The Small and Medium Enterprises Association of Malaysia (Samenta) says SMEs will see a steep hike in compliance-related costs in 2026, which might reduce their typical 10% to 15% net margins.
Samenta president William Ng said among the regulations that would increase the operational costs of SMEs were the stamp duty self-assessment system; the multi-tier levy system for foreign workers; the sector-specific carbon tax; and clean toilet requirements for food businesses.
Ng said the government should set up an industry-led SME transition academy to produce certified occupational safety and health coordinators, data protection officers and sustainability officers to enhance the in-house capabilities within SMEs and reduce transition costs.
He suggested that a national AI-powered environmental, social and governance (ESG) reporting fund be established to automate reporting in line with the National Sustainability Reporting Framework and the Simplified ESG Disclosure Guide, which helps reduce the prohibitive costs of manual compliance and the reliance on third-party consultants.
He also called for a 24-month moratorium on any new costs or regulatory burdens, a transition to an “opt-in” system where struggling businesses will not be penalised for failure to adopt new measures, and extending MyDigital ID to businesses.
“Most businesses lack the specialised legal, ESG or information technology departments to manage these regulatory timelines, leading to a gap between the government’s policy goals and the reality in implementation. This money could be spent instead on growing their businesses.
“To prevent a widespread business slowdown, Samenta calls for a transition from rule-based regulation to incentive-based facilitation,” he said in a statement.
Ng said SMEs were entering a “survival zone” in 2026 as the cumulative cost of regulatory compliance reaches a breaking point.
Unless these initiatives were repealed or postponed, he said, “SMEs will have to grapple with a surge” in new policies.
Earlier today, finance minister Anwar Ibrahim announced that Putrajaya would postpone mandatory e-invoicing for companies with total annual sales of RM1 million to RM5 million until Jan 1, 2027.
Anwar said some companies were still not ready because the cost of preparation for e-invoicing remained high.