KUALA LUMPUR, Feb 19 (Bernama) -- This is going to be a very challenging year for small and medium enterprises (SMEs) due to rising costs, said SMI Association of Malaysia National President Teh Kee Sin.
Teh said the Budget 2014 had underscored the Prime Minister's commitment in tackling the fiscal deficit and federal debt with the introduction of the new regime of subsidy rationalisation.
"Some of the measures indicated in the Budget had affected the cost of running a business, and also changed the way we operate the business in the years ahead, adding to the worries for SMEs," he said.
He said the industry is now paying an additional 11 per cent in petrol costs, a 10 per cent increase in the sugar price, a 15 per cent electricity tariff hike as well as higher labour costs with the minimum wage policy taking full effect on Jan 1 this year.
Speaking at the SMI Association Chinese New Year dinner celebrations here today, Teh said although the toll hike did not take place it still caused a dilution to the country's coffers by RM400 million.
He added the goods and services tax also caused some panic among SMEs as they are still unfamiliar with the system, with some businesses already taking advantage to increase prices, citing the GST as the reason.
Moving forward, Teh said small enterprises would need to be vigilant as business has become more competitive.
Meanwhile, Datuk Low Seng Kuan, Minister in the Prime Minister's Department, in his speech said measures taken by the government especially in subsidy rationalisation were not populist but were necessary actions to make the country's economy robust.
He said the government had already managed to reduce the deficit to four per cent this year and hopefully will reduce it further to three per cent by next year and maybe to zero in the coming years.
Low said under the second Government Transformation Programme, the government has also started implementing measures to improve governance and integrity and to eradicate corruption.
"The initiatives involve taking appropriate measures to ensure that the transformation is not superficial but in-depth, and improvements are institutionalised to ensure long-term sustainability," said the minister.