SMEs Urged To Focus On Institutional Strengthening Amid Economic Stability, Stronger Ringgit

KUALA LUMPUR, Feb 22 (Bernama) -- Small and medium enterprises (SMEs) are urged to use the current economic stability, underpinned by a stronger ringgit, to strengthen their institutions and secure sustainable growth over the next five years, rather than pursue rapid expansion.

“This is not about growing quickly, but about becoming dependable and rectifying structural weaknesses,” FSG Advisory Sdn Bhd chief executive officer Dr Anthony Dass said.

He said currency stability does not in itself strengthen businesses, but instead creates a more governable and predictable operating environment.

“Over time, firms that earn trust gain access to opportunities that are not available to weaker institutions,” he said in response to questions from host Jessy Chahal during Bernama TV’s “The Nation” programme last Friday, entitled “Stronger Firms, Not Just a Stronger Ringgit.”

The Malaysian ringgit has been appreciating against the US dollar, hovering at 3.8995 last Friday compared with 4.50 during the early period of Prime Minister Datuk Seri Anwar Ibrahim’s administration.

Dass said the strengthening ringgit reflects growing foreign investor confidence, with increased investments and tourist spending flowing into Malaysia

The ringgit strengthened by more than 10 per cent against the US dollar in 2025, making it one of Asia’s best-performing currencies.

While acknowledging that a firmer ringgit appears positive as it tends to improve sentiment, Dass cautioned that “sentiment should not be confused with strength.”

“Currency stability does not strengthen a business but creates a more governable environment where leaders have the space to act deliberately rather than react defensively,” he said.

Dass, who is also a national council member of the SME Association of Malaysia, said this was the type of period when businesses should focus on repairing their balance sheets and tightening operational discipline.

SMEs should upgrade capabilities before expectations rise further, especially from banks, buyers, regulators and suppliers.

“The responsibility shifts from endurance to strengthening the institution itself,” he said.

Elaborating further, Dass said firms should reinforce financial resilience by restoring balance sheet discipline, ensuring adequate liquidity and avoiding over-reliance on favourable market conditions.

“SMEs need to enhance operational credibility by systemising documentation processes, strengthening supervision and ensuring consistent performance in line with high standards.

“Increasingly, firms are selected based on reliability, compliance and bankability rather than relationships alone, as was often the case previously,” he said.

Dass added that businesses should invest selectively in building capabilities, particularly in productivity, execution discipline and supervisory depth.

He warned that businesses often face the greatest risks not from sudden shocks, but from a series of seemingly rational, incremental decisions, such as deferring system upgrades, relying on short-term financing or accepting weaker commercial terms, which cumulatively weaken resilience.

“By the time conditions become difficult again, what was deferred has become a structural weakness.

“The real cause of volatility is not the external shock itself, but the cumulative distortion of decision-making over time,” he said, urging firms to act deliberately to strengthen their institutions before crises expose these vulnerabilities.

He said such periods of economic and financial stability provide businesses with the space to act deliberately rather than react defensively, shifting responsibility from mere endurance to actively strengthening the institution.

“Stability should not be taken as comfort but as an opportunity to prepare for inevitable changes in the market,” Dass said.

-- BERNAMA