Asia Pacific Investment Bank (APIB) suggests the Malaysian government to further reduce corporate tax to help SMEs survive the ongoing pandemic.
Chris Wang, CEO of APIB, says the Covid-19 pandemic is taking a toll on the 900,000 SMEs across the nation, especially those that operate in the tourism, manufacturing, catering and retail sectors.
Businesses in Selangor, Kuala Lumpur, Putrajaya and Sabah are especially hard-hit following the announcement of the Conditional Movement Control Order by the government recently to contain the third wave of the Covid-19 outbreak, he adds.
“Malaysia faces a sharp slowdown in economic activity and SMEs are the most affected,” says Wang.
Citing a survey done by the SME Association of Malaysia, Wang says 51.2 per cent of Malaysia’s SMEs have suffered losses of more than RM500,000 in business from March to September.
APIB has been keeping a close eye on the situations and needs of the SMEs, says Wang.
“The Covid-19 pandemic is causing a sudden drop in business. And SMEs are facing significant financial challenges, including a shortage in working capital and cash flow crunch,” he says.
Wang suggests the Malaysian government to reduce corporate tax to help SMEs survive amid such a challenging time.
“The Malaysia corporate tax rate is 24 per cent, which is way higher than some of its ASEAN neighbours including Singapore (17 per cent), Thailand (20 per cent) and Vietnam (20 per cent).
“Reduction in corporate tax will not only lighten the financial burden of the SMEs, it will also attract foreign investments and stimulate the country’s economic growth,” he says.