KUALA LUMPUR, Dec 22 (Bernama) -- Small-and-medium enterprises (SMEs), comprising 99 per cent of the country's businesses, are likely to contribute further to the Malaysian economy as they chalk up dynamic growth next year boosted by six high impact programmes initiated by the government.
The six programmes are namely the SME Investment Programme, Catalyst Programme, Inclusive Innovation, Going Export Programme, Technology Commercialisation Platform and integration of registration and licensing of business establishment.
However, analysts said SME players also need to be more capital-intensive rather than remain labour-intensive in their operations to move up the scale in operational efficiency and aspire for expanded growth.
Others opine that SMEs would still need financial support and that they should emphasise more on the services sector rather than manufacturing, as well as, look to diversify into food production in efforts to reduce the food import bill in the midst of a brittle global economic outlook.
Malaysian Rating Corporation Bhd chief economist Nor Zahidi Alias said although the global economy was facing an uncertain outlook, Malaysian SMEs would remain resilient.
"It is a well-known fact that the growth of SMEs have consistently surpassed the overall economic growth between 2004 and 2010 where SME's value-added growth averaged 6.8 per cent versus 4.9 per cent for the Malaysian economy," he told Bernama in an interview.
Nor Zahidi said the government had taken numerous steps to ensure the domestic engine, including the SME industry, will continue to provide some support to overall growth.
"For instance, different programmes under the Economic Transformation and Government Transformation Programmes will strengthen the investment climate to some extent," he added.
Besides, Nor Zahidi said the stable labour market would ensure private consumption would not be severely affected next year.
"Recent adjustments in the civil servants' salary scale will be positive for consumer sentiment. As a result, many SMEs will stand to benefit from resilient domestic demand," he added.
However, he said there was a sizeable number of SMEs that were still labour incentive in nature.
"Ideally, we want SMEs to shift their business model to become more capital-intensive but the main hurdle is their lack of desire to do so due to several reasons such as lack of capital or sources of fund," he added.
He said from the government standpoint, identifying the various stages of SMEs was crucial in ensuring proper assistance can be tailored as there was a need to optimise the usage of limited resources especially financial assistance.
"Other than that, training programmes are important to create awareness among SMEs about their potential to become productive and competitive.
In this regard, joint efforts between universities, government-linked corporations and multinational companies was critical to enhance technological capability that SMEs can adopt in the future, Nor Zahidi said.
Affin Investment Bank economist Alan Tan said as the Malaysian economy shifted its transition to a service-based economy, local SMEs should focus on the non-manufacturing sector, which has been growing steadily, supported by domestic demand.
"However, the government will also need to look at ways to encourage further foreign direct investments into the country, by introducing more measures to reduce cost of doing business, tax incentives, reduction in corporate tax rate and providing efficiency in government processes," he said.
Tan added growth in private investment was expected to be driven by domestic direct investment in major projects identified under the New Economic Model and the ETP, therefore providing some support to SMEs.
"SMEs will be highly important for Malaysia, as they provide a major and sustainable generator of employment and income for the people in the country," he added.
-- BERNAMA
