SME are stands for Small to Medium Enterprise. Previouslyin Malaysia, there was no standard definition as to what Small and MediumEnterprises were. However, what exactly an SME depends on who is doing the defining.In addition, the size of the enterprise can be categorized in Malaysia. It was basedon the annual sales, number of employees, assets, or any other combination ofthese. Small to medium enterprises are the most majority of businesses in mostcountries.
In order to successful in SMEs, SMEs business may have somechallenges need to face and also have the solution to be solve. Definition of SMEsBased on the official website of SME CORP Malaysia,98.5% business establishments in Malaysia are SMEs. It can be said that SMEsare the backbone of Malaysia economy. Besides that, Malaysia SMEs can be groupinto three categories which are Micro, Small, and Medium. The majority of theSMEs are micro enterprises which make up 76.
5 per cent of the total SMEs,followed by the small-scale enterprises, which comprise 21.2 per cent andMedium-sized enterprises are 2.3 per cent of the total SMEs.In 2005, the National SME Development Council (NSDC)laid out two main criteria which are annual sales turnover and number ofemployees. These criteria apply to all SMEs of various sectors of agriculture,manufacturing and services. According to official SMEs website, SMEs are definedas firms with sales turnover not exceeding RM50 million OR number of full-timeemployees not exceeding 200 for the manufacturing sector. For the services andother sectors, SMEs are defined as firms with sales turnover not exceeding RM20million OR number of full-time employees not exceeding 75.
As the other parts of the world, SMEs in Malaysiaoperate various business. There have three components that may be categorisedin SMEs Malaysia which are agriculture sector, manufacturing sector and generalbusiness sector. Each of these sector and some example are be descried indetail below.A. AgriculturesectorThe agriculture sector includes perennial crops and cashcrops.
Perennial crops includes rubber, palm oil, paddy, and coconut while cashcrops includes vegetables and fruits. B. ManufacturingsectorThe main activities of manufacturing sector is physicalor chemical transformation of materials or components into new products, suchas food, beverage, petroleum, rubber, plastic, wood, chemical, electronic andelectrical components. C. GeneralBusiness sectorMeanwhile for the general business sector involvedwith wholesale and retail trade, construction, restaurant, transport andstorage, hotel and business services and activity.
Role of SMEsCurrently, SMEs are crucial to the economic growth process and play avital role in the development of Malaysian economy. SMEs in Malaysia have toembrace the change in Malaysia and next is across the country. Now the economyis shifting from industry-based to a knowledge-based economy to achieve vision2020. By 2020, Malaysia aims to rise from its present 36% to 41%, and the shareof SME exports must hit 23% in order to achieve this vision. In addition, SMEshave a significant role to play in creating opportunities for women and youth.This is for actively participate in a country’s productivity