PETALING JAYA: Experts support another small and medium enterprise (SME) master plan, saying that it is crucial as it will set the tone for the sector’s growth and ensure its resiliency given that it forms the backbone of the country’s economy.
The last such plan was from 2012 to 2020.
Deloitte Malaysia infrastructure and economics leader Nik Anira Nik Mohd Zain, who is a practitioner in crafting master plans for the country in the last two decades, told StarBiz that a new SME master plan is vital.
She said a master plan is a strategic document which contains a broad course of actions guided by a set of principles aligned to national objectives.
Deloitte Malaysia infrastructure and economics leader Nik Anira Nik Mohd Zain
It is a crucial strategic document which sets the direction for future growth and development of an industry, she added.
Drawing the success story of the previous plan, she said the initiatives implemented had driven SME’s share of gross domestic product (GDP) from 32% in 2010 to 38.2% in 2020, albeit a slight deviation from its intended target of 41% due to the start of the Covid-19 pandemic that year.
She said there have been numerous master plans and national policies from various ministries and agencies to spur SME growth.
For example, digitalising SMEs are anchored by Malaysia Digital Economy Corp and financing assistance through collateral-free initiatives championed by the Entrepreneur Development and Cooperatives Ministry.
“With all the initiatives in place, now is the time to focus on execution and implementation, with relevant agencies working collaboratively to bring them to life and test its effectiveness. These initiatives can then be further strengthened through lessons learnt, comprehending what works and what does not,” she said.
Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) treasurer-general cum SMEs committee chairman Koong Lin Loong
Associated Chinese Chambers of Commerce and Industry of Malaysia SME committee chairman Koong Lin Loong said it is important to have another SME plan.He said this is because local SMEs are vulnerable as seen during the pandemic, noting that this further warrants a plan that could build SMEs resiliency, especially with the existence of the Regional Comprehensive Economic Partnership and fierce competition in the region.
“However, the new SME master plan must be more practical on the growth and the resilience of the SMEs, and not merely one that looks good on the theoretical side. SMEs are very different from those large corporations in terms of resources and markets,” Koong said.
The previous plan, which focused on six high-impact programmes and 26 policy measures, among others, envisioned increasing the participation of SMEs in the national economy and set ambitious targets to attain by 2020, including increasing the contribution of SMEs in national GDP to 41%, employment to 65%, and exports to 23%.
UCSI University assistant professor in finance Liew Chee Yoong
UCSI University Malaysia assistant professor in finance Liew Chee Yoong, who is also a research fellow at the Centre for Market Education, said a new plan is paramount as the business environment, technological environment, and markets for products and services have changed over time.
Hence, he said there is a need for a new and revised strategic thrusts based on the business environment, capacity, capability and market access.
“For example, more regulations are needed to enhance the corporate governance of SMEs in the country due to the advancement of the environmental, social and governance agenda globally.
“In addition, with the advancement of artificial intelligence (AI), SMEs need to be provided incentives and training as well as financing support to embrace AI consistent with global developments in this technology for them to function more efficiently,” he said.
Furthermore, he said the changes in the products and services markets would require assistance to be given to the SMEs in the search for new markets.
Refuting the perception that another plan would cause confusion for implementing agencies, Liew said the critical issue could be resolved if there is a political will to resolve it systematically.
Asked if having another plan could overlap with other SME blueprints, Koong said although SMEs are in all sectors, there is a need to craft different and vital elements for the SMEs.
He said SMEs are facing different challenges compared with their larger counterparts, especially pertaining to capital, technology-adoption, human resources, and access to markets.
“We should develop a master plan that that take heed of the earlier one and which should be able to address the above challenges,” Koong said.
Debunking the fact that such plans are time-consuming and an expensive affair, Nik Anira said developing a plan is not a hassle if it is well thought out.
For instance, she said if a master plan is designed based on the structural foundation of agile planning, there would be monitoring, evaluation and planning processes.
“Notwithstanding that, the planning and execution stage will hold similar weightage. When planning for a master plan, a crucial element to consider is the aspect of inclusivity whereby the voices of its stakeholders should be heard to help policy makers derive policies that are realistic and subsequently lead to outcomes which are stakeholder-focused.
“In executing it, collaborative efforts between the relevant implementing agencies will determine the effectiveness of a masterplan – mitigating areas of duplication and redundancy to ensure allocated resources are fully optimised,” Nik Anira said.
Malaysia University of Science and Technology professor Geoffrey Williams.
Meanwhile, Malaysia University of Science and Technology economics professor and dean Geoffrey Williams said there should not be another SME plan as the previous one was not successful.
“SMEs account for 97% of all companies in Malaysia but 78% of these are micro enterprises with fewer than five employees. Most do not have regular income or declare profits. They account for less than half of employment (48%) and contribute less than 40% to GDP and 13.5% to exports.
“In Germany, SMEs comprised 99% of the total companies, 54% of employees and 60% of GDP value-added. They also train 70% of trainees and account for 17% of exports.
“So, the SME master plan has not delivered the high impact it was designed to provide. Part of the failure is that the plan was poorly designed and implemented. By its nature, the SME sector should be vibrant, competitive, and agile but regulations crush the entrepreneurs too often,” he said.
Many SMEs do not know of the opportunities available for them as well as making the relevant applications, he said.
This is due to having poor track records, documents not being in order, and irregular cash flow.
Bank Muamalat Malaysia Bhd chief economist and social finance Mohd Afzanizam Abdul Rashid
Commenting on the strategies and initiatives needed to spur the growth of SMEs, Bank Muamalat Malaysia Bhd chief economist and social finance head Mohd Afzanizam Abdul Rashid said what is needed is a growth agenda that will provide opportunities for SMEs to grow.
“The ratification of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership will be positive for the SMEs to penetrate overseas market or become part of the ecosystem that will support large corporation supply chains.
“So continuous capacity-building and coaching programmes for the SMEs, especially in areas relative to technological adoption are among the strategic imperatives to grow them.
“Mentoring programmes by the successful entrepreneurs should also be a key measures that will promote practical discussion that would result in further collaboration within the industry players,” he said.
According to Nik Anira, there are several areas that can be strengthened in anticipating a highly demanding economy driven by future global megatrends.
Digitalisation is a key enabler, driving the success of many micro, small and medium enterprises and supporting their outreach beyond national boundaries.
Another key area of development that will support the local SMEs is a strong and holistic supply chain ecosystem. SMEs are limited by financial constraints that restrict their ability to conduct end-to-end services for their customers.
Hence, a strengthened supply chain could act as a strong pillar to support their businesses, she said.
