ABOUT 15% of micro-, small- and medium-sized enterprises (MSME) are temporarily closed due to a lack of funds stemming from the Covid-19 epidemic, said Ding Hong Sing, president of the SME Association of Malaysia.

Ding said there are 1.15 million SMEs, which account for 97.2% of businesses in Malaysia.

Since 2015, SMEs have increased by an average 4.9% each year. Eighty per cent of them are in the service industry. In 2020, this figure increased to 85.5%.

Ding said micro-enterprises make up the bulk of the sector at 78.4%. Its numbers grew by 205,504 from 2015 to 2020 which puts its annual growth rate at 5.4%.

Small businesses make up 20% or 229,987 of SMEs and medium-sized enterprises, 1.6% or 18,289.

The SME sector has also taken a hit for the first time in 17 years, posting -7.3% growth. 

Ding said in 2019, SMEs contributed to 38.9% or RM553.5 billion of the GDP but this declined in 2020 to 38.2% or RM512.8 billion.

In terms of employment, SMEs are also hiring 48% less. In 2020, SMEs employed 7.24 million people, 0.9% less than the previous year, when they employed 7.32 million people.

“The year-on-year decline shows SMEs have been severely hit by the coronavirus. Before 2020, the number of people employed increased by at least 3% or 200,000 a year.”

The Entrepreneur Development and Cooperatives Ministry announced that 104,748 MSMEs were closed in 2020 affecting 61,010 jobs.

In 2021, an estimated 37,415 MSMEs closed down, affecting 172,200 employees.

Data from the Companies Commission of Malaysia showed 4,507 new companies were registered, in November 4,195 in October, and 4,367 in September.

Koong Lin Loong, chairman of the SMEs committee, said the official number of MSMEs that have closed down may be inaccurate.

It will take Malaysia at least one more year to recover from the Covid-19 epidemic, leading many to suspend operations to cut losses.

“They are suspending their businesses to avoid heavy losses, not because they want to close down,” he said. – January 4, 2022.