OUR small and medium enterprises (SMEs) have a critical role to play if we are to renew, transform and rebalance our economy.
Our SMEs' potential can be seen in their contribution to the gross domestic product (GDP) which is set to reach or surpass the 50 per cent mark within the next decade.
According to the Department of Statistics (DOSM), SMEs contributed 38.9 per cent of the GDP in 2019, which roughly translates to RM586.9 billion in nominal terms, and constitute 7.3 million out of the nearly 15 million total workforce (or 48.4 per cent).
The call for a new vision is made all the more urgent with SMEs continuing their appeal to the government for help, even as Budget 2021 has been announced, with a total of 32,469 such businesses forced to shut down permanently between March and September (with thousands of job losses), reflecting the dire straits from the twin supply and demand shocks which chain effect continues to reverberate as caused by the very restrictive Movement Control Order (MCO) in the initial phase.
Concretely, the government should clearly conceptualise our domestic direct investment (DDI) as a core strategic focus as in practice, the government is already committed to jumpstart our DDI by promoting the e-commercialisation, digitalisation and automation of our SMEs.
The emphasis in the short-term and beyond should be on direct (instead of indirect) involvement or participation of SMEs.
In this regard, the Finance Ministry (MOF), Economic Affairs Ministry (MEA), International Trade & Industry Ministry (Miti), and Entrepreneur Development and Cooperatives Ministry (Medac) are the key players – alongside their respective agencies such as SME Corporation, SME Bank, Teraju (Bumiputera Agenda Steering Unit), etc.
Existing high-level or strategic policy frameworks should be re-activated. These include the National Entrepreneurship Policy or DKN (2030) – which is oriented towards creating a vibrant and conducive eco-system for entrepreneurs to thrive and flourish (Strategic Thrust 1).
Towards that end, the government should accelerate the Vendor Development Programme or VDP (Strategic Thrust 5) and internationalisation of Malaysian SMEs or MSMEs (Strategic Thrust 6) that leverages on the domestic and global supply chain opportunities.
With the DKN 2030, the SME Masterplan (2012-2020) which expires this year could also be readjusted and readapted in light of Covid-19. GLCs will have to compete with SMEs for the VDP (procurement). Simultaneously, SMEs will also increase their participation in the FDI supply chain.
Some complementary policy recommendations by EMIR Research are as follows:
1. To ensure SME representation in all trade and investment missions by the government at regional and global levels.
2. To boost and strengthen SME linkages and production networks in the context of Asean – thus enabling SMEs to contribute towards intra-Asean trade and investment flows as well as regional integration.
This could be done through the pre-existing Asean Inclusive Business Framework within the broader structure of the Asean Economic Community (AEC).
Furthermore, the SMEs of Malaysia, Singapore, Thailand and Indonesia to enhance cooperation and involvement in e.g. the Indonesia-Malaysia-Thailand Growth Triangle or IMT-GT and the Singapore-Johor-Riau Growth Triangle (SIJORI).
The conceptualisation of both Growth Triangles could be renewed to include tourism (marine and eco-tourism, as examples), FDI destination and export hub to other emerging markets.
By extension, both at the bilateral and multilateral levels, efforts should be intensified to match and support the SME nexus with other regional counterparts such as in East Asia (e.g. China). In turn, this will indirectly boost DDI; and
3. As part of the job creation strategy of the government, a holistic approach and further integration and coordination of youth entrepreneurship and SME development should come under a single body, perhaps a reactivated National Entrepreneur and SME Development Council (NESDC) chaired by the Prime Minister or, as it is to come under the newly set up National Employment Council.
May these trying times be seen as a golden opportunity for the government to re-envision and further elevate the role and place of our SMEs as the lead engine in our economy.
The writer is Head of Social, Law & Human Rights at EMIR Research, an independent think tank focussed on strategic policy recommendations based on rigorous research
The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times