Is 2019 Going to Be a Better Year for SMEs? 7 Things You Can Look Forward to

2 Jan 2019

That is one of the biggest questions on the mind of SME owners as we move into the new year. What does 2019 hold in store for entrepreneurs and small enterprises in the country?


Along with ongoing and continuing trends, if the recently announced Budget 2019 is any indication, you should look forward to a remarkable SME industry in 2019. Here are a few goodies to look forward to.

1. Exploring new markets

The increase in the number of SMEs doing business online is expected to advance the expansion into other markets outside Malaysia. According to the Malaysia External Trade Development Corporation (MATRADE), e-commerce adoption is expected to grow from 32% in 2016 to 50% by 2020. This development is encouraged by several factors including lower operating costs, productivity and the larger customer base.

2. Growing local markets

Did you know that only 20% of products at hypermarkets around the country are produced by Malaysian SMEs? The government is aiming to increase that number to around 30%. This means that while there is massive business opportunity for SMEs outside the country, there remains significant growth potential here at home. Getting 30% of SMEs’ products on shelves also mean that Malaysian SMEs need to adjust their branding to be more attractive to hypermarket operators and consumers.

Related: Free and Low-Cost Branding Ideas for Malaysian SMEs

3. Taxing imported services

Starting 1 January 2019, consumers will have to pay more for using imported services like foreign-designed graphics, architecture and engineering services. It also extends to online services like Netflix, Spotify and Steam.

This move is expected to encourage consumers to try Malaysian homegrown alternatives; for instance, offering alternative engineering, architecture or graphic design services. Again, your branding should reflect that you are a capable alternative to attract more customers and provide the service.

Related: Ready to Build Your Brand? 3 Strategies You Can Use Right Now

4. Competitive leg-up

Implementing information and communications technology (ICT) in manufacturing is one of the biggest global trends. Named Industry 4.0, it is the use of data and automation in manufacturing technologies.

Part of Budget 2019 — RM210 million — was allocated to Malaysian SMEs between 2019 and 2021 to encourage the transition to Industry 4.0. The allocation includes funding, low-interest loans and grants for the adoption of smart technology such as automation, robotics and artificial intelligence.

5. Cross-border trade

On 12 November 2018, the Malaysian government signed the ASEAN Agreement on Electronic Commerce. The agreement is an effort between the 10 countries in the region to enhance cross-border e-commerce transactions by reducing red-tape barriers and entry costs. The ASEAN Agreement on Electronic Commerce is also in line with the Digital Free Trade Zone (DFTZ) project to help SMEs to easily export their products globally. It is estimated that 3,800 SMEs have already joined the DFTZ platform.

Related: What You Need to Know about Digital Free Trade Zone (DFTZ)

6. Domestic travel boost

Budget 2019 also introduced a Travel Levy that becomes operational in June 2019 — RM20 for passengers flying within ASEAN and RM40 for passengers to other countries. If you operate an SME in the hospitality and tourism industry, this move is expected to boost spending in the sector by promoting travel within the country, especially between Peninsular Malaysia and East Malaysia and vice versa.

7. National growth and development

On a general note, the health of the national economy is important for the SME industry to thrive. The SMEs industry also needs to advance for the national economy to grow, hence the focus on SME development in the national budget.

In 2019, the Malaysian economy is expected to grow moderately at around 5%, considering the current state of the global economy. This should give the SME industry plenty of room for growth while encouraging the sector to increase their contributions to national development.

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