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| Enticing…vendors of electronic products awaiting customers |
The development of domestic
enterprises is of vital importance to the future prospects of the Malaysian economy
due to their significant numbers, size and nature of operations.
The contribution of small and medium-sized enterprises to a country’s overall
economic growth could not be underestimated.
Small and Medium Scale Enterprises (S.M.E.s) provide a vital link in the business
supply chain, create synergies, and have significant potential to grow and evolve
into larger entities or corporations.
With these objectives in mind, The National S.M.E. Development Council is formed
to accelerate the process of strengthening the enabling infrastructure that supports
S.M.E. development.
This will enable them to be upgraded in a systematic and sustainable manner, and
to enhance their contribution to Malaysia’s economic expansion and development
and to develop domestic enterprises for a significantly higher value-added contribution
to the economy.
S.M.E.s
Small and medium-scale enterprises created jobs and strengthened support industries
in domestic economies.
An enterprise is considered an S.M.E. in each of the respective sectors based
on the Annual Sales Turnover or Number of Full-Time Employees as shown in the
tables 1 & 2.
Enhancing Access to Financing
In the efforts to enhance S.M.E.s access to financing, Bank Negara Malaysia has
established a comprehensive S.M.E. Special Unit in May 2003.
The role of the S.M.E. Special Unit has now been expanded to not only provide
information on the various sources of financing available to S.M.E.s, facilitate
loan applications, address problems faced by viable S.M.E.s in securing financing
and provide advisory services on other S.M.E. financial requirements, but also
facilitate loan restructuring under the Small Debt Resolution Scheme (SDRS).
The S.M.E. Special Unit represents an integrated reference centre for all issues
relating to access to financing for the S.M.E.s, including under- taking the responsibility
of administering the SDRS.
In relation to this, Bank Negara Malaysia is setting up a customer service centre
as a reference point to facilitate a rapid and efficient response for the public
in general and the S.M.E.s in particular on financial matters.
Since its inception, the S.M.E.s Special Unit have received nearly 3,000 calls
from interested members of the public with more than half of the callers requesting
for details about business financing.
Up to 2004, Malaysian banks have made available 45% of business loans to S.M.E.s
compared to 26% in 1999.
According to the Governor of Bank Negara, Tan Sri Dr. Zeti Akhtar Aziz, the increase
in loans to S.M.E.s is the result of Bank Negara’s efforts in setting up
a comprehensive and convenient banking and loan infrastructure for easy access
by S.M.E.s.
The Contributions of Malaysia’s S.M.E.s
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| Small…given the right support, a small enterprise
can grow and be successful |
S.M.E.s in Malaysia account for a large proportion of the total establishments
in the various sectors. In the manufacturing sector, for instance, S.M.E.s comprise
93.8 percent of all establishments.
Moreover, of the total number of S.M.E.s, small enterprises comprise 76.0 percent,
while medium companies account for 17.8 percent of all manufacturing establishments.
Meanwhile, the Eighth Malaysia Plan (2001-2005) estimated that 90 percent of all
manufacturing establishments were S.M.E.s, employing some 868,000 workers or 38.9
percent of the total.
Small enterprises account for 3.9 percent and 11.4 percent, while medium enterprises
contribute 23.4 percent and 27.5 percent in manufacturing output and employment
respectively. Overall, 85 percent of the small establishments generate less than
RM5 million in output annually and employed less than 25 workers.
S.M.E.s in the manufacturing sector are found mainly in textiles and apparel,
food, wood-based and fabricated metal products sectors, while S.M.E.s in wood-based
products provide the largest employment share followed by food, textiles and apparel,
fabricated metal products.
The significant role of S.M.E.s in all sectors in the economy is demonstrated
by their output which was worth about RM4.3 billion or about 20 percent of the
Malaysian Gross Domestic Product (GDP) in 1990 and was projected to be around
50 percent or RM120 billion by the year 2020.
During the Sixth Malaysia Plan (1991-1995), the government expected S.M.E.s to
have invested around RM80 billion, increasing to RM126 billion under the Seventh
Malaysia Plan (1996-2000).
Meanwhile, during the Eighth Malaysia Plan (2001-2005), the government provides
RM131.9 million as soft loans to the State Economic Development Corporations to
develop S.M.E. Industrial Parks, and combined all the allocations in the Plan
totalling to RM1,091.8 million.
The most popular argument in favour of S.M.E.s is that they create substantial
employment opportunities. This is argued on the basis that S.M.E.s, by their nature,
use relatively labour-intensive production techniques. Thus, they may employ more
labour than otherwise would be the case.
Research has shown that fixed assets per worker rises significantly with employment
size i.e. fixed assets per worker in establishments employing 100 full-time workers
and above is more than forty times higher than those establishments with less
than 100 full-time workers.
 |
Wood Looks Good…S.M.E.s financing
enable furniture manufacturers to be creative in their designs |
There are two major implications
of this. First, since S.M.E.s use less capital, a given amount of capital will
create more jobs if it is spread over a large number of S.M.E.s than if it is
focused on a few large ones.
Second, since the capital-labour ratio gives, in general, a clear indication of
the level of mechanization of production, it may be assumed that the smallest
group- size operates at the lowest level of mechanization and vice-versa.
The exception to this, which is more pertinent to highly developed economies,
rather than to Malaysia, are small high-tech niche companies.
S.M.E.s serve as a “training ground” for upgrading and developing the
skills of industrial workers and entrepreneurs.
The lower cost of setting up small and medium-scale units enable enterprising
workers not only to provide themselves with a livelihood but also to offer employment
to others.
It is essential for Malaysia to recognize that globalization and the competitive
global market require S.M.E.s to play an active role in promoting knowledge-based
workers, mastering technical, engineering and design skills, rather than solely
assembling the products.
| Table 1 : In terms of Annual Sales Turnover
: - |
| Size |
Manufacturing (including Agro-Based) & Manufacturing-Related Services
|
Primary Agriculture |
Services Sector
(including ICT)
|
| Micro |
Less than RM250,000 |
Less than RM200,000 |
Less than RM200,000
|
| Small |
Between RM250,000 and less than RM10 million |
Between RM200,000 and less than RM1 million |
Between RM200,000 and
less than RM1 million
|
| Medium |
Between RM10 million and RM25 million |
Between RM1 million and RM5 million |
Between RM1 million and
RM5 million |
| Table 2 : In terms of Number of Full-Time
Employees : - |
| Size |
Manufacturing (including Agro-Based) & Manufacturing-Related Services
|
Primary Agriculture |
Services Sector
(including ICT)
|
| Micro |
Less than 5 employees |
Less than 5 employees |
Less than 5 employees
|
| Small |
Between 5 and 50 employees |
Between 5 and 19 employees |
Between 5 and 19 employees
|
| Medium |
Between 51 and 150 employees |
Between 20 and 50 employees |
Between 20 and 50 employees |
Acknowledgement : Puan Liyana, Bank Negara Malaysia, Sarawak
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