KUALA LUMPUR, Sept 6 — Small and medium enterprises (SMEs) in Malaysia continue to struggle with shrinking profit margins despite the nation’s overall economic recovery, according to the Small and Medium Enterprises Association of Malaysia (Samenta).
In a press statement, Samenta President Datuk William Ng highlighted that many SMEs are finding it difficult to maintain cash reserves, with two-thirds of those surveyed indicating they have less than six months of cash flow available, despite 44 per cent reporting revenue growth.
“This disconnect between sales growth and tightening cash reserves is indicative of severe margin compression among our SMEs,” Ng said, attributing the issue to rising costs in raw materials, energy, and salaries.
“Some SMEs are reporting profit margins as low as 2 per cent, and many are losing money despite higher sales figures.”
Ng also warned that the government may be under the false impression that SMEs are thriving due to strong GDP growth and moderated inflation.
“Contrary to that belief, many SMEs are badly impacted by the additional cost of doing business and are mulling steep price increases,” he added.
Samenta's survey, conducted in July, reflected mixed sentiments among SMEs, with those reporting poor prospects for the remainder of 2024 nearly matching those with optimistic outlooks.
Ng further pointed out the challenges posed by upcoming compliance requirements, including e-invoicing mandates and adherence to environmental, social, and governance (ESG) standards.
“Despite these, various government agencies and local authorities are increasing their fees to SMEs by between 15 to 250 per cent,” he said, noting that many SMEs are struggling to find the help they need.
Samenta has urged the government to halt any new cost increases and curb fee hikes by agencies and local authorities, warning that the situation could lead to mass closures and job losses if left unaddressed.
“The rosy headline numbers are not reflecting the reality on the ground for our SMEs,” Ng added.
