Rising costs continue to hit local SMEs


Over two-thirds of small and medium-sized enterprises (SME) have reported a 20% yearly increase in their operating costs as a result of increased material prices, based on SME Corp Malaysia’s third quarter of 2017’s SME survey.

Minister of International Trade and Industry Darell Leiking (picture) said the cost gain was due to increased prices in raw materials and other input costs.

“This also includes utility bills, cost of fuel and gas for transportation, as well as higher salary and wages,” he said at a media briefing SMEs’ performance last Friday. The survey included 1,469 respondents from various SMEs nationwide.

Last year, SMEs contributed RM435.1 billion and posted higher real gross domestic product (GDP) growth of 7.2% versus the 5.2% recorded previously.

The higher GDP growth among SMEs was projected across major economic sectors such as services, manufacturing and agriculture.

Meanwhile, SME exports recorded a higher growth of 7.9% last year versus 7% previously due to higher commodities’ exports, such as palm oil and rubber, as well as manufactured products, inclusive of electrical and electronics (E&E).

Leiking said exports by large firms also posted a double-digit growth of 17.9%, which is backed by E&E, liquefied natural gas and crude oil exports.

“As a result, the contribution of SME exports to total exports during the year was lowered at 17.3% versus 18.6%. In terms of value, SME exports increased to RM167.4 billion though,” he said.

He added that the employment of SMEs increased to 66% last year.

“This is due to a more streamlined and coordinated approach in SME development and successful implementation of initiatives under the SME masterplan,” he said.

The plan targets SME contribution to the overall GDP to reach 41%, the country’s exports 23% and employment by 65%.

Meanwhile, SME Corp CEO Datuk Dr Hafsah Hashim said the company will be undertaking a new long-term plan called SME Masterplan 2.0.

“The proposed plan will lay out strategies for entrepreneurship and SME development for business sustainability and competitiveness, in order to compete in a more globalised and high-tech marketplace,” she said.

Leiking added that the plan will also consider demographic changes and the shift in economic and business landscapes.

“The masterplan will also look into aligning SMEs to reap the benefits from megatrends, such as Industry 4.0 and digitalisation, to explore new business models arising from new emerging financial technology, inclusive business, gig and circular economy,” he said.

Last month, Communications and Multimedia Minister Gobind Singh Deo said efforts are being made to increase SME participation in the Digital Free Trade Zone as a platform to market their products abroad.