are some internal challenges for Malaysian SMEs:
In his budget (2010) speech in 2009, the Prime Minister and the Minister of Finance, Dato' Sri Najib Razak emphasized that "the Government continues to focus on the development of local entrepreneurs, particularly in small and medium enterprises."
In the recent budget (2011) speech in 2010, the Prime Minister and the Minister of Finance, has again emphasized the importance of private investment, but without using the words Small & Medium enterprises directly. Perhaps, the 1st budget strategy "reinvigorating private investment" refer to and focus on the large firms and large development projects.
The recent budget (2011) has fall short of and fail to provides a clear direction to the SMEs. As the commentator puts it, it is a misopportunity for the SMEs.
Malaysian SMEs face many external challenges, such as global competitiveness, as well as many internal challenges. It is particularly challenging especially for the start-up business in Malaysia.
The following are some internal challenges for Malaysian SMEs:
- Registration of licenses are subject to many regulations, policies and conditions;
- Compliance of returns and forms require too many information and too detail, sometime duplicating the initial information already provided in the registration stage. In this aspect, the government has set up ePortal to facilitate such returns;
- The registration fees for companies have been relatively high compare to registration of business. In addition, the penalties imposed on the SMEs incorporated for non compliance have been harsh (the penalty imposed on SMEs incorporated must not be compared with that of the public listed companies) ;
- The tax rate of 20%-26% for SMEs (with paid-up capital of below RM2.5 million) have been challenging. In additional, under the self-assessment system, the tax payers are required to make advance monthly installments toward the payment of profit (the tax authority have waive the payment CP207 for the newly incorporated companies for a period of two years), irrespective of collection from the trade debtors. The current tax guideline on bad debt written off are relatively rigid;
- The cost of running the business in respect of fees, rate, assessment, tolls, utilities, sewerage charges, are relatively challenging although not the highest in Asean.
In his budget (2010) speech in 2009, the Prime Minister and the Minister of Finance, Dato' Sri Najib Razak emphasized that "the Government continues to focus on the development of local entrepreneurs, particularly in small and medium enterprises."
In the recent budget (2011) speech in 2010, the Prime Minister and the Minister of Finance, has again emphasized the importance of private investment, but without using the words Small & Medium enterprises directly. Perhaps, the 1st budget strategy "reinvigorating private investment" refer to and focus on the large firms and large development projects.
The recent budget (2011) has fall short of and fail to provides a clear direction to the SMEs. As the commentator puts it, it is a misopportunity for the SMEs.
Malaysian SMEs - The roles and challenges
General Definitions
The definitions for Small and Medium Enterprises (SMEs) in Malaysia was first approved for adoption by National SME Development Council on 9 June 2005. The definition was subsequently adopted by various government agencies and private enterprises to include the two main categories as follows:
1. Manufacturing (including agro-based) and manufacturing-related services enterprises with full-time employees not exceeding 150 or with annual sales turnover not exceeding RM25 million.
2. Service, primary agriculture and information and communication technology (ICT) with full-time employees not exceeding 50 or annual sales turnover not exceeding RM5 million.
Application for Approved SME Definitions
1.The above definitions are to be adopted by the Government Ministries and Agencies, including Statutory Bodies, local authorities and financial institutions
2. The scope of application includes and encompass data collection; formulation of SME policies and programmes; and identification of eligibility status for SME financial assitance and support programmes.
3. The purposes is to harmonise their data collection procedures based on the size and sectoral classifications above.
The Role of Malaysian SMEs
Malaysian SMEs play an important role in the Malaysia economy in terms of economic growth and providing employment. They have become the prime mover and also the backbone of industrial development in Malaysia.
The Malaysian government is aware of the importance of SMEs and the importance of private investment enterprises.The setting up of Small and Medium Industries Development Corporation (SMIDEC) in 1996 was an early initiative by the Malaysian government to promote SMEs, while the Multimedia Super Corridor (MSC) in 1996 was developed with them very much in mind. According to recent report, SMEs in Malaysia contributing to 32% of the gross domestic product, accounted for 56.4% of the total workforce, contributing to 19% of total exports.
In this modern challenging economic environment, it has also become evident that the contribution of SMEs has become even more important. It is recognized that they can be leaders in exploring new opportunities, and in becoming creative and innovative in new product development, packaging and branding, new services in ICT and outsourcing sector.
The Challenges of Malaysian SMEs
In the face of the new challenges posed in the global economy, Malaysian SMEs need to perform, compete and survive in the following challenges.
* The emergence of China as the world's leading manufacturing power house, especially, has posed new challenges to Malaysian SMEs in manufacturing. China is famous for its mass production with cheap and competitive products. This will require Malaysian SMEs to change from a traditional manufacturing industries to a knowledge based industries, and to adapt their traditional management processes to knowledge creation processes.
* The emergence of India as the new ICT super power in the region. This has prompted many Malaysian SMEs to change their strategic approach by incorporating information technology into knowledge management system, and information management into knowledge management.
* The emergence of Vietnam and other Asean countries as new international Foreign Direct Investment (FDI) destination. This has prompted Malaysian government to relax many restrictive old economic policy. The perception of the New Economy Model will take time, both by the local businesses and the foreign investors. The local political factors play an important part to the success of the New Economic Model. The continuation of existing racial policy and the newly set up racial non-government grouping may acted as a detrimental and damaging the effort of the New Economic Model. Malaysia FDI is falling and the time is a critical factor.
* Malaysian SMEs are far behind, in terms of innovation, compared to advancing Asian economies like South Korea, Taiwan and Singapore. The setting up of Cradle Fund and Cradle Investment Programme provide the incentive to Malaysian SMEs to further enhance their technology capability and commercialization, thus to compete in the global technology environment.
Summary
Malaysian SMEs play an important role in the Malaysian economy in terms of economic growth (gross domestic product), providing employment (skills and non-skills, and knowledge worker), national revenue (direct tax and indirect taxes), and corporate social responsibility.
The success of Malaysian SMEs will depends on an integrated approach of all Malaysians. Any fractional and racial approach is not suitable in these global competitive economic environment, further more it will delay the success of Malaysian SMEs.
By Tan Thai Soon
MD of TST Consulting Group
The definitions for Small and Medium Enterprises (SMEs) in Malaysia was first approved for adoption by National SME Development Council on 9 June 2005. The definition was subsequently adopted by various government agencies and private enterprises to include the two main categories as follows:
1. Manufacturing (including agro-based) and manufacturing-related services enterprises with full-time employees not exceeding 150 or with annual sales turnover not exceeding RM25 million.
2. Service, primary agriculture and information and communication technology (ICT) with full-time employees not exceeding 50 or annual sales turnover not exceeding RM5 million.
Application for Approved SME Definitions
1.The above definitions are to be adopted by the Government Ministries and Agencies, including Statutory Bodies, local authorities and financial institutions
2. The scope of application includes and encompass data collection; formulation of SME policies and programmes; and identification of eligibility status for SME financial assitance and support programmes.
3. The purposes is to harmonise their data collection procedures based on the size and sectoral classifications above.
The Role of Malaysian SMEs
Malaysian SMEs play an important role in the Malaysia economy in terms of economic growth and providing employment. They have become the prime mover and also the backbone of industrial development in Malaysia.
The Malaysian government is aware of the importance of SMEs and the importance of private investment enterprises.The setting up of Small and Medium Industries Development Corporation (SMIDEC) in 1996 was an early initiative by the Malaysian government to promote SMEs, while the Multimedia Super Corridor (MSC) in 1996 was developed with them very much in mind. According to recent report, SMEs in Malaysia contributing to 32% of the gross domestic product, accounted for 56.4% of the total workforce, contributing to 19% of total exports.
In this modern challenging economic environment, it has also become evident that the contribution of SMEs has become even more important. It is recognized that they can be leaders in exploring new opportunities, and in becoming creative and innovative in new product development, packaging and branding, new services in ICT and outsourcing sector.
The Challenges of Malaysian SMEs
In the face of the new challenges posed in the global economy, Malaysian SMEs need to perform, compete and survive in the following challenges.
* The emergence of China as the world's leading manufacturing power house, especially, has posed new challenges to Malaysian SMEs in manufacturing. China is famous for its mass production with cheap and competitive products. This will require Malaysian SMEs to change from a traditional manufacturing industries to a knowledge based industries, and to adapt their traditional management processes to knowledge creation processes.
* The emergence of India as the new ICT super power in the region. This has prompted many Malaysian SMEs to change their strategic approach by incorporating information technology into knowledge management system, and information management into knowledge management.
* The emergence of Vietnam and other Asean countries as new international Foreign Direct Investment (FDI) destination. This has prompted Malaysian government to relax many restrictive old economic policy. The perception of the New Economy Model will take time, both by the local businesses and the foreign investors. The local political factors play an important part to the success of the New Economic Model. The continuation of existing racial policy and the newly set up racial non-government grouping may acted as a detrimental and damaging the effort of the New Economic Model. Malaysia FDI is falling and the time is a critical factor.
* Malaysian SMEs are far behind, in terms of innovation, compared to advancing Asian economies like South Korea, Taiwan and Singapore. The setting up of Cradle Fund and Cradle Investment Programme provide the incentive to Malaysian SMEs to further enhance their technology capability and commercialization, thus to compete in the global technology environment.
Summary
Malaysian SMEs play an important role in the Malaysian economy in terms of economic growth (gross domestic product), providing employment (skills and non-skills, and knowledge worker), national revenue (direct tax and indirect taxes), and corporate social responsibility.
The success of Malaysian SMEs will depends on an integrated approach of all Malaysians. Any fractional and racial approach is not suitable in these global competitive economic environment, further more it will delay the success of Malaysian SMEs.
By Tan Thai Soon
MD of TST Consulting Group
Tuesday, May 25, 2010
About Malaysian SMEs
General Definitions
The definitions for Small and Medium Enterprises (SMEs) in Malaysia was first approved for adoption by National SME Development Council on 9 June 2005. The definition was subsequently adopted by various government agencies and private enterprises to include the two main categories as follows:
1. Manufacturing (including agro-based) and manufacturing-related services enterprises with full-time employees not exceeding 150 or with annual sales turnover not exceeding RM25 million.
2. Service, primary agriculture and information and communication technology (ICT) with full-time employees not exceeding 50 or annual sales turnover not exceeding RM5 million.
Application for Approved SME Definitions
1.The above definitions are to be adopted by the Government Ministries and Agencies, including Statutory Bodies, local authorities and financial institutions
2. The scope of application includes and encompass data collection; formulation of SME policies and programmes; and identification of eligibility status for SME financial assitance and support programmes.
3. The purposes is to harmonise their data collection procedures based on the size and sectoral classifications above.
The definitions for Small and Medium Enterprises (SMEs) in Malaysia was first approved for adoption by National SME Development Council on 9 June 2005. The definition was subsequently adopted by various government agencies and private enterprises to include the two main categories as follows:
1. Manufacturing (including agro-based) and manufacturing-related services enterprises with full-time employees not exceeding 150 or with annual sales turnover not exceeding RM25 million.
2. Service, primary agriculture and information and communication technology (ICT) with full-time employees not exceeding 50 or annual sales turnover not exceeding RM5 million.
Application for Approved SME Definitions
1.The above definitions are to be adopted by the Government Ministries and Agencies, including Statutory Bodies, local authorities and financial institutions
2. The scope of application includes and encompass data collection; formulation of SME policies and programmes; and identification of eligibility status for SME financial assitance and support programmes.
3. The purposes is to harmonise their data collection procedures based on the size and sectoral classifications above.
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