Small or medium-sized enterprises (SME) are businesses with revenues, assets or employees that fall below a certain number.
However, there isn’t an ironclad global definition of an SME, as it varies across different countries and sometimes even industries.
Every country has the prerogative to set their own definition, but there is a shared goal to differentiate small or medium-sized businesses from large entities.
In this article, we’ll be covering everything you need to know about SME in Malaysia and the role they play in our country.
SME Malaysia Definition
The economy has undergone various developments since 2005, such as price inflation and change in business trends and structures.
Therefore, the definition of SME has been reviewed, and a new one was sanctioned at the 14th National SME Development Council (NSDC) Meeting in 2013.
A business is deemed an SME if it fulfils either one of the two qualifying criteria as follows:
- Manufacturing: Sales turnover does not exceed RM50 million OR full-time employees do not exceed 200 workers.
- Services and Other Sectors: Sales turnover does not exceed RM20 million OR full-time employees do not exceed 75 workers.
Definition by Size of Operation
The following table depicts the criteria for micro, small and medium categories in their respective sectors:
| Category | Micro | Small | Medium |
|---|---|---|---|
| Manufacturing | Sales turnover of less than RM300,000 OR full-time employees of less than 5 | Sales turnover from RM300,000 to less than RM15 million OR full-time employees from 5 to less than 75 | Sales turnover from RM15 million to not exceeding RM50 million OR full-time employees from 75 to not exceeding 200 |
| Services and Other Sectors | Sales turnover of less than RM300,000 OR full-time employees of less than 5 | Sales turnover from RM300,000 to less than RM3 million OR full-time employees from 5 to less than 30 | Sales turnover from RM3 million to not exceeding RM20 million OR full-time employees from 30 to not exceeding 75 |
*If a business complies with either one criteria across the different sizes of operation, the type of SME will be defined by the smaller size. For example, if a company’s sales turnover falls under microenterprise, but their number of employees falls under small, they will be considered as the former.
Classification of Sectors
Let’s dive into each sector for a clearer understanding of how SMEs work in Malaysia.
‘Manufacturing’ sectors refer to those that physically and chemically transform materials or components into brand new products.
‘Services’, as you can probably guess, refer to service industries such as distributive trade; information and communications technology (ICT) and other professional services; hotels and restaurants; private educational and health institutions; entertainment, et cetera.
Lastly, ‘others’ refer to the remaining three main economic activities—primary agriculture, such as perennial crops, livestock and forestry; construction, as well as mining and quarrying.
Sales turnover concerns the total revenue plus other incomes, while full-time employees comprise of all paid workers working a minimum of six hours a day and twenty days a month.
These employees include foreign and contract workers. As for proprietors, business partners or members who work in a firm but do not acquire regular wages; they do not fall under this category.
Business establishments that exceed the threshold for both criteria for two consecutive years are no longer defined as SMEs.
Likewise, large organisations can qualify as SMEs if they fulfil the mentioned qualifications for two successive years.
Role of SMEs in Our Economy
In most countries, SMEs constitute a vast majority of businesses.
This proves to be true in Malaysia, as they are often said to be the ‘backbone of our economy.’
Despite their ’S’ and ‘M’ sizes, the total contribution of these enterprises are not at all small.
To paint a picture, 98.5% of businesses in the country are SMEs, and in 2018, they contributed over RM500 billion of Malaysia’s gross domestic product (GDP).
Aside from significant economic growth, SMEs are also a key driver of employment. Currently, they provide 5.7 million jobs to 70% of the country’s workforce.
That’s 66% of Malaysia’s total employment!
Most SMEs—approximately 89.2%—in Malaysia are involved in services.
You can access more information on financing, training and support programmes for SMEs on the SMEinfo Portal at https://www.smeinfo.com.my/about-sme.
Digitalisation of SMEs
With the continuous rise of digital culture, SMEs began adopting new business strategies to improve their market base.
Among these strategies is an increase in online marketing for direct communication with customers.
There are many benefits to reap from digital marketing, including an increase in productivity and efficiency.
These days, people tend to cruise social media platforms and websites before deciding on a company to work with or purchase services from.
For that reason, small and medium-sized firms must build a notable online presence to maximise full potential.
Having an eye-catching website with stunning visuals and a professional company profile can do wonders in creating a lasting impression.
Digital Marketing Trends for SMEs
Although trends come and go in reaction to new technologies and consumer behaviours, many of them become permanent fixtures in our culture.
Some of the digital marketing trends that are popularly utilised in the world of SMEs include:
1. Social Media Marketing
Social media is a crucial marketing tool as prospects spend a lot of time patrolling these networks.
A few ways SMEs can drive growth and capture audiences’ attention include sharing fascinating and relevant content, advertising to gain new customers, building brand recognition and analysing data to understand customers’ needs and behaviours further.
It’s essential to incorporate skilful copywriting in the aspect of social media marketing.
Entertaining content and engagement with users through commenting, addressing complaints and questions can go a long way in securing customer loyalty.
2. Voice Strategy
Many consumers use voice assistants for internet searches.
SMEs have started adapting to this new trend by creating a voice search strategy to remain relevant.
You can optimise your content with specific relevant keywords that most commonly appear in voice searches.
More often than not, voice searches resemble questions, so your content should be catered to providing succinct answers.
3. Novel Content
Nowadays, businesses often use interactive content marketing for audiences to actively engage with them.
This type of content includes polls, animated infographics, online voting and assessments.
The good thing about digital marketing is that you can expand your market base globally, as well as monitor the performance and effectiveness of campaigns in real-time.
That way, you can get immediate feedback from customers to help improve your products and services.
Walk Production, a Malaysia creative agency offers excellent services that assist in elevating online brand awareness.
Create an intriguing company website that’s geared towards your needs and goals, whether it’s to improve customer service or brand image.
We can deck your sites with compelling visuals, logo designs and error-free copywriting.
Additionally, Walk Production is well-versed in the conduction of on-page and off-page SEO (search engine optimisation), which coincides with the voice strategy marketing tool.
XPERT Engineering had previously failed to appear on the radar despite significant online marketing investments.
After collaborating with Walk Production, their web pages started ranking on the first page on Google, and web traffic has increased by 200%.
Not only are digital marketing and good brand awareness a critical factor in increasing sales, but it has proven beneficial in reaching a larger audience and establishing long-lasting relationships with customers and clients.
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