Understanding Small Company
In Malaysia, small and medium enterprises (SMEs) form the backbone of the nation’s economy, which is defined by specific criteria that include staff headcount, annual sales turnover, and paid-up capital. These enterprises are categorised based on their operational scale in various sectors
Defining SMEs
The definition of an SME in Malaysia varies across sectors, with distinct thresholds for manufacturing, services, and other industries, as per the guidelines set by Bank Negara Malaysia and the Malaysian Ministry of Human Resources (MOHR).
In the manufacturing sector, an SME is defined as a company with an annual sales turnover of not more than RM50 million or a full-time workforce of no more than 200 workers. For services and other sectors, SMEs have a sales turnover of less than RM20 million or a full-time staff of no more than 75 employees.
Sector-Specific Classifications
SMEs in Malaysia span various sectors, with the highest concentration in the services sector, accounting for 85.5% of all SMEs, according to SMECorp. This is followed by the construction, manufacturing, agricultural, and mining and quarrying sectors. These classifications help tailor government support and funding programs to the specific needs of SMEs within their operational contexts.
Economic Role and Contribution
SMEs are heralded as the economic bedrock of Malaysia, offering numerous employment opportunities and contributing significantly to the Gross Domestic Product (GDP). They are vital for their flexibility, responsiveness to market changes, and capacity for innovation, supporting 5.7 million jobs, and constituting about 70% of Malaysia’s total workforce.
Digitalisation and Market Adaptation
The adaptation to digitalisation marks a significant trend among Malaysian SMEs, with an increasing shift towards online marketing, social media engagement, and voice search optimisation to enhance market presence and efficiency. These digital strategies allow SMEs to compete globally, offering innovative solutions and products to a wider audience.
SMEs in Malaysia are not just businesses; they are a dynamic force that stimulates economic growth, fosters innovation, and creates job opportunities. Their diverse nature, spanning from traditional manufacturing to cutting-edge digital services, illustrates the vibrancy and resilience of Malaysia’s economic landscape. As the country progresses, the role of SMEs in shaping its future remains indisputably significant, highlighting their importance in Malaysia’s journey towards becoming a high-income, knowledge-based economy.
