Awang Tengah (second right) addresses the session. From right are Minister of International Trade and Industry Datuk Seri Mustapha Mohamed, Regional Corridor Development Authority (Recoda) CEO Tan Sri Datuk Amar Wilson Baya Dandot, and Ministry of Industrial and Entrepreneur Development, Trade and Investment permanent secretary Datu Liaw Soon Eng. – Photo by Chimon Upon
KUCHING: Sarawak has requested the federal government reserve certain allocations for small and medium enterprises (SMEs) as well as more funding to develop industrial estates.
Minister of Industrial and Entrepreneur Development, Trade and Investment Datuk Amar Awang Tengah Ali Hasan said this is because rural SMEs in particular faced hurdles accessing the government’s limited sources of funding.
“The rural areas in Sarawak are not entirely connected with telecommunications infrastructure, making it extremely difficult for rural entrepreneurs and businesses to strive for the application of funding mainly because administration is centralised in Kuala Lumpur and many systems have already gone online,” he explained during a town hall session with the Ministry of International Trade and Industry yesterday.
“Due to the lack of such connectivity, the rural SMEs are deprived of the opportunity. By the time they are aware of these funding, most of the allocations have already been taken up.”
Currently the state has 43,830 SMEs, which constitute 97 per cent of total businesses.
“However, the state’s economic development is still behind Peninsular Malaysia, and our SMEs are also lagging in terms of capacity and capability,” he said.
“The federal government should provide more incentives and give special consideration to Sarawak SMEs by taking into account the unique situation of the State in order to narrow the development gap.”
He said the challenges faced by businesses and industries include higher operation costs due to geographical constraints, poor road network and lack of infrastructure.
“Therefore, the import of raw materials and export of our manufactured products have to go through Port Klang or Singapore. This adds cost to their operations and decreases competitiveness of products,” he said.
“Sarawak has a small domestic market so most products need to be exported to Peninsular Malaysia and overseas. This will incur additional charges for logistics.”
Awang Tengah proposed the extension of double tax deduction for freight charges incurred for the export of rattan and wood-based products.
“We hope the extension includes sawn timber and veneer,” he said.
He also requested a 10-year extension for the double tax deduction incentive for the insurance premium paid for import and export of cargo with local insurance companies.
“The incentive for insurance charges is important as it helps businesses in Sarawak alleviate cost pressures,” he said, adding Reinvestment Allowance (RA) should be reinstated and Sarawak companies allowed to claim RA incentive against 100 per cent of statutory income.
Awang Tengah warned that unless these issues were addressed, SMEs in Sarawak would continue to lag behind their counterparts in Peninsular Malaysia.