KUALA LUMPUR: Malaysia's challenge is no longer creating more micro, small and medium enterprises (MSMEs), but helping existing businesses grow into larger, more competitive companies capable of expanding overseas, says Entrepreneur Development and Cooperatives Minister Steven Sim Chee Keong.
Despite MSMEs growing faster than the overall economy last year, Sim said more than three-quarters of Malaysia's nearly 1.3 million MSMEs remain micro enterprises, while only 1.1% have grown into medium-sized firms.
He described the trend as an "hourglass" that has persisted over the past decade, with the number of micro enterprises continuing to widen at the bottom, relatively few businesses progressing into the medium-sized category, and large companies becoming even bigger.
"The real challenge is not merely creating more businesses, but ensuring Malaysian businesses can scale up - micro enterprises becoming small enterprises, small enterprises growing into medium-sized firms, and more local companies breaking into global markets.
"This growth must translate into businesses that are more productive, innovative and competitive," he said after a briefing about the MSME performance report 2025 at SME Corp Malaysia on Friday (July 31).
To address the structural imbalance, Sim said the ministry aims to increase the proportion of medium-sized enterprises to 5% by 2030 through initiatives focused on productivity, easier access to financing and stronger market access.
Sim noted that the ministry is rolling out the Power Up 100K initiative, backed by RM15bil in financing, grants and related assistance, to help businesses strengthen productivity, improve cash flow and expand into domestic and international markets.
The initiative is anchored on the ministry's ABCD framework, which focuses on accelerating productivity, reducing bureaucracy, improving access to capital and expanding market access.
Sim's remarks came as the Statistics Department (DOSM) reported that Malaysia's MSME sector expanded 5.7% in 2025, outperforming the country's overall economic growth of 5.2% despite persistent geopolitical tensions and global trade uncertainties.
The sector's value added rose by RM40bil to RM689.8bil, increasing its contribution to the country's gross domestic product (GDP) from 39.5% in 2024 to 39.7% last year.
Malaysia had nearly 1.3 million MSMEs in 2025, representing 96.2% of all business establishments, an increase of almost 20% from the previous year.
Sim said all five major sectors of the MSME economy recorded growth last year, led by construction at 12%, followed by services (5.7%), manufacturing (4.8%), mining and quarrying (4.4%) and agriculture (1.8%).
He said MSME exports also recorded robust growth, rising 10.5% to RM214.5 billion, outperforming Malaysia's overall export growth of 5.9% as well as the 5.1% growth recorded by non-MSME firms.
"The performance shows that Malaysian MSMEs have strong fundamentals and are capable of adapting to changes in the global market," he said.
To accelerate the sector's development, Sim said the ministry is rolling out the Power Up 100K initiative, backed by RM15bil in financing, grants and related assistance.
The programme aims to help 10,000 businesses scale up, invest RM100mil in capacity-building programmes for 100,000 entrepreneurs, increase MSME GDP contribution beyond RM700bil, and nurture at least 100 Malaysian companies with annual revenue of RM100mil over the medium term.
The initiative is guided by the ministry's ABCD framework, which focuses on accelerating productivity, reducing bureaucracy, improving access to capital and expanding market access.
During the event, Sim also launched SME Corp Malaysia's Quick Guide on Utilising FTAs by SMEs, a practical guide to help businesses tap into the 17 free trade agreements currently in force, besides witnessing the exchange of memoranda of understanding between SME Corp Malaysia and the Malaysia-China Chamber of Commerce (MCCC) as well as the Small and Medium Enterprises Association (Samenta).
The partnership with MCCC will focus on helping MSMEs expand into the Chinese market through trade missions, business matching, digitalisation and artificial intelligence adoption, while the collaboration with Samenta will support businesses in adopting environmental, social and governance (ESG) practices and preparing for the green economy.
