SMEs Advance Further This Year Amid Stable Environment, Consistent Policies And Targeted Support
By Durratul Ain Ahmad Fuad
KUALA LUMPUR, Dec 15 (Bernama) -- Small and medium enterprises (SMEs), regarded as the backbone of the economy, progressed further this year, buttressed by a more stable economic environment and a gradual recovery in domestic demand, which boosted sales and business confidence across the sector.
A combination of factors contributed to the progress, notably the government's consistent policy clarity and predictable reforms in areas such as subsidy rationalisation, fiscal consolidation and the MADANI industrial strategy, which strengthened SMEs’ confidence in planning for the future.
In addition, the expansion of targeted government support, including SME financing windows, export promotion programmes and industry-specific facilitation, helped businesses navigate cash-flow and market challenges.
Besides this, their upward trajectory was aided by strengthening consumer demand in selected sectors such as retail, food and beverage, logistics, professional services and certain manufacturing subsectors, particularly as inflation moderates.
SME Digitalisation Progress and Support
Small and Medium Enterprises Association (SAMENTA) president, Datuk William Ng, told Bernama that while SMEs are making progress this year, their performance remains uneven, with micro and small businesses — especially in the East Coast of Peninsular Malaysia, Sabah and Sarawak — continuing to face tighter margins, labour constraints and slower digital adoption.
Regarding SME digitalisation, he said it improved meaningfully in 2025, although progress remains uneven across firm sizes and sectors.
“The strongest improvements were seen in digital payments and e-commerce adoption, accounting and payroll digitalisation, early-stage automation in manufacturing and logistics, and adoption of cloud-based enterprise resource planning (ERP) among mid-tier SMEs.
“Government initiatives that worked well include SME Digitalisation Grants, Automation and Smart Manufacturing financing via SME Bank, Government Technology (GovTech) and e-invoicing migration support,” he said.
Ng said the recently announced 50 per cent tax deduction for artificial intelligence and cybersecurity training shows the government is serious about high-value skills, which has helped raise awareness of digital compliance — and this should continue.
“Digitalisation is not a one-year project; it is a multi-year transformation, especially for smaller firms. We recommend expanding grants to cover subscription-based tools, decentralising delivery through banks and industry associations, and simplifying processes for micro-SMEs,” he said.
Challenges and achievements
Ng said 2025 has been a significant year for SMEs as Malaysia’s ASEAN chairmanship opened doors for greater regional integration, with key initiatives being the upcoming ASEAN SME Cross-Border Facilitation Framework and the Digital Economy Framework Agreement, both of which are expected to deepen intra-ASEAN trade.
“SAMENTA, along with our counterparts in other ASEAN member states, has also established the ASEAN SME Caucus, which will drive private sector initiatives to promote intra-ASEAN trade among our SMEs, empower stronger digitalisation and work on common grounds in green transition and circularity,” he added.
However, he said SMEs still faced challenges similar to those in 2024, such as higher operating costs in logistics, utilities, compliance and labour.
“We also faced tight liquidity due to slower payment cycles and reduced risk appetite among lenders. Compliance pressures have also risen significantly, particularly with e-invoicing, environmental, social and governance expectations, and industry certifications. Regional competition, especially from Indonesia and Vietnam, has also heated up,” he said.
Despite this, Ng shared several notable achievements, including Malaysia’s recognition as a top emerging hub for digital services and supply-chain diversification, and continued progress in halal industry development, especially in standards and certification across ASEAN.
“Malaysia’s progress in the Johor-Singapore Special Economic Zone implementation has also placed SMEs in Johor at the forefront of regional expansion opportunities,” he added.
Outlook 2026
He said SAMENTA is cautiously optimistic about the outlook for SMEs next year, with three forces set to shape their performance, including a supportive Budget 2026 and stable economy.
“Budget 2026 is structurally supportive, with a strong focus on creating liquidity for SMEs and driving green transitions and AI adoption.
“We also see the economy becoming more stable with the narrowing of our budget deficit and with no new major taxes announced.
“As Malaysia’s oldest and largest association for SMEs, SAMENTA will continue to support SMEs to embrace digital tools, automation, certification and regional partnerships in order to grow faster than those who maintain a purely domestic mindset,” he said.
-- BERNAMA