By DayakDaily Team
KUCHING, Oct 10: The federal government must pair Budget 2027’s wage and cost-of-living measures with stronger support for micro, small and medium enterprises (MSMEs) to prevent rising operating costs from undermining business sustainability and job creation.
The Sarawak United Peoples’ Party (SUPP) Stakan chairman, who is also Sarawak Housing and Real Estate Developers’ Association (Sheda) adviser, Dato Sim Kiang Chiok said while the federal budget presented by Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim was broadly inclusive, smaller businesses needed adequate support to remain competitive and viable.
He welcomed the proposed reduction in MSME tax rates to 14 per cent on the first RM150,000 of taxable income and 16 per cent on the next RM450,000, as well as the exemption for businesses with annual sales below RM50 million from the new RM2,000 minimum wage requirement.
However, he expressed concern that some enterprises could struggle to absorb higher wage costs while maintaining their financial viability.
Sim urged the government to reconsider the minimum wage adjustment or introduce a transition arrangement, alongside targeted assistance for employers and workers.
He said wage increases must be accompanied by productivity improvements to prevent higher operating costs from leading to price increases, reduced recruitment or fewer employment opportunities.
“If wages rise faster than productivity, businesses may face higher operating costs, which could eventually lead to higher prices, reduced recruitment or fewer employment opportunities,” he said in a statement today.
He called for productivity-linked wage incentives, automation grants, digitalisation support, technical training and easier access to financing to help MSMEs improve efficiency and build their capacity to pay better wages.
The objective, he said, should be to help smaller businesses become more productive and competitive rather than simply transferring higher costs to employers.
Sim also welcomed the reinstatement of the price adjustment clause covering increases in diesel and bitumen costs for construction contractors.
He said transparent implementation and timely assessment of claims would help protect contractors, particularly smaller firms, from cash-flow pressures and losses arising from fluctuating material costs.
Beyond business concerns, Sim described Budget 2027 as an inclusive package balancing cost-of-living relief with longer-term economic growth and social protection.
He said its measures benefited various groups, including households, middle-income taxpayers, students, persons with disabilities (OKU), senior citizens and first-time homebuyers.
He welcomed the increase in individual income tax relief from RM9,000 to RM12,000 and the one-percentage-point reduction in individual income tax rates, particularly for the M40 group.
The measures are expected to provide up to RM1,600 in additional disposable income to approximately five million taxpayers, helping middle-income families manage household expenses, education costs and healthcare.
He also welcomed additional Sumbangan Asas Rahmah (SARA) assistance of RM100 on two occasions for about 13 million eligible adult Malaysians, monthly SARA assistance of up to RM150 for Sumbangan Tunai Rahmah recipients, and the increase in the STR allocation to RM16 billion.
However, he stressed that cash assistance should complement broader efforts to address the underlying cost of living.
Sim also welcomed the RM1.5 billion allocation for OKU assistance and the increase in the Special Education Needs Allowance from RM150 to RM200 monthly for about 150,000 students, including children with autism.
He said these measures would help vulnerable groups and their families cope with rising living and healthcare costs, while calling for periodic reviews of allowances for special-needs students.
He further welcomed the RM2,500 living allowance for Form Six students, saying education assistance should be viewed as an investment in human capital.
On housing, Sim said up to RM20 billion in financing guarantees through Syarikat Jaminan Kredit Perumahan (SJKP), aimed at assisting 80,000 first-time homebuyers, would benefit self-employed individuals and gig workers without fixed monthly incomes.
Stamp duty exemptions for eligible first-time buyers would further reduce upfront costs, although he urged the government to monitor housing affordability to ensure the measures translated into genuine homeownership opportunities.
On Sarawak’s funding, Sim welcomed the increase in the interim special grant for Sabah and Sarawak to RM1.5 billion.
However, he said both the federal and Sarawak governments should continue working towards a fair, transparent and sustainable formula under Article 112D of the Federal Constitution, taking into account the rights and interests of both states under the Malaysia Agreement 1963 (MA63).
Overall, Sim said the budget’s long-term success would depend on effective implementation, sound fiscal management and a competitive private sector.
“A good budget should not only give people immediate assistance; it must also create the conditions for businesses to prosper, workers to earn better incomes and the economy to become more productive,” he said. — DayakDaily
