Last mile of reform: Samenta calls for local govt overhaul to sustain Malaysia’s competitiveness gain
KUALA LUMPUR, July 22 — While Malaysia has surged to a historic 15th in the IMD World Competitiveness Ranking, the Small and Medium Enterprises Association of Malaysia (Samenta) warns that these macro-level gains must now trickle down to the SME sector.
To achieve this, the association urged the government to target the next critical layer of bureaucracy: local councils (PBTs) and statutory bodies.
Samenta said its own surveys highlight a stark disconnect between national rankings and ground-level reality.
“SMEs consistently report that unpredictable processing timelines for licenses, permits and renewals as well as erratic enforcement remain a primary driver of rising operational costs and business uncertainties,” Samenta national president Datuk William Ng said in a statement.
This call for localized reform comes as Malaysia celebrates its best competitiveness level in over a decade, jumping eight spots out of 70 economies.
Ng described the climb as clear evidence that the Madani Economy framework is on the right track, proving that the economy moves forward when the government actively reduces red tape.
The surge was largely propelled by the Reformasi Kerenah Birokrasi (RKB) initiative and the passing of the Iltizam Act. These reforms triggered a significant leap in government efficiency, which rose 11 spots to 14th globally, and business efficiency, which climbed 16 places to 16th. Most notably, the time required to start a business jumped 38 places to 15th globally, while business legislation rose 29 spots to 6th place.
To capitalise on this momentum, Ng said that the government must now integrate local suppliers into the growing wave of high-tech foreign direct investment (FDI). The association proposes a target benchmark of at least 40 per cent domestic supply chain sourcing for major projects to ensure that multinational investments directly uplift the capabilities of local SMEs.
Samenta also credited the Malaysia Productivity Corporation (MPC) and its Productivity Nexuses for bridging the gap between policy and industry. The association suggests evolving these Nexuses into implementation units that partner government agencies with trade associations to deliver co-funded digital and automation initiatives tailored for micro and small enterprises.
While hailing the 15th place ranking as a win for all Malaysians, Ng stressed that the work is far from over.
He argued that by deepening public-private engagement at the municipal level and supporting domestic supply chain integration, Malaysia can build an economy where every business, regardless of size, has the support to compete on the world stage.
