Malaysia’s SMEs Confront “Survival Zone”?

 

Samenta president Datuk William has warned that many Malaysian SMEs lack the financial and technical capacity to cope with overlapping compliance demands coming into force this year. This is prompting warnings that many businesses could struggle to survive without urgent government intervention. 

The Small and Medium Enterprises Association Malaysia (Samenta) said SMEs were entering a “survival zone” in 2026, as the cumulative cost of compliance reaches what it described as a breaking point. 

Source: https://www.wikiimpact.com

 

The Stamp Duty Self-Assessment System, the Multi-Tier Levy System for foreign workers, preparations for sector-specific carbon taxes, mandatory e-invoicing for SMEs with annual revenue above RM1 million, and new operational requirements tied to business licensing are some of the regulatory requirements. Additional obligations linked to environmental, social and governance (ESG) standards are also expected to intensify, particularly for firms connected to multinational or export-oriented supply chains. Many SMEs lack the financial capacity and in-house expertise to manage the overlapping timelines and technical demands imposed by these rules. 

SMEs typically operate on net margins of between 10 and 15 per cent, Samenta noted, but much of that is now being eroded by what it described as defensive spending on compliance rather than investment for growth. Samenta also highlighted that while SMEs are not directly required under Malaysia’s National Sustainability Reporting Framework to track carbon emissions, many are effectively compelled to do so because of reporting demands imposed by larger corporations and multinational clients. 

Calling for a change in regulatory approach, the association urged the government to move away from rigid, rule-based enforcement towards incentive-driven facilitation.  Among its proposals are a 24-month moratorium on new regulatory costs, funding for AI-powered ESG reporting tools, and industry-led training programmes to help SMEs develop in-house compliance capabilities. Without such measures, Samenta warned, compliance risks becoming not a pathway to competitiveness, but a barrier to business survival. 

Reference:

Samenta: Malaysia’s SMEs confront ‘survival zone’ under expanding compliance rules, Malay Mail, 5 January 2026