A year of SME empowerment

THIS year marks a milestone in 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 targets to empower the bottom 40% 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% of the gross domestic product (GDP) and 30% of total exports as set under the NEP.

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

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

The government has pledged a financial commitment of RM13.7bil 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 RM148bil, he says.

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

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

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

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 points out that whether the business is growing or struggling, managing cash flow effectively is absolutely essential to their 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 tells Bernama.

Hence, Noor Azmi says it is important to identify these needs and fulfil 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 to increase.

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 the halal industry.

HDC industry development vice-president Hanisofian Alias says 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 on 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 says.

Hanisofian says 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 says about 1,600 companies have exported their products so far this year, representing more than 75% of the total halal exporters in Malaysia.

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

In 2018, Malaysia’s total halal exports stood at RM40bil compared to RM43.4bil in 2017. — Bernama

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