Professional Documents
Culture Documents
Medium
Business in
Malaysia
Session 2
Background on SME
Definitions
In 2005, the National SME Development
Council (NSDC) approved the use of
common definitions of SMEs in the
manufacturing, manufacturing-related
services, primary agriculture and services
sectors.
These definitions are applied by all
Government Ministries and Agencies
involve in SME development, as well as by
the financial institutions
Background on SME
Definitions
The use of common definitions for SMEs
will
strengthen government efforts to create effective
policies and support programmes for specific
target
make it easier to provide technical and financial
assistance to SMEs
allow for the identification of SMEs in the various
categories and levels
Coverage of
Definitions for
SMEs in Malaysia
For wider coverage and applicability,
definitions of SMEs will be based on two
criteria
Number of employees
Annual sales turnover
SMEs Sectors in
Malaysia
Manufacturing - physical or chemical
transformation of materials or components
into new products
Services and other sectors
All services including distributive trade; hotels
and restaurants; business, professional and ICT
services; private education and health;
entertainment; financial intermediation; and
manufacturing-related services such as research
and development (R&D), logistics, warehouse,
engineering etc.
SMEs Sectors in
Malaysia
Primary Agriculture
Perennial crops (e.g. rubber, oil palm, cocoa, pepper
etc.) and cash crops (e.g. vegetables, fruits etc.)
Livestock
Forestry & logging
Marine fishing & Aquaculture
Construction
Infrastructure
Residential & non-residential
Special trade
Broad Definition of
SME
Manufacturing
Sales turnover not exceeding RM50 million OR
full-time employees not exceeding 200
workers; and
Detail Definitions
for SME
Micro
Manufactur
ing
Service
Sales
turnover
of less than
RM300,000
OR
full-time
employees
less than 5
Small
Medium
Sales turnover
from RM300,000
to less than
RM15 million
OR
full-time
employees from 5
to less than 75
Sales turnover
from
RM15 million to
less than RM50
million
OR
full-time
employees from
75 to less than
200
Sales turnover
from RM300,000
to less than RM3
million
OR
Sales turnover
from
RM3 million to
less than RM20
million
Importance of SMEs
Developing a group of diverse and
competitive small and medium enterprises
(SMEs) is central theme towards achieving
sustainable economic growth.
SMEs are crucial to the economic growth process
and play an important role in the countrys
overall production network
Importance of SMEs
Although the numbers might be lower in
Malaysia, SMEs have the potential to
contribute substantially to the economy
and can provide a strong foundation for the
growth of new industries as well as
strengthening existing ones, for Malaysias
future development
Government
Strategies
Constituting more than 99% of total
business establishments in Malaysia, it
clear that promoting a viable SME sector is
essential in the nations stride towards
broadening the sources of growth and
sustaining the growth momentum
This is reflected in the national
development agendas, namely the
Ninth Malaysia Plan (9MP: 2006-2010)
Third Industrial Master Plan (IMP3: 2006-2015)
Eighth Malaysia Plan (8MP: 2001-2005)
Human Capital
Development
Only 8.9% of the total respondents
contributed to the Human Resource
Development Fund (HRDF) with majority of
those who contributed (58%) utilized only
up to 20% of their total contribution in
2010
On phasing out foreign workers, the top
three suggestions included incentives for
employing local workers (61%), incentives
for training local workers (60%), imposing
heavy penalty for employing illegal workers
Investment Issue
About 44% of the total respondents do not
face any problems in investing, while
another 35% claimed that they were facing
difficulties and 21% did not intend to
expand and invest in Malaysia
The key impediments to investment were high
cost of raw materials, high initial cost of
investment and low rate of returns on
investment compared with other countries
Financing and
Other Assistance
About half of the respondents have
outstanding financing facilities with
financial institutions
Most of the respondents (60%) perceived
that the average interest rate or profit rate
(Islamic banking) charged by financial
institutions were on par with market rates,
with the mean rate of 6.8% per annum and
median of 7% per annum
On average, respondents took up to six
weeks (42 days) for financial institutions to
Exports of Products
and Services
Most of the respondents were domesticallyoriented with only 13% involved in
exporting their products/ services (previous
survey: 15%)
One-third of the respondents indicated
interest to export their products/services,
mostly to ASEAN region, Middle East, China
and other Asian countries
Common issues faced by the respondents
in going abroad to export their
products/services were expectations of
Thank You