THE nation’s extensive system of assistance programmes for small and medium-sized enterprises is increasingly burdening rather than helping entrepreneurs, according to a new report by Khazanah Research Institute, which warned that overlapping government initiatives are creating confusion, inefficiency and rising compliance costs for small businesses.
The report found that the proliferation of financial aid schemes and digitalisation incentives across multiple ministries and agencies has produced significant coordination problems, particularly for micro and small enterprises with limited administrative capacity.
Administrative data reviewed by KRI showed that more than 270 SME financial support programmes were implemented by over 80 different agencies between 2016 and 2019 alone.
“Fragmentation of financing programmes and digitalisation incentives has ultimately created high information-search costs and compliance burdens, especially for micro and small enterprises with limited administrative workforce capacity,” the institute said in the key findings of its discussion paper.
Researchers noted that many small businesses continue to rely on informal financial management systems, making it difficult for them to satisfy documentation requirements and regulatory standards imposed by government financing agencies.
The report warned that entrepreneurs are often forced to navigate multiple application systems, overlapping eligibility requirements and duplicated reporting obligations in order to access support intended to modernise their operations.
To address the issue, KRI urged the government to accelerate the development of a fully integrated one-stop portal consolidating all SME grants, incentives and financing information under the direct coordination of Ministry of Entrepreneur Development and Cooperatives.
The proposed platform would function as a national digital hub to coordinate assistance programmes across federal ministries and state governments, enabling businesses to access support more efficiently through a unified system.
According to the report, reducing duplication between programmes would allow government aid to be distributed more effectively while helping a greater number of SMEs strengthen their digital capabilities.
Despite years of digital transformation efforts, the study found that the majority of Malaysian SMEs still rely heavily on social media platforms as their principal business channel, with daily usage rates reaching 69.6 per cent.
Complex documentation procedures and strict compliance requirements were also identified as major barriers preventing entrepreneurs from securing financing to upgrade digital technology systems.
The challenges were found to be particularly severe in rural and border states such as Kelantan and Perlis, where micro-enterprises serve as a critical source of employment for local communities.
Research data showed that micro-enterprises account for approximately 45 per cent of jobs in several localities, underlining the importance of reliable access to government support for their long-term survival.
KRI also called for a shift away from broad nationwide assistance policies towards more targeted interventions tailored to geographical conditions and local business ecosystems.
The institute argued that strengthening central coordination mechanisms under the Ministry of Entrepreneur Development and Cooperatives would improve business confidence among SMEs, in line with findings showing that 82 per cent of Malaysian SME entrepreneurs remain optimistic about their companies’ growth prospects by 2025. - May 26, 2026
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