Local SMEs contracted 7.3% in 2020

SMEs’ GDP contribution is only 38.2% compared to 2019 with 38.9% or RM554b

by AZALEA AZUAR / Pic by MUHD AMIN NAHARUL

THE GDP for Malaysia’s Small and Medium Enterprises (SME) has contracted by 7.3% in 2020 to RM512.8 billion.

The decline was higher compared to the country’s GDP (-5.6%) and non-small and medium enterprises (SMEs) (4.6%), according to the Department of Statistics Malaysia.

Chief statistician Datuk Seri Dr Mohd Uzir Mahidin said SMEs’ GDP contribution is only 38.2% compared to 2019 with 38.9% or RM553.5 billion.

“SMEs GDP for all sectors recorded negative growth in 2020. SMEs value added for the services sector decreased 9.2% in 2020 from 7.5% in 2019,” he said in a statement yesterday.

Wholesale and retail trade, food and beverages (F&B) and accommodation subsector has declined to 7.8% while the finance, insurance, real estate and business services subsector also decreased to 10.6%.

Furthermore, SMEs in the construction sector have also dropped to 15.4% due to the decline in all its subsectors.

SMEs in the manufacturing sector registered a value-added negative growth of 2.9% due to the fall of non-metallic mineral products, basic metal and fabricated metal products (3.1%).

On the other hand, SMEs in the mining and quarrying sector posted a 7.1% decline in its value-added in 2020.

Those in the agriculture sector have also dropped to 0.3% due to the decrease in all of the subsectors except for the livestock and other agriculture sectors which continued to flourish.

Despite most of the sectors being negatively impacted by the Covid-19 pandemic, products from the petroleum, chemical, rubber and plastic (3.2%), F&B and tobacco (2%) increased last year.

“Contribution of SMEs exports to total exports in 2020 was 13.5% where 9.4% was from the manufacturing sector. Furthermore, the services sector contributed 3.9% and agriculture sector 0.3%,” said Mohd Uzir.

He also explained that SMEs exports fell by 33.1% to RM117.8 billion in 2020 compared to 2019 where it has grown by 2.6% supported by services (-62.1%) and manufacturing (-3.6%) sectors.

On the other hand, SMEs exports in the agricultural sector increased by 2.5% to RM2.3 billion last year driven by the increase in SMEs exports for vegetables, fisheries, poultry, banana and durian.

SME exports in the manufacturing sector contributed 69.3% of the total SMEs exports last year, which was helped by miscellaneous manufactured articles, manufactured goods and machinery and transport equipment.

The exports of SMEs in the service sector dropped to RM33.9 billion last year compared to RM89.3 billion in 2019 due to the double digit decline in travel and transport activities.

“A larger decline was observed in SMEs employment as against a decrease in national employment indicating SMEs were hit harder by the pandemic. SMEs employment recorded a decrease of 0.9% to 7.3 million persons in 2020, constituted 48% of the national employment (2019: 48.4%),” Mohd Uzir added.

The only sector which recorded an increase last year for SME employment was the agriculture sector which comprised 41.8% or 779,000 individuals, despite having a marginal rate of 0.5%.

“The SMEs are going to experience harder consequences in recovering, especially during prolonged health crises attributed to the escalation of Covid-19 cases and social and economic restrictions that were imposed nationwide,” Mohd Uzir said further.