Malaysia’s micro, small and medium enterprises (SMEs) outperformed the overall national economy in 2025, prompting the Government to shift its focus towards helping more businesses scale up, improve productivity and expand into international markets.
Speaking at the 2025 SME Performance Media Briefing held at SME Corp. Malaysia, Minister of Entrepreneur and Cooperatives Development, Steven Sim Chee Keong, said official statistics from the Department of Statistics Malaysia (DOSM) showed that the SME sector remained one of the country’s strongest economic drivers despite a challenging global business environment.
SMEs Continue to Drive Malaysia’s Economic Growth
According to DOSM, Malaysia’s SME Gross Domestic Product (GDP) grew 5.7 per cent in 2025 to almost RM690 billion, outperforming the overall national economic growth rate of 5.2 per cent.
The sector’s contribution to the national GDP also increased from 39.5 per cent in 2024 to 39.7 per cent in 2025, reflecting the growing importance of SMEs to Malaysia’s economy.
The number of SMEs also continued to expand. Nearly 1.3 million SMEs were operating across the country in 2025, accounting for 96 per cent of all businesses in Malaysia—an increase of almost 20 per cent compared with the previous year.
However, Steven Sim noted that more than 77 per cent of Malaysian SMEs remain micro enterprises, while only 1.1 per cent fall within the medium-sized business category.
“The real challenge is not simply creating more businesses, but ensuring Malaysian businesses can scale up—from micro to small enterprises, from small to medium-sized companies—and enabling more local businesses to penetrate global markets,” he said.
He added that future growth must translate into businesses that are more productive, innovative and globally competitive.
SME Exports Outperform the National Average
Malaysia’s SMEs also recorded a strong export performance in 2025 despite continued uncertainty in global trade.
SME exports increased by 10.5 per cent to RM214.5 billion, outperforming overall national export growth of 5.9 per cent as well as the 5.1 per cent growth recorded by non-SME firms.
According to Steven Sim, the performance demonstrates that Malaysian SMEs possess strong fundamentals and have shown resilience in adapting to changing global market conditions.
He said the results reinforce the Government’s commitment to transforming export growth into a larger pool of productive, innovative and internationally competitive Malaysian companies.
Power Up 10K to Accelerate SME Growth
To help businesses move to the next stage of development, the Ministry of Entrepreneur and Cooperatives Development (KUSKOP) is implementing the Power Up 10K initiative, supported by RM15 billion in financing.
The programme aims to strengthen SME productivity, improve cash flow and expand business capacity while supporting companies in growing their domestic and international market presence.
Power Up 10K also aligns with KUSKOP’s strategic ABCD framework, which focuses on:
- Anjakan Produktiviti (Productivity Transformation)
- Birokrasi Dipermudah (Simplified Bureaucracy)
- Capaian Modal (Access to Capital)
- Daya Akses Pasaran (Market Access)
The initiative supports the Government’s target of increasing the proportion of medium-sized enterprises to 5 per cent by 2030.
Helping SMEs Maximise Free Trade Agreements
During the same event, Steven Sim also launched the Quick Guide on Utilising Free Trade Agreements (FTAs) by SMEs, developed by SME Corp. Malaysia.
The guide is designed to help SMEs maximise the opportunities created through Malaysia’s 17 Free Trade Agreements (FTAs) by providing practical guidance on identifying suitable agreements, evaluating export markets, understanding Rules of Origin requirements, and taking advantage of tariff concessions and trade facilitation measures.
“FTAs are not only for large corporations. SMEs can also benefit from lower tariffs, wider market access and opportunities to participate in international supply chains,” he said.
Strengthening SME Development Through Strategic Partnerships
The media briefing also witnessed the exchange of Memoranda of Understanding (MoUs) between SME Corp. Malaysia, the Malaysia-China Chamber of Commerce (MCCC) and the Small and Medium Enterprises Association (SAMENTA).
Commenting on both the launch of the FTA guide and the strategic partnerships, SME Corp. Malaysia Chief Executive Officer Rizal Dato’ Nainy said the guide was developed to make it easier for SMEs to leverage Malaysia’s network of FTAs to accelerate export growth.
He noted that Malaysia currently has 17 FTAs, including agreements containing dedicated SME chapters.
Rizal added that the newly signed MoUs are intended to strengthen SME sustainability through collaborative initiatives focused on sustainability, market access, industry networking, capacity development and advisory services.
Building More Competitive Malaysian SMEs
As Malaysian SMEs continue to outperform the broader economy, the Government’s next priority is no longer simply increasing the number of businesses, but helping more enterprises scale up, innovate and compete internationally.
Through initiatives such as Power Up 10K, the new FTA Quick Guide, and strengthened industry collaborations, KUSKOP and SME Corp. Malaysia aim to equip SMEs with the financing, market access and strategic support needed to build stronger, more competitive businesses capable of driving Malaysia’s long-term economic growth.
