- 5 hours ago
Malaysia’s SMEs warn that last‑minute public holidays disrupt operations, inflate costs, and undermine economic stability — raising concerns about long‑term competitiveness and investor confidence.
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00:00All right, for the next segment, we're going to be focusing on businesses where Malaysia's business community is once again
00:06raising red flags over the growing trend of surprise public holidays,
00:11which SME groups have labeled an unhealthy economic habit that disrupts operations, weaken plannings and injects avoidable costs into an
00:20already fragile economy environment.
00:22The Small and Medium Enterprises Association's Manta warned on 16-17 March 2026 that last-minute holiday declarations, such as
00:32the additional day announced for ID53,
00:35have forced manufacturers to pay triple wages, raise contractual penalties and absorb losses from disruptive schedules and perishable stock management.
00:45These disruptions are particularly damaging for SMEs, which lack the buffer larger corporations enjoy and are often operating under rising
00:54costs and volatile global condition.
00:57And for that, I'm going to welcome you, our guest, to understand on this situation is Datuk David Gropatham, Industries
01:03Unite co-founder.
01:04I want to say thank you very much, Datuk, for joining me.
01:07Taking a look at several SME groups have described last-minute public holidays as an unhealthy economic habit that disrupts
01:14planning and adds operational costs.
01:17From your perspective, Datuk, how severely do surprise holiday announcements impact business operations, particularly insiders like manufacturing, logistic, retail and
01:28even F&B that operates on tight timelines?
01:33I think there are two elements to this. One is an additional public holiday and the other is the fact
01:39that it's a problem too, right?
01:42I think when you have, when it's an additional public holiday, what happens is there are some sectors that will
01:50benefit like the tourism, consumption base, retail, they will benefit.
01:55But the problem really is when it's unplanned, we have, we have a bigger issue and it's unplanned because, you
02:03know, you have disruptions to business planning.
02:07How do you plan, how do you plan? And a lot of manufacturing, especially manufacturing, you know, they have production
02:16schedules, delivery times, right?
02:19And they can be subject to sanctions or breaches if they can't deliver on time or there's a timing schedule
02:25and things like that.
02:26Now, it affects both, right? It's not just the businesses, but also businesses that rely on government approvals, things like
02:35that.
02:35So, for example, if you're import, export, then the customs and all of that you pay, then shut down, that
02:40has an impact.
02:41Then there's also the financial impact and the financial impact is higher labor costs, right?
02:48Because you have either double wages or triple wages, depending on whether it's your regular or overtime pay and things
02:56like that.
02:57Now, these are for cash sensitivity, it affects cash flow because, as I've said many times, one of the biggest
03:05things that is affecting Malaysian businesses is the cost of doing business.
03:09And a lot of SMEs, especially, particularly now with the impact of rentals and things like that.
03:20So, these kind of disruptions can be catastrophic, where you have companies that have certain commitments when it comes to
03:29deliveries.
03:30And so, there are penalties that need to be paid.
03:35And then, of course, productivity loss, right?
03:38So, for example, a lot of companies are measured on how much they produce, shareholding, you know, shareholders and companies,
03:45you know, they get paid sometimes or investments are based on how much, what percentage of productivity.
03:53So, it goes beyond just the SMEs can also affect investors and also affect investments into companies in Malaysia.
04:03So, it's quite challenging when it is, if it's impromptu.
04:10Sometimes surprises is good and sometimes surprises can be disruptive and which is affecting the cash flow, which can be
04:18a big problem for any type of businesses.
04:21And research from the Centre for Future Labor Market Studies indicates that productivity peaks at around 10 public holidays a
04:28year.
04:28Yet, Malaysia already records one of the highest numbers of holidays in the region.
04:34Do you believe this trend risks undermining Malaysia's long-term competitiveness and even investors' confidence?
04:41I think it's a fact.
04:43And again, the numbers don't lie.
04:45And Nina, you know what, you were right.
04:46Because if you look at our strongest competitors in ASEAN, which are Vietnam and Singapore, they have 11 public holidays,
05:00which are around the optimum, as you say, 10, right?
05:03But they have 11.
05:04We have 14 federal holidays and 24 state holidays.
05:09So, we're way above the average for the competitive economies, right?
05:15The economy is very similar to us, where we are competitive.
05:19So, Vietnam and Singapore are the benchmark.
05:21And, you know, they are closer to that optimum level that you say.
05:28But over and above that also, you know, it also reflects government policy.
05:34I think for foreign investors, when they come in, they want to see very consistent government policy, right?
05:41So, if an investor is going to Singapore, they're not going to worry about, oh, there's going to be a
05:45change, a policy change or whatever, right?
05:48I know it's just public holidays.
05:50But on the whole, people will see how this government and how consistent are the government policies, right?
05:57You're not going to get major policy changes in Singapore.
06:00And that's probably one of the reasons why you have a lot of FDI investments going in, companies wanting to
06:07locate their headquarters in Singapore and things like that because of all these things, right?
06:11So, you have very fixed public holidays, they can plan, they can manage.
06:17So, the indication to the world at large is, well, Malaysia can flip-flop on policy, they can flip-flop
06:24on public holidays, and you don't know what they're going to do with other major decisions.
06:28I mean, it's just an impression, but it's not a very good impression for the world.
06:34It's actually quite interesting to reach our discussion here.
06:38It's not only affecting the cash flow for businesses in a lot of industry, but also the same line we
06:46have to consider also how is investors also seeing us from consistency in policy planning and something, how can we
06:55manage the expectation is very important.
06:56And also, talking about policy and rules, some industry organisations have proposed amending the Public Holidays Act 1951, including limiting
07:06ministerial towers to declare ad hoc holidays and instituting a minimum three-month notice period.
07:13Would Industry Unite support such legislative reform?
07:17And what governance model would you recommend to ensure clarity and predictability?
07:23Well, I think, I mean, I do understand the government also, and I do, I do, you know, I was
07:30a worker once.
07:31I like public holidays, right?
07:33So, I understand the social impact of it, work-life balance for the workforce, it boosts morale, I understand all
07:41of that.
07:42But here, we're talking not about the holidays, we're talking about the fact that, you know, it's impromptu and unplanned.
07:48And that's, that's really where the impact is.
07:50So, yes, I do agree that we need to amend the Act to have some certainty in this.
07:57But I guess what we need to do is maybe we can have something called floating holidays within, within that
08:05period where it allows, or people can manage and say,
08:08okay, there'll be one or two extra holidays this year, and so the market can perhaps allocate for that.
08:18But in reality, yes, I do agree that we should be very consistent.
08:23We should amend the Act.
08:24And I don't think ministers or even the prime ministers should actually make such statements, particularly without consulting business.
08:35So, if you realize, again, every time I've been on Astro since even COVID, you know, we talk about the
08:44same thing,
08:44that policy decisions affecting businesses tend to be made without consulting the business community,
08:50without getting a response from the business community.
08:53And that, to me, would, you know, is what causes a lot of these problems.
08:58I think, you know, I think if they wanted to do something or whatever, they should.
09:03Apart from amending the Act, of course, it's also consulting business, see what the impact is overall, overall, not just,
09:10you know,
09:12it's good policy for the government.
09:15People love the government, right?
09:17You know, they say, wow, this government, you know, or that government.
09:20And so it can be seen political.
09:23But at the end of the day, we also need to protect businesses that are facing very, very big challenges
09:32at the moment.
09:33You know, as I said, you know, one of the biggest things is the impact of rents due to the
09:39current restructured tax scheme.
09:42You know, and, you know, especially also now, you know, we're facing challenges in global supply chains, oil.
09:51Just recently, we've seen spike in shipping and supply chain disruptions.
09:57So all of this is compounding.
10:00And we have to factor all of this in terms of impact and timing.
10:06You know, so if you want to do something like this, you do it when you have very good consumption,
10:11very good period and things like that,
10:13but not at a time when there's so much uncertainty for businesses.
10:17I mean, this is another factor, I think, that needs to be taken into account.
10:21Let's stick to a situation if the government continues to allow at hot holidays declarations for reasons such as national
10:28appreciations or festive easing.
10:30What are some of the short-term mitigations measures should be introduced, such as substitutions options or assumptions for critical
10:38industry or cost-sharing mechanisms to reduce the impact on businesses?
10:43I think one of the first things you can do is perhaps offer tax relief for the additional wages, for
10:51example, that they face.
10:54So a lot of companies, I mean, if you're having a staff force of, let's say, 1,000 people, 10
11:00,000 people, and you're paying double or triple that daily waste, that's very impactful.
11:05So the fastest way that they can recover that perhaps is through tax relief, and that's going to have a
11:12burden on the government, right?
11:13Right. And also, for example, incentives, you know, in a way that, you know, companies that actually are impacted by
11:26this get other incentives to mitigate the loss that they're facing.
11:32But, you know, these are all short-term measures.
11:34It does not mean, it cannot change the fact that your supply chain disruption changes, you know, it's not just
11:43dollars and cents.
11:44Delivery schedules, right? Contractual delivery schedules, right?
11:48And it affects the man in the street.
11:50Even, for example, even if it was a legal service and I need to make a payment or land deal
11:56on a particular day,
11:59and assuming that that fee then suddenly becomes a public holiday, we're going to have a lot of issues, right?
12:04People also have contractual obligations, and if they don't meet their contractual obligations, then there are penalties, penalty clauses.
12:11So how do you mitigate for that?
12:13I mean, in terms of workforce, you can mitigate yourself, and then by saying, okay, let's do some tax deductions
12:19or incentives or things like that.
12:20But overall, it's not a fix.
12:24You're still having a major issue.
12:28But again, it's not, again, we're looking at it from an operational point of view, but we also have to
12:33look at it from a policy point of view and how people perceive, how people look at this, right?
12:40Now, if you continue to put pressure on SMEs, now, I keep saying this, the economy, 70% is based
12:48on SMEs.
12:49If you keep continuing to put pressure on SMEs with the increased cost of business and things like that, we
12:55are going to have layoffs.
12:57We are going to not have the kind of cash flows that maybe the next riot, a lot of these
13:01companies can't pay the bonuses that they should be paying.
13:04And so while the right hand may feel happy today because they've got a public holiday today, it may affect
13:12their increments, their salaries, bonuses.
13:16You know, some companies might just say, hey, you know what, I'm just fed up, like after COVID, you know,
13:21and just closed down.
13:22So I think we have to look at it from a balanced perspective.
13:26Clearly, while flexibility in public holidays may carry good intentions, the real challenges lies in balancing that with business certainty
13:35and operational stability.
13:37It's a conversation that ultimately comes down to policy, clarity, fairness and even long-term sustainability.
13:43Dato' David Gurupatam, Industry Unite co-founder, thank you so much for your insights and for joining us today.
13:48We'll take a short break. Stay with us on Niaga Awani.
13:51More discussions coming up right after this.
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