The role of small and medium enterprises in supporting economic development: Evidence from Malaysia

Abstract

This study explored role of small and medium enterprises in supporting Malaysian economic development. The study reached a set of results, the most important of which is that small and medium enterprises contribute up to 35.9% to the gross domestic product, the added value of small and medium enterprises is 36.3%, and the employment rate is 65.5% of the total workforce in Malaysia. The most prominent challenges facing small and medium enterprises in Malaysia are the limited capacity to manage technology and acquired knowledge. Introductions The interest in small and medium enterprises in Malaysia began in the early seventies with the implementation of the New Economic Policy in 1971, which aimed to improve the standard of living and restructure economic imbalances. The commitment of the Malaysian governments to the development of small and medium enterprises has been strengthened through the implementation of the Industrial Master Plan in Malaysia, in particular the Second Industrial Master Plan from 2000 to 2005, which was followed by the Third Environmental Management Plan that extends from 2006 to 2020. And which coincides with the comprehensive vision that aims to: Malaysia is a developed country by the year 2020 and as a result of the important role of small and medium enterprises, the Malaysian state is working on designing and implementing plans for developing small and medium enterprises to help them face new challenges, especially in the field of global competition. In Malaysia, Small and medium-sized enterprises (SME) represent about 99% of all businesses and contribute 35.9% to the country's Gross domestic product (GDP). Moreover, SMEs employ 65% of the total workforce and generate 30% of the total exports. Considering that the Malaysian experience in the field of small and medium enterprises is one of the successful experiences, which greatly contributed to achieving a remarkable development of the Malaysian economy and a diversification of sources of income. Therefore, this study deals with research and analysis of small and medium enterprises in Malaysia and their role in achieving economic development by focusing on the contribution of small enterprises. In addition to focusing on government policy on enhancing the competitiveness of small and medium enterprises and methods of government financing for small and medium enterprises, and shedding light on the challenges they face.