SMEs in Malaysia progressed in 2025, aided by stable policies and digital adoption, while facing cost and competition challenges, says SAMENTA
KUALA LUMPUR: Small and medium enterprises (SMEs) progressed further this year, supported by a more stable economic environment and a gradual recovery in domestic demand.
A combination of factors contributed to this progress, notably the government’s consistent policy clarity and predictable reforms in areas such as subsidy rationalisation.
The expansion of targeted government support, including SME financing windows and export promotion programmes, also helped businesses navigate challenges.
Strengthening consumer demand in sectors like retail, food and beverage, and logistics further aided their upward trajectory.
Small and Medium Enterprises Association (SAMENTA) president Datuk William Ng said SME performance remains uneven, with micro and small businesses in East Coast states, Sabah and Sarawak facing tighter margins.
Regarding SME digitalisation, he said it improved meaningfully in 2025, although progress remains uneven across firm sizes and sectors.
“The strongest improvements were seen in digital payments and e-commerce adoption, accounting and payroll digitalisation, and early-stage automation,” he said.
Ng said government initiatives that worked well include SME Digitalisation Grants and Automation and Smart Manufacturing financing via SME Bank.
He said the recently announced 50% tax deduction for artificial intelligence and cybersecurity training shows the government is serious about high-value skills.
“Digitalisation is not a one-year project; it is a multi-year transformation, especially for smaller firms,” Ng added.
He said 2025 has been a significant year for SMEs as Malaysia’s ASEAN chairmanship opened doors for greater regional integration.
Key initiatives include the upcoming ASEAN SME Cross-Border Facilitation Framework and the Digital Economy Framework Agreement.
“SAMENTA, along with our counterparts, has also established the ASEAN SME Caucus, which will drive private sector initiatives,” he said.
However, he said SMEs still faced challenges such as higher operating costs in logistics, utilities, compliance and labour.
“We also faced tight liquidity due to slower payment cycles and reduced risk appetite among lenders,” Ng said.
Compliance pressures have also risen significantly, particularly with e-invoicing and environmental, social and governance expectations.
Despite this, Ng shared several notable achievements, including Malaysia’s recognition as a top emerging hub for digital services.
Malaysia’s progress in the Johor-Singapore Special Economic Zone implementation has also placed SMEs in Johor at the forefront of regional opportunities.
He said SAMENTA is cautiously optimistic about the outlook for SMEs next year, with three forces set to shape their performance.
“Budget 2026 is structurally supportive, with a strong focus on creating liquidity for SMEs and driving green transitions and AI adoption,” Ng said.
He also sees the economy becoming more stable with the narrowing of the budget deficit and with no new major taxes announced.
“SAMENTA will continue to support SMEs to embrace digital tools, automation, certification and regional partnerships,” he concluded. – Bernama
