2019 marks year of SME empowerment

By Siti Noor Afera Abu & Zufazlin Baharuddin

KUALA LUMPUR, Dec 18  -- The year marks the empowerment of small and medium enterprises (SMEs) through various programmes spearheaded by the government, as well as financing facilities extended by trade and financial institutions to spur their growth.

Among the highlights of the year was the National Entrepreneurship Policy (NEP), launched by Prime Minister Tun Dr Mahathir Mohamad in July, which targeted to empower the bottom 40 per cent of the household income (B40) group by inculcating a culture of entrepreneurship, in line with the aspiration to create one million jobs.

The NEP 2030 outlines seven core thrusts, including generating new growth sectors, improving the labour market, and enhancing social wellbeing and social capital.

By 2030, the government wants SMEs to contribute up to 50 per cent of the gross domestic product (GDP) and 30 per cent of total exports as set under the NEP.

In 2018, SMEs contributed 38.3 per cent or RM521.7 million of the GDP compared with RM491.2 million a year ago, as well as 17.3 per cent of the country’s total exports.

Entrepreneur Development Minister Datuk Seri Mohd Redzuan Yusof said the government is committed to supporting SMEs to achieve the NEP targets.

The government has pledged a financial commitment of RM13.7 billion this year for 164 entrepreneurship and SME development programmes implemented by various ministries and agencies.

These include 28 programmes focusing on innovation and technology adoption with a financial commitment of RM148 billion, he said.

The SMEs in the country are highly concentrated in the services sector, accounting for 89.2 per cent of total SME establishments, followed by the manufacturing sector (5.3 per cent), construction sector (4.3 per cent), agriculture sector (1.1 per cent), and mining and quarrying sector (the remaining 0.1 per cent).  

Based on data published by the Department of Statistics, a total of 907,065 SMEs are operating in Malaysia, accounting for 98.5 per cent of the total establishments.

In terms of size, the majority of the SMEs are micro-enterprises, constituting 76.5 per cent of the total SMEs in Malaysia. small-sized SMEs (21.2 per cent), and medium-sized SMEs (the remaining 2.3 per cent).

Despite much attention given to the SMEs, entrepreneurs still face some major challenges such as adapting technologies and getting access to financing, which hinder growth and prevent them from competing with large-scale companies.

SME Corporation Malaysia chief executive officer Noor Azmi Mat Said pointed out that whether the business is growing or struggling, managing cash flow effectively is absolutely essential, and for many, it is the key to SMEs business survival.

"Cash is a major concern for SMEs to operate. Many of them struggle to properly manage and maintain cash flow.

"SME Corp is currently having conversations with them (SMEs) and financial institutions to understand the challenges they face (particularly in getting funding)," he told Bernama.

Noor Azmi said hence, it is important to identify these needs and fulfill them in order to foster their growth and subsequently aid economic growth.

Moving forward, Noor Azmi expects the contribution of micro-enterprises undertaken by the B40 group is on the rise.

On the halal sector, Halal Industry Development Corporation Sdn Bhd (HDC), this year, leads the Halal Sourcing Partnership Programme (HSPP) in collaboration with multinational companies (MNCs) to nurture SMEs and create business opportunities in halal industry. 

HDC industry development vice-president Hanisofian Alias said the HSPP started in January this year with the participation of 10 SMEs. 

“As most of them are producing ingredients, they need an international certificate to supply their products to MNCs.

"We have enlightened them of the importance of having an international certification such as the Hazard Analysis and Critical Control Point System (HACCP) and ISO 22000 but now we have the allocation to assist them in this area," he said.

Hanisofian said the first batch of SMEs will complete the programme at the end of next year, after which HDC will review its impact and propose to the government to expand the project to enable more entrepreneurs to benefit from it.

He said about 1,600 companies have exported their products so far this year, representing more than 75 per cent of the total halal exporters in Malaysia.

“We see the trend is increasing seven to eight per cent every year," he said.

In 2018, Malaysia’s total halal exports stood at RM40 billion compared to RM43.4 billion in 2017.

-- BERNAMA