Budget 2027 Seen Offering More Incentives To SMEs -- Economist

By K. Naveen Prabu

KUALA LUMPUR, Aug 18 (Bernama) -- Budget 2027 is expected to offer more incentives to support small and medium enterprises (SMEs) amid rising costs, supply chain disruptions and geopolitical uncertainties, said Affin Bank Bhd chief economist Alan Tan.

He said SMEs are important drivers of Malaysia’s economic growth, and further assistance could be necessary should external developments increasingly affect their operations.

Given the current geopolitical developments, he believes that the government will introduce even more initiatives to help the SMEs under the upcoming Budget 2027.

During a panel session at the SME Forum 2026 here today, Tan said greater uncertainty could emerge next year as the impact of higher prices and global supply chain disruptions takes time to filter through to businesses.

“The uncertainty is really in 2027, where all these lagged impacts from higher prices and disruption to the global supply chain will come through. Basically, SMEs will be a leading indicator,” he said.

When asked which SMEs would be most affected, Tan said that those that are highly dependent on oil, freight and transport costs are the most vulnerable to disruptions in the Strait of Hormuz.

“But having said that, I think the disruption will affect all SMEs,” he said.

As such, he urged SMEs to maintain sufficient working capital and cash reserves to meet day-to-day expenses and sustain operations amid potential disruptions and delayed payments.

“Assuming a company records a profit from the sale of its products to an external party, there may still be a time lag before the payment is received.

“In the meantime, however, the company must continue to meet expenses such as raw material costs and employee wages, and any strain on cash flow could adversely affect its operations,” he added.

-- BERNAMA