Malaysia: The Malaysian small and medium enterprise(SME) sector

The Malaysian small and medium enterprise(SME) sector is expected to continue on a sustained increase path and expand further in 2014, supported by sustained domestic request, higher tourism activities and development in exports.

A recent survey by SME Corp Malaysia showed that additional than 50 % of respondents expected better performance next year.

"In addition, the government through the 2014 Budget has taken the necessary measures to ensure that the SMEs are not adversely affected by the ongoing policy reforms.

"These include the minimum wage policy introduced this year and the recently announced goods and services tax which will come into result on April 1, 2015," SME Corp Malaysia Chief Executive Officer Datuk Hafsah Hashim told Bernama.

She said the measures in the budget would contribute towards creating an in general conducive entrepreneurship ecosystem inclunding in achieving the goals of the SME Masterplan, which is to promote innovative and high increase firms, increase business formation and enhance productivity.

The SME Masterplan (2012-2020) launched in July last year, is aimed at raising the contribution of SMEs to the economy, from 32 % of gross domestic product (GDP) currently to 41 % by 2020, employment from 59 % to 62 %, and exports from 19 % to 25 %.

Hafsah said the SME Masterplan was aimed at achieving four goals: increase business formation; reduce the informal sector in the economy; raise productivity of the SMEs; and expand the number of high increase and innovative firms.

She said SME Corp is working with the relevant agencies which will be taking the lead in the implementation of the High Impact Programmes (HIPs), that would contribute significantly to achieving the targeted goals.

"This is a long-term initiative. The initial HIP to be rolled out is the Technology Commercialisation Platform (TCP) that will begin its operation early next year.

"The Masterplan is a long-term plan and its impact will not be seen instantly, it takes time for the SMEs to meet the set goals," she added.

Hafsah said next year would as well see the implementation of the Breakout Strategy for Microenterprises (ME).

"The strategy is aimed at improving productivity and accelerating increase of MEs through five focused programmes: StartMEup, GrowME, MarketME, FastTrackME and MEMoneymatter.

"The deliverables part others are the utilisation of start-up kits, application of productivity toolkits, access to online markets, awareness on availability and accessibility to financial products, and issuance of productivity vouchers," she said.

According to statistics from the Economic Census 2011, there are a total of 645,136 SMEs operating in Malaysia, representing 97.3 % of total business establishments in the country.

Meanwhile, to further enhance the development of the SME industry next year, Prime Minister Datuk Seri Najib Tun Razak, during 2014 Budget announcement, allocated RM120 million for an integrated package to increase innovation and productivity of SMEs.

The package will provide financing for mechanisation, automation and upgrading SMEs' capacity.

Add to that, the government provides various assistance and incentives under the Green Lane Policy programme for financing, tax incentives and procurement, inclunding subsidy on interest rate of two % or a maximum of RM200,000 per year and stamp business exemption for loan agreements under the soft loan incentive scheme.

The others include tax deduction on expenses incurred for obtaining 1-InnoCERT certification, government procurement incentives encompassing approved manufacturers status company registration without site visit inclunding bonus marks given in technical evaluation and priority incentives to participate in procurement exercise by the Ministry of Finance.

During the 4th World Entrepreneurship Summit 2013 held in October in Kuala Lumpur, Najib had as well announced the establishment of the Malaysian World Innovation and Creative Centre (MaGIC), that will be a one-stop shop for entrepreneurs, covering everything from getting financing from banks or venture capital to incubators for developing start-ups; from intellectual property rights registration to facilities for training, coaching and mentoring.

To be located in Cyberjaya, this initiative is expected to increase local entrepreneurs' opportunities to due penetrate the world market. With the government's decision to establish MaGIC, SME Corp expects 25 % of the local SMEs to have world market business networking by 2020.

To date, 19 % of local SMEs have established networking in foreign markets, with food and beverage segment making up the majority market.