Sunday, 13 Oct 2019
4:07 PM MYT
KUALA LUMPUR: Small and medium enterprises (SMEs) should act quickly to digitalise and automate, as there are a slew of incentives and grants announced under Budget 2020.
Local accounting, tax and business advisory YYC Group CEO Datin Yap Shin Siang said the government had announced many initiatives that is designed to spur the digital economy, but they are on a first-come basis.
“The government has offered many matching grants, and SMEs must seize the opportunity quickly. We are very happy to see these measures, as we have also been encouraging our customers to transform their businesses through digitisation, ” she said in a statement.
One example is a matching grant of up to RM5,000 per company to adopt digitalisation measures, such as electronic Point of Sale systems (e-POS), Enterprise Resource Planning (ERP) and electronic payroll system. “It’s only for the first 100,000 SMEs.
Similarly, the Smart automation matching grant of RM2mil per company is for 1,000 manufacturing and 1,000 service companies to automate their business processes, ” she said.
She added that with minimum wage increased to RM1,200 in major towns, it is even more pertinent for businesses to automate and digitise to keep their wage bill sustainable.
Yap said Malaysians will be greatly encouraged to embrace the digital economy, including the government’s move to place RM30 in e-wallets of qualified Malaysians.
“It is a pleasant surprise and it will help to expose a wide base of Malaysians to the digital economy. Now, everyone will have an e-wallet. It is a small gesture that will have a big impact.
It is a bottom-up approach in building the digital ecosystem, ” she said. Yap said although the one-time RM30 digital stimulus may seem small, but the impact is potentially big as Malaysia would stand to gain about 1% in cost savings to the GDP annually by adopting e-payment processes and going cashless.
“It will also boost the economy as the government has, in essence, injected RM450 million into the economy by giving RM30 to 15 million Malaysians, ” she said.
Yap also lauded the move to increase chargeable income for small and medium enterprises (SMEs) from RM500,000 to RM600,000 at a tax rate of 17%. Chargeable income above the threshold is taxed at 24%.
“It is like a direct rebate. By increasing chargeable income by RM100,000, this results in RM7,000 of savings which can be reinvested into the business and will help the cash flow of SMEs.”
“In Budget 2019, the SMEs enjoyed a reduction in tax rates from 18% to 17% for the first RM500,000. That’s a savings of RM5,000. So across two budgets, SMEs earning below RM600,000 would save RM12,000, ” she said.
She also called on SMEs to make full use of the Market Development Grant initiative by Malaysia External Trade Development Corporation (Matrade) as the ceiling had been increased from RM200,000 to RM300,000.
“It is pertinent to expand exports, and the Government is helping by revising participation grant in each export fair from RM15,000 to RM25,000, ” she said.
Yap labelled Budget 2020 as the most inclusive budget she had seen in recent years, which is in line with the Shared Prosperity theme.
She said Budget 2020 made a concerted effort to change the composition of the local workforce by encouraging the hiring of unemployed graduates, attracting women back to the work and replacing foreign workers.
Yap said this will resolve the increasing rate of unemployed graduates as well as reduce the country’s dependency on low skilled foreign labour.
“Employers will have access to a bigger pool of talents with the right skillsets for their business, ” she said.
To encourage more hiring of unemployed graduates, women and local workers, the Government is offering an incentive of up to RM500 per month to the employee and up to RM300 to the employer for two years.