Kota Kinabalu: The Sabah Muslim Chamber of Commerce (DPMS) urged immediate action to ease growing pressure on businesses, particularly Small and Medium Enterprises (SMEs), as operating costs continue to rise while consumer purchasing power and profit margins shrink.
DPMS Sec-Gen. Shihan Mohd Salim said businesses are now grappling with higher wages, statutory contributions, rental, electricity and utilities, raw materials, transportation, logistics, taxes, licences, digital systems and compliance costs.
He said the pressure is more pronounced in Sabah due to geographical factors, long travel distances and high logistics costs.
“When people limit their travel and spending, the impact is also felt by restaurants, shops, markets and local businesses. If this situation continues, more SMEs risk downsizing their operations, reducing their workforce or shutting down altogether,” he said in a statement, Thursday.
DPMS proposed nine measures for consideration by the Federal and Sabah governments to ease the burden on the business community.
“First, raising the eligibility threshold for the BUDI fuel subsidy in Sabah to 500 litres a month, taking into account the state’s geographical realities, long travel distances and limited public transport.
Also, reducing travel costs could also help revive economic activity in towns and urban areas.
“Second, DPMS proposes raising the mandatory e-Invoice threshold to RM5 million, with businesses recording annual sales below the threshold either exempted or given a simpler compliance mechanism to reduce system, accounting and administrative costs.
“Third, on mandatory Employees Provident Fund (EPF) contributions for foreign workers, DPMS urged the Government to review the requirement, noting that employers already bear costs for levies, visas, permits, medical examinations, insurance and accommodation.
“If contributions were to continue, the Government should consider a more suitable special rate or mechanism,” he said.
Fourth, Shihan said DPMS also called for future minimum wage increases to take into account productivity, skills, job types, sectoral affordability and the state’s economic conditions, rather than applying a uniform increase across all sectors.
“Fifth, DPMS further proposed that the Government study a reasonable wage differential between local and foreign workers, including the possibility of a lower minimum wage for foreign workers, subject to existing laws and basic worker protections.
“Having such differential is important so that it could give Malaysians greater income advantages and incentives to work, while providing employers with stronger reasons to prioritise local hiring.
“However, the need for foreign workers in sectors facing genuine labour shortages should also be taken into account,” he said.
Sixth, DPMS also proposed expanding the use of ‘Sumbangan Asas Rahmah’ (SARA) to cover ready-to-eat meals at registered restaurants and food premises, subject to limits and controls set by the Government.
“This would help SARA recipients while also stimulating the local economy,” he said.
Seventh, DPMS also called for special electricity tariffs or rebates for SMEs with high energy consumption but low profit margins, including restaurants, hotels, laundries and retail businesses.
Eighth, for the Government to impose a moratorium on new compliance costs for SMEs while economic conditions remained challenging and to ensure that every new policy underwent an SME impact assessment.
Lastly, Shihan said DPMS also proposed targeted moratoriums by banks, local authorities and government agencies for viable SMEs facing temporary cash-flow problems.
“Such businesses should be allowed to apply for loan moratoriums, repayment rescheduling, instalment arrangements or deferment of certain payments.
“Moratoriums do not mean debts are written off, but provide businesses room to restore their cash flow and resume meeting their obligations,” he said.
Shihan said the business community was not seeking to have all its responsibilities removed but operators need reasonable breathing space to continue operating, retain workers and contribute to the economy.
“When a business closes, it is not only the owner who is affected. Workers lose their jobs, suppliers lose customers, property owners lose tenants, banks face non-performing loans and the Government loses revenue,” he said.
Hence, DPMS urged the Federal and Sabah governments to take action before the situation became more serious and to step up engagement with the business community and SMEs.
“Do not wait until shops and businesses close before acting. The People’s purchasing power must be restored and the cost of doing business must be controlled. SMEs must be given room to breathe.
“When people have money to spend, businesses thrive. When businesses thrive, jobs are secured and Sabah’s economy continues to grow,” Shihan said.
