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New Definition of SMEs - An additional 8,120 establishments set to be classified as SMEs, bringing the share of SMEs to total establishments from 97.3% to 98.5%.

The Prime Minister of Malaysia, Y.A.B. Dato’
Sri Mohd Najib Tun Haji Abdul Razak has announced a new definition of SMEs which
will be effective 1 January 2014. The announcement was made right after the 14th
National SME Development Council Meeting which the Prime Minister had chaired
on 11 July 2013. The Council had approved the proposal to raise the qualifying
threshold for sales turnover and employment of SMEs for all economic sectors in
the country.

For the manufacturing sector, SMEs are
defined as firms with sales turnover not exceeding RM50 million (currently:
less than RM25 million) or employment not exceeding 200 workers (currently:
less than 150 workers). For the services and other sectors, the threshold was
also raised, as firms with sales turnover not exceeding RM20 million
(currently: less than RM5 million) or employment not exceeding 75 workers
(currently: less than 50 workers).

It was a such needed review given the changes
that have taken place in the economy since a common definition was adopted in
2005. Even though the redefinition of SMEs may seem like a small initiative, it
is undeniably a path-breaking development on a national scale, as it reflects
the country’s economic realities, development blueprints, national aspirations
and growth objectives of the SME Community. It also takes into account the
potential for future innovation, job creation, sectors driving growth, price
inflation, structural shifts in the economy and changing business trends, among

The new definition is an outcome of a comprehensive review, taking both
top-down and bottom-up approaches that included technical analysis, global
benchmarking and stakeholder engagement. In order to have a better clarity in
the new definition, a series of focus group discussions were held with close to
60 stakeholders including industry associations from all sectors, Ministries
and Agencies, regulators and financial institutions. The Guiding Principles in
the review process ensure that the SME re-definition is wide-ranging, clear and
simple, and that it includes all sectors of the economy including agriculture,
construction and mining. The
classification is further simplified into only two simple categories -
manufacturing, and services and other sectors.
A quick win that will result from this new definition
is the fact that more firms, particularly those from the oil and gas category
as well as other types of the services sector, will now be classified as SMEs.
With this, approximately more than 8,000 establishments will now be classified as
SMEs, increasing the share of
SMEs to total establishments from 97.3% currently to 98.5%. This will undoubtedly facilitate the country’s transformation into a
high-income nation envisioned by the SME Masterplan, resulting in higher
contribution to GDP, employment and exports.
The new definition which
will only be implemented next year will give some required space to the Ministries
and Agencies, financial institutions and other entities related to the
development of SMEs to make the necessary changes to their systems.




 Manufacturing  Sales turnover of less than RM300,000 OR
employees of less than 5
 Sales turnover from RM300,000 to less than
RM15 mil OR
employees from 5 to less than 75
 Sales turnover from RM15 mil to not exceeding RM50 mil OR
employees from 75 to not exceeding 200
Services and Others Sectors   Sales turnover of
less than RM300,000 OR
employees of less than 5
 Sales turnover from RM300,000 to less
than RM3 mil OR
employees from 5 to less than 30
 Sales turnover from RM3 mil to not exceeding RM20 mil OR
employees from 30 to not exceeding 75


SME Corporation Malaysia
Level 6, SME 1, Block B 
Platinum Sentral
Jalan Stesen Sentral 2
Kuala Lumpur Sentral
50470 Kuala Lumpur

Info Line: 1300-30-6000
Fax Line: 03-2775 6001
Email: info[at]smecorp[dot]gov[dot]my

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