KUALA LUMPUR: Bank Islam Malaysia Bhd expects sthe small and medium enterprises' (SMEs) gross domestic product (GDP) to grow 4.5 per cent next year.
The post-Movement Control Order (MCO) environment would present huge opportunities to the SMEs as long as they remain competitive, said Bank Islam chief economist Dr Mohd Afzanizam Abdul Rashid.
Afzanizam said in the past, SME GDP growth had tended to accelerate much faster than the overall economy by a factor of 1.09 compared to the GDP of the country.
He said while Bank Islam projected the GDP to grow 3.5 per cent next year, the SME industry would grow higher at 4.5 per cent in 2021 and 5.8 per cent in 2022 (compared to the 4.7 per cent projection of GDP growth).
He said one of the important indicators of recovery in the economy was the data from Malaysia's Industrial Production Index (IPI), which had increased by 18.2 per cent month-on-month in May from 30.5 per cent fall in the previous month.
"In light of close correlation with Malaysian economy, the SME GDP is expected to decline by-1.0 per cent in 2020 (Malaysia: -1.5 per cent) before rebounding to 4.5 per cent (Malaysia: 3.5 per cent) in 2021 and 5.8 per cent (Malaysia: 4.7 per cent) in 2022.
"SME GDP tend to accelerate much faster than the overall economy by a factor of 1.09. With the right policy in place, a swift recovery can be expected," he said.
Besides that, he said this would also be supported by increase in household income, of which in average had grown 5.2 per cent since 22 years ago for all groups.
"This data is important for the SMEs where it signifies the increasing purchasing power of Malaysians. Consumers continue to demand quality products and services. Therefore, value proposition is the critical success factor for business survival.
"The backdrop for SMEs to thrive is there and the Malaysian economy presents a huge potential for them to thrive," he said during Bank Islam's "Webinar 2020: SMEs post-MCO surviving the shifting landscape" today.
Bank Islam SME advisor Datuk Dr Hafsah Hashim said in order for SMEs to remain competitive post-MCO, one of the important thing for them was an understanding of which innovations, if adopted permanently, might provide substantial uplift to economic and social welfare— and which would ultimately inhibit the broader betterment of society, even if helpful in halting or limiting the spread of the virus.
She said for example, SMEs could leverage on technology such as Artificial Intelligence (AI) and Big Data into their business model.
"For AI, I am suggesting for the SMEs to start small. Start by integrating first-party apps that facilitates productivity of the already employed workforce.
"They can also steer efforts towards open-sourced AI, cloud systems and flexible workflow models and start with a small problem with a high chance of demonstrating a positive return on investment," Hafsah added.