The National SME Development Council (NSDC) in 2005 had endorsed a SME Development Framework (Figure 1.1) aimed to ensure synchronisation of policies on SME development and effective delivery of Government SME development programmes by more than 15 Ministries and more than 60 agencies.
Figure 1.1: SME Development Framework
- The framework provides a clear statement of the Government’s strategic intent and focus on SME development. Its ultimate objective is to develop competitive and resilient SMEs across all sectors to enable them to increase their contribution to the economy. SMEs constitute 99.2% of total establishments in the country and provide employment to 56.4% of the total workforce. In terms of contribution to the Gross Domestic Product (GDP), the Malaysian SME sector is still lagging behind, with total contribution of 31%.
With the increase in the levels of globalisation and trade liberalisation, Malaysian SMEs need to enhance their capacity and capability to remain competitive and resilient in the domestic market as well as to explore new opportunities in the global markets. In preparing Malaysian SMEs to face the challenges, the SME development framework which aligns closely to the Ninth Malaysia Plan (9MP) and Industrial Master Plan 3 (IMP3), specifies two broad objectives:
- Enhancing viability of SMEs across all sectors; and
- Promoting development of SMEs in knowledge-based industries.
- Developing progressive and resilient Bumiputera SME entrepreneurs.
- Economic objectives
Since its implementation, the framework has served as a roadmap for Ministries and agencies to put in place a coherent set of SME development policies and comprehensive programmes for SMEs. The programmes are premised on the following three strategic thrusts aimed at:
Strengthening enabling infrastructure for SME development
The programmes include developing and enhancing physical infrastructure and information management as well as creating conducive regulations and operating requirements for SMEs;
Building the capacity and capability of SMEs
The programmes focus on entrepreneur development, human capital development, advisory services, awareness and outreach, technology enhancement and product development; and
Enhancing access to financing by SMEs
The programmes focus on developing and strengthening institutional arrangements to support financing for SMEs.
- Strengthening enabling infrastructure for SME development
- The structured approach implemented in managing SME development programmes has enhanced the effectiveness and efficiency of these programmes, as well as has increased inter and intra-Ministerial and agency collaboration and consultation in streamlining SME development programmes.