Tian Chua: Budget Fails to Address Urgent Needs of SMEs

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Budget 2021 has greatly disappointed small and medium enterprises (SMEs) and micro-enterprises who urgently need financial support to survive in the long term, PKR vice-president Tian Chua said.

He said more than 98% of Malaysia’s business establishments were SMEs or micro enterprises, adding that the majority of them were struggling and in dire need of government assistance to survive the crisis.

“Microenterprises and SMEs are doubtful that the funds allocated in the budget are adequate to address their colossal problems.

“Regrettably, the finance minister did not show any will or determination to reform the imbalances of profit structure in the corporate economy,” he said in a statement.

Chua said the government ought to have been proactive in devising aid packages for specific categories of enterprises.

“Meanwhile, policies must be reformed to create conducive conditions for market recovery. Reforms and recovery go hand in hand,” he said.

Chua said the concessions given by the banks and the big financial institutions were too minimal, adding that the finance ministry was clearly very reluctant to slash the profits of the big corporations and banks in order to give the “B40” community some genuine relief.

Generally, he said the budget may be seen as being innovative in some areas, but it lacked the much-needed economic recovery strategy.

He said although the finance minister recognised the importance of infrastructure development, the budget was not “expansionary” enough to cover the cost of urgently needed projects in the rural areas.

“Most of the countries affected by Covid-19 have introduced much larger spending on health, social protection and employment creation.

“We need a much more robust stimulus policy in order to counter the cyclical downturn caused by the pandemic. In comparison, the ministry’s approach to economic recovery is relatively conservative,” he said.

On the range of financial handouts and aid schemes, Chua said they were impressive as such policies were intended to reflect the caring aspect of the budget.

“But injecting cash handouts would create an effect like ‘helicopter money’ to boost domestic consumption. However, we should also be mindful that this effect is temporary.

“A more beneficial model would be strengthening social protection institutions. The government should seize this critical moment to reform our rather archaic social welfare system.

“It is good to hand out cash to help the unemployed, disabled and those in destitute. But the one-off or short-term measures are merely painkillers. The country needs a long-term solution to the continuous threats of the Covid-19 pandemic or any other future unpredicted turmoil,” he said. – FMT