Malaysia economy sees 7.2% growth for local SME
SME (small- and medium-sized enterprise) in Malaysia grew from 5.2% in 2016 to 7.2% in 2017 (RM435.1 billion). According to Darell Leiking, Malaysia’s International Trade and Industry Minister, this growth took place in all main economic sectors such as manufacturing, services, and agriculture.
This expansion also increased the contribution of SME to the local GDP by 0.5% (from 36.6% in 2016 to 37.1% in 2017). In fact, if SME growth rate in Malaysia economy stays at 6.7%, Leiking expects SME Malaysia to reach their goal of contributing 41% of the Malaysia economy GDP by 2020. He also expects SMEs to contribute to 23% of the country’s total exports and 65% of Malaysia’s employment by that year.
The real GDP for SMEs has also been growing at a much faster rate than the overall economy for the last 14 years. The average GDP growth for SME in Malaysia and overall Malaysia economy is 6.6% and 5.1%, respectively.
Challenges faced by Malaysian SME
Despite the positive growth, SMEs still face bottlenecks that prevent them from growing to the fullest in the Malaysia Economy. The Malaysian SME Online Survey 2017 found that 53% of SMEs lack marketing and branding funds and 52% of SMEs face staggering brand communication costs. Other obstacles that they also encounter includes high operating costs, price war, and unclear products and services differentiation.
Future implications for SME Malaysia
Unless local SME start solving their bottlenecks and strengthening their business plans, they won’t be able to compete with other businesses and reach their growth potential. One way SMEs can do this is by attending branding and marketing programs run by trade associations or government agencies. Here, businesses will be able to gain insights on different marketing methods and guidance for their business strategy.
Businesses should also adapt their operations to Industry 4.0 standards to stay competitive. Industry 4.0 is combining technology tools with manufacturing practices to automate production processes. For instance, factories that have adopted Industry 4.0 will mainly use self-operating robots instead of humans in their production line. SME that conform their processes to Industry 4.0 benefit from higher work efficiency, lower production cost, and increased revenue.