April 29, 2011 15:55 PM

PUTRAJAYA, April 29 (Bernama) -- The government will relax all requirements for the issuance of licences and permits to small and medium enterprises (SMEs).

Prime Minister Datuk Seri Najib Tun Razak said the radical move was following an analysis by the World Bank that had found that the SMEs still needed to have too many licences and permits to run their businesses.

"This thing also has some something to do more or less with corruption.

"Because of this, we will make obtaining licences and permits easy. A review will be conducted because it has some connection with competition policy to make it easy for a company to enter particular markets.

"This task will be given to the chief secretary to the government as chairman of Pemudah (the Special Taskforce to Facilitate Business).

He can engage with the private sector and submit proposals to the government," he told reporters after chairing the 11th National SME Development Council Meeting here Friday.

He said the meeting also agreed on the introduction of a "green lane" policy on the use of SME products or services by the government and government-linked companies (GLCs)

"The opportunities will be given through central contracts to high-potential SMEs which have highly innovative products based on recommendation by the SME Corporation and the Malaysian Technology Development Corporation (MTDC)," he said.

Najib said the government was also looking at other assistance which could be provided based on the company's potential to penetrate global markets.

"The government also will see how it can help SMEs which have not won any prizes but have big potentials," he said.

The meeting also agreed that the productivity of SMEs at the global level was still very low and several initiatives needed to be implemented to raise it to at least 100 per cent compared with the current rate, he said.

"Perhaps, the use of foreign labour at the present rate is a disincentive for them to innovate. May be this is an obstacle, being in a comfort zone using relatively cheap labour," he said.

The prime minister said today's meeting also approved Phase One of the SME Masterplan (2011-2020).

He said the plan would emphasize the creation of an ecosystem whose objective was to promote productivity and innovation as two major tools to boost the development of SMEs.

"We also should realise that SME competitiveness needs to be developed further not only in the context of SME relations with the global market but also to enable them to compete in the local market in the context of globalisation and liberalisation," he said.

He said the implementation of the Asean Free Trade Area and free trade agreements as well as other multilateral agreements "means that our market is more open compared to previously".

Najib said the government had given a lot to help the SMEs and this year alone, RM6 billion was allocated by various ministries and agencies.

He said the goverment was aware that in trying to make changes and a big leap, several things needed to be looked at.

Among them were the weaknesses in entrepreneurship management and ability, the SMEs' refusal to innovate and apply high technology, and their reliance on especially foreign labour to generate output.

"These problems relate not with difficulty in getting finance because it has been overcome, but with their inner ability," he said.

He said the goverment wanted to see the expansion of markets for goods and services generated by the SMEs in the future.

-- BERNAMA