The Small and Medium Industries Association welcomes the Budget 2010 which is a caring budget geared towards the achievement of the ‘1Malaysia’ concept of a high income economy with further liberalisation especially for the financial sector and further promotes the ease of doing business.

The SMI Association welcomes the specific measures to assist small-medium enterprises (SMEs) especially in ensuring adequate and easier assess to financing during the current economic downturn. The rationalisation of SME funds from 79 to 33 will allow underutilised SME funds to be merged with the more popular funds and be utilised fully.

Currently, SMEs need working capital financing rather than financing in capital expenditure for expansion as there is still excess capacity in the current downturn in demand.

In view of this, we propose that the government have a re-look at the almost exhausted government guaranteed funds such as the SME Assistance Guarantee Scheme (Sags) and Working Capital Guarantee Scheme.

The coordination of these SME funds by SME Corp will reduce the running around by SMEs to various agencies for funding. However, SME Corp - being new in its responsibilities - will hopefully be sufficiently staffed with competent personnel to cope up with the demand and to avoid any bottlenecks.

We welcome the government setting a timeline of six days for approval and four days for disbursement for micro-credit financing which are much needed by micro enterprises short of funds.

We also hope that SME Corp, which has been allocated with RM350 million funding, will also set their own speedy disbursement timeline. On micro financing, the government should also look into the current high interest rates being imposed by the micro credit lenders.

We welcome the tax deduction for expenses incurred by SMEs to register their patents and trademarks as this will reduce their cost burden in protecting their intellectual property and encourage them to invest in R&D and in the development of new products for the worldwide market.

The reduction in maximum individual income tax by 1% to 26% and the increase in individual income tax relief from RM8,000 to RM9,000 will result in an increase in disposal income and stimulate increase in the domestic demand of goods. This will help SMEs as they are concentrated mainly in the domestic market.

As the government has realised that our current broadband penetration is rather low at 25%, we hope that this can be expanded fast to the level of developed countries (60%- 90% ) as this will help SMEs to swiftly adopt ICT and e-commerce which in turn will reduce their cost of doing business tremendously and enhance their ability to compete with big companies globally.

The writer is national president, SMI Association of Malaysia