Technology and modernisation to be growth drivers of Sme business
“Under this umbrella, the Sustainabilitylinked Financing programme was launched in the second half of 2023, a first in the market to offer a complete value proposition for SMES to achieve credible emission reduction targets and be rewarded with attractive financing rebates of up to 0.50% per annum,” he explains.
Shedding light into the growth drivers of the SME business for this year, Loh says it will be technology and modernisation of businesses.
This will provide added impact and value to simplify the complexities of business and provide greater value through awareness and adoption of sustainability practices, he says.
Additionally, he says SMES may leverage the initiatives and support granted by the government for Budget 2024.
These include improved access to business loan facilities such as SME loan funds under Bank Negara, provision of small business capital by Amanah Ikhtiar Malaysia and government guarantee schemes by Syarikat Jaminan Pembiayaan Perniagaan Bhd.
Malaysia’s renewed interest in the southern corridor, along with the ongoing China Plus One strategy, also promises increased growth opportunities for SMES due to the increased demand of local manufacturing and supply chains, he adds.
Separately, he says the confluence of rising operating costs, a depreciating ringgit, geopolitical uncertainty, China’s economic sluggishness and conflicts such as the Russia-ukraine war and instability in the Middle East pose significant challenges to Malaysian SMES.
He says these factors collectively strain profitability, with increased costs affecting competitiveness and supply chain dynamics.
Loh says: “SMES face higher import costs due to currency depreciation, coupled with disruptions in global trade and investment flows amid geopolitical uncertainties. The slowdown in China’s economy further compounds these challenges, impacting demand and supply chains.
“The conflicts in key regions disrupt global supply chains and commodity prices, necessitating adaptive strategies like cost-saving measures, diversification of markets and supplies, and robust risk management for Malaysia SMES to navigate these complex challenges seamlessly.”
He says as external factors will remain a threat, businesses need to invest in technology, automation, research and development, human capital and talent to enhance the value of their businesses.
“Businesses must embrace innovation and value enhancement as a pivot for growth, their competitiveness will be derived from a push for better technology through digitalisation and better automation.”
For practising and adoption of sustainability, he says, the challenges lie in limited awareness and understanding of sustainable practices, lack of resources including technical, financial, manpower and skills as well as managing the gaps in data.
He says the most important step for SMES to address this is through capacity building, which will help them set the right strategy and direction, make committed and relevant decisions and act decisively to unlock the available financing and incentives.