Premium Essay

Sme in Malaysia

In: Business and Management

Submitted By farah56
Words 6025
Pages 25
International Review of Business Research Papers
Vol.2. No.1 August 2006 pp.1-14

An Evaluation of SME Development in Malaysia
Ali Salman Saleh∗ and Nelson Oly Ndubisi∗∗
Small and medium enterprises (SMEs) in play a vital role in the Malaysian economy and are considered to be the backbone of industrial development in the country. However, few studies examined their development, challenges and future prospects. Therefore, the aim of this paper is to examine and analyse the role of SMEs in different sectors as well as their major contribution to the economy. The paper goes further to review the existing literature as well as the empirical studies in order to identify the major challenges (domestically and globally) that face this sector. The key messages from the studies examined in this paper are that Malaysian SMEs still face many domestic and global challenges in achieving economies of scale and competing internationally. Among the challenges are the low level of technological capabilities and limited skilled human capital resources, a low level of technology and ICT penetration, low levels of research and development (R&D), a substantial orientation towards domestic markets, a high level of international competition (for example, from China and India), a high level of bureaucracy in government agencies, and internal sourcing of funds. These characteristics suggest that government programs and incentives are either insufficient or not delivered effectively enough to overcome these problems. This paper attempts to identify the challenges as a positive first step towards formulating a workable framework for the SMEs to overcome them.
Keywords: SMEs, development, contributions, challenges, Malaysia.

1. Introduction
Malaysian SMEs are a vital component of the country’s economic development. According to SMIDEC
(2002), SMEs accounted for…...

Similar Documents

Premium Essay

Sme in Malaysia

...enterprise (SME) in Malaysia. The first category comprises agriculture, services, information and communication technology (ICT) with less than 50 full-time employees or annual sales turnover fewer than RM 5 million. The second included manufacturing and agro-industries with less than 150 full-time employees or annual sales turnover not exceeding RM25 million. Small and medium sized enterprise (SME) is the engine for economic growth. Development of SME brings technology development and employment creation. Michael and John (1998) have noted that relative to larger firms, SMEs are well prepared for facing the challenges of increasing competition and globalization of markets. Planning is usually done first by entrepreneur when decided to start a SME. This is because everything else will be depends on the planning makes by the entrepreneur. A business plan plays an important role in obtaining funds and as a blueprint for the enterprise operates towards success. As Peel and Bridge (1998) and George and Jonathan (2002) reported, there is a strong connection between the success of a SME and its long-term planning. In Malaysia, National SME Development Council (NSDC) was established in June 2004. It acts as the highest policy-making body to chart the direction and strategies comprehensive and coordinated development across all sectors of the economy. Some examples of successful SMEs in Malaysia are Unico Holdings (Unico) and Hockpin Precision Sdn Bhd (HP). A SME......

Words: 6284 - Pages: 26

Premium Essay

Sme Development in Malaysia

...International Review of Business Research Papers Vol.2. No.1 August 2006 pp.1-14 An Evaluation of SME Development in Malaysia Ali Salman Saleh∗ and Nelson Oly Ndubisi∗∗ Small and medium enterprises (SMEs) in play a vital role in the Malaysian economy and are considered to be the backbone of industrial development in the country. However, few studies examined their development, challenges and future prospects. Therefore, the aim of this paper is to examine and analyse the role of SMEs in different sectors as well as their major contribution to the economy. The paper goes further to review the existing literature as well as the empirical studies in order to identify the major challenges (domestically and globally) that face this sector. The key messages from the studies examined in this paper are that Malaysian SMEs still face many domestic and global challenges in achieving economies of scale and competing internationally. Among the challenges are the low level of technological capabilities and limited skilled human capital resources, a low level of technology and ICT penetration, low levels of research and development (R&D), a substantial orientation towards domestic markets, a high level of international competition (for example, from China and India), a high level of bureaucracy in government agencies, and internal sourcing of funds. These characteristics suggest that government programs and incentives are either insufficient or not delivered effectively enough to......

Words: 6067 - Pages: 25

Free Essay

Ict in Malaysia

...ICT IN MALAYSIA: POLICY, REGULATION & INDUSTRY PROGRESS (1996-2000) AND PROSPECTS (2001-2005) Presented by Gazali Abas at ITU-Waseda University Workshop for Regulators and Policy-Makers “New Trends in ICT” 13th-24th November, 2001 Waseda University Tokyo, JAPAN CONTENTS 1. 2. 3. 4. 5. INTRODUCTION PROGRESS (1996-2000) PROSPECTS (2001-2005) ALLOCATION CONCLUSION 14 Nov.2001.Gazali A. 2 1. INTRODUCTION THE BIG PICTURE - Human Capital 23 m - Vision 2020 - Long-term Outline Perspective Plan - Five-year Development Plan - K-Economy - ICT policy, regulation and industry 14 Nov.2001.Gazali A. 3 2. PROGRESS, 1996-2000 1. 2. 3. 4. 5. 6. 7. 8. Utilization of ICT National IT Agenda Development of the Multimedia Super Corridor MSC Flagship Applications Development of Communications Infrastructure Electronic Commerce Human Resource Development for ICT Funding for ICT Industry 14 Nov.2001.Gazali A. 4 2.1.1 - UTILIZATION OF ICT: ICT Expenditure by Sector, 1995-2000 Total expenditure on ICT increased 9.2% p.a. in 1996-2000. Big spenders on ICT: 1995 2000 AAGR Banking & Finance 27% 15% -4% Manufacturing 13% 16% 19% Distributions 8% 10% 16% Government 10% 8% 7% Home 2% 8% 44% 14 Nov.2001.Gazali A. 5 2.1.2 - SELECTED ICT INDICATORS, 1995-2000 Indicator PC (units installed) PC per 1,000 pop. Tel.lines/1,000 pop. Tel.Subscribers Mobile Phones Internet Subscribers 14 Nov.2001.Gazali A. 1995 610,000 29.5 161.7 3,332,447 700,000 13,064 2000 2,200...

Words: 2334 - Pages: 10

Premium Essay

Sme Chocalates in Malaysia

...the A@mar Chocolatios will post up customers’ orders to attract new customers as their marketing strategy and also to give idea what type of chocolate designs can the customers’ order. THE BARGAINING POWER OF SUPPLIERS Their main supplier is unknown as in A@mar Chocolatios’s blog just mention they receive guidance from Lembaga Koko Malaysia. Service making homemade chocolate being done by the family members of A@mar Chocolatios as it is a family business. All the raw materials & cooking utensils to make chocolates are Halal. Main focus is take order and make chocolate. They do not have readymade chocolate. INTENSITY OF RIVALRY Competitor is Cadbury Chocolate Malaysia. Well established chocolate for many years. Promotion of Cadbury chocolate is very intensive as they have SMS contest, Cadbury nationwide happiness tour, mobile game contest and so on. Cadbury chocolates been sold in every supermarkets, small groceries shop, petrol station and so on. It is easily to buy Cadbury chocolate everywhere and anytime. A@mar Chocolatios deliver their customers orders by using poslaju and being posted all over Malaysia therefore customers need to email them if they want to order chocolates. The level of advertising of A@mar Chocolatios compare to Cadbury chocolate is low as A@mar Chocolatios only uses blog and open homemade chocolate classes to promote their homemade business where as Cadbury uses website with all those animation cartoons......

Words: 494 - Pages: 2

Premium Essay

Bond Sales for Sme Clients

...BUSINESS RESEACRH METHOD BOND SALES FOR SME CLIENTS An Action Research Study in Lecturer: Dr. Mirza Manirajah Abdullah Prepared by Student Name : Tan Saw Kien Student ID : EMBA-R-121525 I/C NO : 700707-07-5174 RIVERBANK ACADEMY SDN BHD NO 3-3 & 5-3, JALAN PUSAT PERNIAGAAN 1, PUSAT PERNIAGAAN SG.JELOK, 43000 KAJANG SELANGOR TEL: 03-87375009 FAX: 03-87395418 WEBSITE: www.riverbankacademy.com.my EMAIL: info@riverbankacademy.com.my 1 CONTENTS DESCRIPTION PAGE Executive summary Introduction To Standard Chartered Bank Introduction to Bond Sales & Literature Review Purpose of Study Objective of Study Problem Statement Literature Review Methodlogy Limitation of Study & Data Anaylsis Summary and Conclusions Recommendations page 3 page 4 page 15 page 19 page 21 page 23 page 25 page 27 page 29 page 31 page 32 2 Executive summary Business research functions to study the internal and external factors that affect profitability and market share for a company. There are several methods used in business research that helps executives to focus the energy of developers, production staff and distribution forces. The concept of sales "theory" or marketing "theory" is problematic. This is because these are really subsets of a broader microeconomic approach to the manipulation or creation of demand. The concept of "translating purchasing power into demand" is nothing other than this. Therefore, sales "theory and practice" is an aspect of microeconomics and revolves around the......

Words: 5848 - Pages: 24

Premium Essay

Smes

...Article 1: Exploring new supply chain strategies in manufacturing SMEs Summary: The article explores about the different types of supply chain strategies in manufacturing SMEs. Kamel A. Fantazy, Vinod Kumar and Uma Kumar are professors at Sprott School of Business. They did a research on what kinds of supply chain management strategies are usually adopted by SMEs. A research survey was created and distributed among 1500 Canadian SMEs, out of which only 175 were used as a sample. That’s how many responses were collected. Previously, the supply chain strategies of all the SMEs were classified into the following four: * Modularizing * Appending * Innovating * Following After the responses were computed, it was found out that modularizing and appending does not really exist, but there is another one which has been prevailing the manufacturing SMEs. It is known as Customer Oriented Strategy. So, now there is three types in total which are COS, INS and FOS. The results did not show any correlation with modularizing and appending and hence, were dropped off. Lessons Learnt: * Activities within the supply chain must be Customer Based. SMEs should be Customer Oriented. They should try to satisfy the customer needs. * Understanding customers’ need knowing how to satisfy them, is a key. * Every supply chain must have a Customer strategy. But this is going to be different for every supply chain company because every company is going to adopt a......

Words: 1004 - Pages: 5

Free Essay

Smes

...Cairo University Faculty of Economics & Political Science Post graduate studies Economic Department Finance for Growth and Role of SMEs An Application to Egyptian Case Prepared by: 1- Amr Hassan Elkady 2- Nashwa Mohamed Hussein Presented to: Prof. Hala El-Saied 2010 In September 2004, the Financial Sector Reform Program was launched and endorsed by the Government of Egypt at the highest political level. The five pillars of the program are reforming the banking sector, restructuring the insurance sector, deepening the capital markets, developing a well functioning mortgage market, and activating other non-bank financial institutions and services. The program aims at improving the soundness of the financial sector and promoting an enabling environment for an efficient, competitive and agile financial system that serves Egypt’s development and growth objectives. The progress and pace of the Egyptian Financial Sector Reform Program have been commended at home and abroad. However, we still have some way to go to fully reform the sector and address its main challenges; one of which is ensuring better access to financial services which is imperative to economic growth and development. Improving access to finance allows businesses, especially small and......

Words: 5415 - Pages: 22

Free Essay

Malaysia

...Isu dan cabaran dalam pelaksanaan Rancangan Malaysia dan cadangan penambahbaikan Malaysia – A success story 2 Rancangan Malaya 9 Rancangan Malaysia Parliament Building (1963) National Mosque (1965) Federal Territory Mosque (2000) Malaysia Trade Centre (2006) Terengganu International Airport Terminal (2007) Kuala Lumpur International Airport (1998) SILK Kajang Interchange Sayong Bridge CIQ Complex, Johor (2007) Submarine Bay, Sepangar Bay, Kota Kinablu, Sabah We have progressed What do we want? Maximise value of investment Reference Model Competitive Tourism Highly respected SUSTAINABILITY Quality Environmental friendly Energy Efficiency Safety Issues, enablers and recommendations Issues 1. Clarity of outcomes 2. Strategic and integrated planning 3. Innovative Procurement 4. Life Cycle Costing Enablers 1. Human capital development 2. Construction technology 3. ICT Strategic map for improved project delivery in Malaysia Plans ONE MALAYSIA PEOPLE FIRST PERFORMANCE NOW Competitive Reference Model Sustainable Highly respected Safety Quality Tourism Clarity of outcome Strategic and integrated planning Innovative procurement Life Cycle Costing Enablers Human Capital Construction Technology ICT Cost and Impact vs time Impact/Cost Can make fundamental changes Effort not cost effective Less opportunity Consumes valuable time Influence Curve More......

Words: 740 - Pages: 3

Premium Essay

Sme in India

...Management March 18-20, 2013 Problems affecting the growth of small and Medium Enterprises (SMEs) in India Lubina Zaidi Lubina.zaidi@gmail.com Faculty of Management Studies, University of Delhi Small and Medium Enterprises (SMEs) play a pivotal role in the development of the country. It has made significant contribution to industrial production, export and employment generation. In developing countries as well as developed countries they are important from the point of view of employment generations, which is very important in countries like India with huge backlog of unemployment in the urban sections of the economy. It has been observed that their composition depends upon the way the production is being organized in the economy .However in India Government deliberately planned the growth of SMEs to achieve certain economic and non-economic objectives. India has registered a consistent high economic growth (6-9%) over the last decade and was able to survive and sustain world recession triggered in 2008. For the sustainability of this kind of growth proper nurturing of SME sector is imperative. This paper will detail various challenges being faced by Indian SMEs, the role of government in upliftment of staggering Indian SMEs as well as the impact of government initiatives and policies on the upliftment of Indian SMEs. This paper also highlights the recommended solutions so that SME sector is empowered to perform better and prosper in domestic and international arena.......

Words: 4514 - Pages: 19

Premium Essay

Factoring Sme

...Around the world, factoring is a growing source of external financing for corporations and small and medium-size enterprises (SMEs). What is unique about factoring is that the credit provided by a lender is explicitly linked to the value of a supplier’s accounts receivable and not the supplier’s overall creditworthiness. Therefore, factoring allows high-risk suppliers to transfer their credit risk to their high-quality buyers. Factoring may be particularly useful in countries with weak judicial enforcement and imperfect records of upholding seniority claims, because receivables are sold, rather than collateralized, and factored receivables are not part of the estate of a bankrupt SME. Empirical tests find that factoring is larger in countries with greater economic development and growth and developed credit information bureaus. In addition, we find that creditor rights are not related to factoring. This paper also discusses “reverse factoring”, which is a technology that can mitigate the problem of borrowers’ informational opacity in business environments with weak information infrastructures if only receivables from high- quality buyers are factored. We illustrate the case of the Nafin reverse factoring program in Mexico and highlight how the use of electronic channels and a supportive legal and regulatory environment can cut costs and provide greater SME services in emerging markets. World Bank Policy Research Working Paper 3593, May 2005 The Policy Research Working Paper......

Words: 11362 - Pages: 46

Premium Essay

Small Medium Enterprise Sme

...1.0 INTRODUCTION Presently, in order for small medium enterprises (SMEs) to be competitive in the global economy, the quality of their products and services cannot be under estimated. Therefore in today's economic climate, SMEs competitions are greater than ever may in local or global. The quality of goods and services are most important thing for SMEs to continue for grow and survive. We can see that, many SMEs in Malaysia lack the resources and knowledge to practice the quality management in their operations. The immediate goal for any small to medium-sized enterprise (SME) is to survive and maintain in the economic growth. According to the Prime Minister of Malaysia, Small Medium Enterprises (SMEs) has been one of the major engines of growth of Malaysia’s economy. With globalization and the accompanying liberalized trading environment, trade is expected to intensity, the more integrated global market also presents new opportunities and greater market access for Malaysia SMEs. It is acknowledge that small and medium enterprise play a great role in develop the world, unlike in developed where the benefits through high cost such as lost of scale production, inefficiency and appalling employment conditions. In this facet of a country’s economy, labor plays a great role which is for most SMEs are labor intensive in developing the world. 2.1 BACKGROUND OF THE STUDY Productivity is an important aspect of the construction industry that may be used as an......

Words: 5297 - Pages: 22

Premium Essay

Sme Development in Ghana

...definition of Small and Medium Enterprises (SMEs). Some define them in terms of their total revenue, while others use the number of employees as an indicator. The European Union defines a medium-sized enterprise as one with a headcount of 250, a small firm as one with a headcount of less than 50 and a microenterprise as one with a maximum of 10 employees. The National Board for Small Scale Industries (NBSSI) which is the regulatory body for SMEs in Ghana defines SMEs in terms of both fixed asset and number of employees. It defines an SME as an enterprise with turnover greater than US$200,000 and not more than US$5 million equivalent (NBSSI) The SME market constitutes the vast majority of businesses in Ghana and over the years has evolved to become the key supplier and service provider to large corporations, including multinational and transnational corporations. Principally, SME’s has contributed to: Expanding output; Providing value-added activities in the manufacturing sector; Creating employment opportunities especially in the services sector; Contributing to broadening Ghana‟s export base; Increased competition; Innovation; SMEs are important to almost all economies in the world, especially to those in developing countries. They contribute to productivity and job creation; they serve as a nursery for larger firms constituting the next step for micro enterprises (Palma and Gabriel, 2005). In addition, SMEs tend to be the primary driver for job......

Words: 1907 - Pages: 8

Free Essay

Malaysia

...Datuk Seri Najib Abdul Razak , Prime Minister 3rd April 2009 unveiled a new concept- One Malaysia - as a guiding principle to build a united and progressive Malaysian nation in 21st century. The two paramount cardinal principles underlie in One Malaysia concept is to inculcate the sprit and values of togetherness and a sense of belonging among Malaysians, regardless of race ,religion and creed. Najib also reiterated that he will make sure that the future policies formulated by the government will be focused on people centric or people’s interest at heart. He urged Malaysians of all walks of life to admit and accept the reality that Malaysia is made up of plural society. There is no two way about it. Thus, he called all Malaysians to treat diversity in a plural society of Malaysia as a impetus to progress further to greater heights in future. Some of Najib’s new cabinet’s decisions recently reflect the spirit of One Malaysia. For an example, his cabinet decision on conversion issue. The rakyat, particularly the non-Muslim society who were looking forward to resolve many issues pertaining to conversion and lopsided policies felt joyous about the recent decision. His laudable and remarkable decisions on conversion marks the dawn of a better and greater Malaysia for all. His recent policies surely has potential to woo the confidence of the rakyat towards his government . Cabinet has made a ruling that a child must follow the religion practiced by the parents at the time......

Words: 824 - Pages: 4

Premium Essay

Malaysia

...A Trip to Malaysia Travelling is a sense of adventure that excites people, and also is a big chance for us to learn about other cultures and the way people live their lives. While many tourists travel to France, England or some famous countries in Europe, fewer travel to a small country in Asia. As someone who loves to explore and enjoy new things, 3 years ago in the summer, my boyfriend and I decided to backpack to Malaysia. It was a fantastic trip and an amazing experience for us that you should definitely try it. In this country, there are three destinations that travelers should not miss: the Petronas Twin Towers, Golden Triangle area, and The Genting Highland Park.   When we arrived into Kuala Lumpur, we headed straight to the Petronas Twin Towers, which are also known as the world’s tallest tower. They are an impressive icon of the capital of Malaysia that are visible from about everywhere in the city, and dominate the night sky. The Petronas Twin Towers are 1,483 feet tall, have 88 stories, and were completed in 1998. The architecture was very magnificent from the outside, especially at night, they look like ice sculptures. The most attractive architecture of the tower is that at the 41st and 42nd level, there is a skybridge connecting the two towers. The bridge is 170 meters above the ground, 58 meters long and weighs 750 tons. My boyfriend and I drove the high-speed lift that zooms up to the skybridge on the 41st floor; we walked across the skybridge to take some......

Words: 354 - Pages: 2

Premium Essay

Franchising in Malaysia

...franchises to other people within the territory, known as sub-franchises. Therefore, the master franchisee may takes over many tasks, duties and benefits of the franchisor like providing support and training, receives fees and royalties. There is another type of multi-unit franchise, which is an area representative franchise. In this model, the area representative buys a territorial franchise to sell and service unit franchisees in the territory. The area representative does not contract with the unit, but they do receive a portion of the initial fees and ongoing fees paid by the unit franchisee to the franchisor. Statistics on Types of Franchise in Malaysia Franchising is one of the fastest growing sectors in Malaysia. Based on past statistic (Franchise Development, 2011), it’s shown that among the 373 franchise registered in Malaysia in year 2011, 69% are home-grown franchise brand while 31% are foreign franchises. Table below are the statistics which included list of approved registrations by sector April 2011. We can observe that food industry is the most popular industry which had registered by franchisee. Table 1 No. | Sector | Total | % | 1 | Food | 167 | 32 | 2 | Clothing & Accessories | 73 | 14 | 3 | Service & Maintenance | 54 | 10 | 4 | Learning Centre & Nursery | 60 | 11 | 5 | Health & Beauty Care | 52 | 10 | 6 | Convenience Shop & Supermarket | 15 | 3 | 7 | ICT & Electronics | 29 | 5 | 8 | Other Businesses | 78 |......

Words: 2332 - Pages: 10