Tough Year for SMEs this 2015

A plate of curry noodle costs RM 3.50 in Penang and that is already considered "expensive" by local standard. Now imagine, in 24 hours, it had gone up to RM 5.00, because that's what just happened.

"SMEs are facing rising costs on several fronts. They include the government's subsidy rationalisation programmes, TNB's tariff hike and even, higher, sugar prices. SMEs have also had to meet minimum wage requirements. All these have contributed to increased costs. We saw the depreciation of the ringgit in 2Q2014." are some of the explanations offered by SME Association of Malaysia National Presient Teh Kee Sin as reported in The Edge, June 8.2015.

Along with other factors are the Goods and Services Tax, which came into force on April 1, and it is expected to be tough on the 650,000 SMEs in Malaysia.

Already large organisations are coming out in numbers to ask the regulators to ease up on SMEs given that over-regulation can kill the goose that lays the golden egg. E-Commerce for example in South East Asia only made up 1% of total retail, unlike 8% in China and over 10% in US and UK economies.

What is also severely lacking include the human capital development that includes retention rate and generation gap trends.

"SMEs are generally reluctant to send their employees for training due to fear of disruption in work activity and staff pinching by other firms. They also face difficulty in attracting and retaining workers due to perceived low remunerations and non-competitive rewards and benefits," says SME Corp Malaysia CEO Datuk Hafsah Hashim.

The good news are our early investigation into Enterprise 50 companies stretching since 1998 to present day revealed that though almost 20% to 33% companies were no longer in existent, those that are still around are making good of their revenues and organisational growth. 

Nevertheless we are keen to study on net profit and positive cash flows to be able to understand more of survival rate in volatile market conditions.

----

MIENS is currently assisting with mergers and acquisitions, towards IPO and also following the regularisation of Crowd-fundings.