SMEs’ contribution to Employments

Contribution of SMEs to Overall Employment (%) and Annual Growth SME Employment (%)

e: estimate
p: preliminary

e: estimate
p: preliminary

Sources: Department of Statistics Malaysia (DOSM) and SME Corp. Malaysia

Based on the latest data published by the Department of Statistics, Malaysia (DOSM), MSMEs accounted for 96.9% (1,101,725 firms) of overall establishments in Malaysia in 2023. There has been an increment of more than 190,000 firms as compared to a total of 907,065 MSMEs in 2015, thus registering an average growth rate of 2.5% per annum during the period.

In terms of breakdown by key economic sectors, the services sector has consistently accounted for more than 80% of all MSMEs throughout the period. For the latest 2023 MSME profile, services sector constituted 83.9%, amounting to 924,170 firms. The construction sector remained to be the second largest contributor at 9.3% (102,657 firms). Meanwhile, about 5.4% of MSMEs (59,316 firms) were involved in the manufacturing sector, followed by 1.2% (13,099 firms) in the agriculture sector, with the remaining 0.2% (2,483 firms) in the mining & quarrying sector.

By business size, majority of the MSMEs were microenterprises, forming 69.7% (767,421 firms) of total MSMEs in Malaysia. Meanwhile, small-sized firms accounted for 28.5% (314,465 firms) and medium-sized firms constituted the balance 1.8% (19,839 firms). 

Updated: August 2024
Source: Department of Statistics, Malaysia (DOSM)

Given that there have been many developments in the economy since 2005 such as price inflation, structural changes and change in business trends, a review of the definition was undertaken in 2013 and a new SME definition was endorsed at the 14th NSDC Meeting in July 2013. The definition covers all sectors, namely services, manufacturing, agriculture, construction and mining & quarrying.

Sales turnover and number of full-time employees are the two criteria used in determining the definition with the “OR” basis as follows:

• For the manufacturing sector, SMEs are defined as firms with sales turnover not exceeding RM50 million OR number of full-time employees not exceeding 200.

• For the services and other sectors, SMEs are defined as firms with sales turnover not exceeding RM20 million OR number of full-time employees not exceeding 75.

Detailed definition of category, namely micro, small and medium is as follows:

Under the new definition, all SMEs must be entities registered with SSM or other equivalent bodies. It however, excludes:

• Entities that are public-listed on the main board; and
• Subsidiaries of:
  • Publicly-listed companies on the main board;
  • Multinational corporations (MNCs);
  • Government-linked companies (GLCs);
  • Syarikat Menteri Kewangan Diperbadankan (MKDs); and
  • State-owned enterprises.

For more information, please refer to the Guideline on New SME Definition

Source: SME Corp. Malaysia

Small and medium enterprises (SMEs) have long been recognised as the backbone of the Malaysian economy. The latest statistics from the Economic Census 2011: Profile of SMEs, conducted by Department of Statistics, Malaysia (DOSM) indicates a total of 645,136 SMEs operating in Malaysia, representing 97.3% of the total business establishments in 2010. The majority of SMEs are operated in the services sector (90%), followed by manufacturing (6%), construction (3%), agriculture (1%) and the remaining 0.1% are found in the mining and quarrying sector.

As the important generator of growth and employment, SMEs contributed close to 36% of the country’s gross domestic product (GDP) in 2014. SMEs’ shares to total employment and exports of the country are 65% and 17.8% respectively.