No common definition of small and medium enterprises (SMEs) in Malaysia

Published: Last Edited:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

Presently, there is no common definition of small and medium enterprises (SMEs) in Malaysia. Different Agencies define SMEs based on their own criteria, usually benchmarking against annual sales turnover, and number of full-time employees or shareholders' funds. In addition, present definitions focus mainly on SMEs in the manufacturing sector. The establishment and adoption of standard definitions for SMEs will facilitate better identification of SMEs across sectors, thus enabling more effective formulation of SME policies and implementation of SME development programmers, and provision of technical and financial assistance. It will also allow better monitoring of SME performance and their contribution to the economy.

For wider coverage and applicability, definitions of SMEs will be based on two criteria, namely Number of employees or Annual sales turnover. Therefore, an enterprise will be classified as an SME if it meets either the specified number of employees or annual sales turnover definition.


The definitions will apply for the following sectors:

1.2.1 Primary Agriculture

A small and medium enterprise in primary agriculture is an enterprise with full-time employees not exceeding 50 or annual sales turnover not exceeding RM5 million. A micro enterprise in primary agriculture is an enterprise with full-time employees of less than 5 or with annual sales turnover of less than RM200,000. A small enterprise in primary agriculture is an enterprise with full-time employees of between 5 and 19 or with annual sales turnover of between RM200,000 and less than RM1million; and A medium enterprise in primary agriculture is an enterprise with full-time employees of between 20 and 50 or with annual sales turnover of between RM 1 million and RM5 million.

1.2.2 Manufacturing (including agro-based) and Manufacturing-Related Services (MRS)

A small and medium enterprise in manufacturing (including agro-based) and MRS is an enterprise with full-time employees not exceeding 150 or with annual sales turnover not exceeding RM25 million. A micro enterprise in manufacturing (including agro-based) and MRS is an enterprise with full-time employees of less than 5 or with annual sales turnover of less than RM250,000. A small enterprise in manufacturing (including agro-based) and MRS is an enterprise with full-time employees of between 5 and 50 or with annual sales turnover of between RM250,000 and less than RM10 million and A medium enterprise in manufacturing (including agro-based) and MRS is an enterprise with full-time employees of between 51 and 150 or with annual sales turnover of between RM10 million and RM25 million.

1.2.3. Services (including Information and Communications Technology)

A small and medium enterprise in services is an enterprise with full-time employees not exceeding 50 or annual sales turnover not exceeding RM5 million. A micro enterprise in services is an enterprise with full-time employees of less than 5 or with annual sales turnover of less than RM200,000. A small enterprise in services is an enterprise with full-time employees of

between 5 and 19 or with annual sales turnover of between RM200,000 and less than RM1million and . A medium enterprise in services is an enterprise with full-time employees of between 20 and 50 or with annual sales turnover of between RM1 million and RM5 million.

For consistency and comparability of data across sectors, the working definition for SMEs in the mining and quarrying sector, and construction sector will be based on the SME definition for the services sector (as per paragraph 3.3 below). To ensure comparability of data from the various sources and to facilitate data harmonization across the various providers of SME statistics, classification of economic activities will be based on the Malaysian Standard Industrial Classification (MSIC) 2000 codes. Appendix 2 provides the list of economic activities under the various sectors. The following list of approved SME definitions is not exhaustive and may be amended or expanded by the National SME Development Council from time to time to reflect changes in operating and business conditions.

The table below summaries the approved SME definitions based on number of full-time employees:

Table 1

The table below summaries the approved SME definitions based on annual sales turnover:

Table 2



NEKMAT is stand for national fishermen's association of malaysia its own fish based products under Enna brand.NEKMAT is capable of producing fish-based products such as fish burgers and fish balls among others.all these products are manufactures under the brands "Enna" and "NEKMAT" and are marketed nationwide. NEKMAT was incorporated under the fishermen's association act 1971.the objective of NEKMAT are To uplift the economy and social well being of the fishermen's community. Increase yield and income of the fishermen's community through increase in production, skills and initiatives and give tranquility to the members and to develop a progressive, independent, united and dedicated fishermen community.since 1987 Enna made debut in the market,NEKMAT has invested over RM4 million in research and development(R&D) as well as on marketing its products.those product are sold in hypermatkets such as Giant and Mydin,as well as supermarkets like UO superstore,The store,Sabasun,NSK,Bintang and others.NEKMAT's fish-based products have obtained halal certification from the Jabatan Agama Islam Malaysia(Jakim)as well the GMP Certificate.


SWOT analysis can be understood as the examination of an organization's internal strengths and weaknesses, and its environments opportunities, and threats. It is a general tool designed to be used in the preliminary stages of decision-making and as a precursor to strategic planning in various kinds of applications. An understanding of all external factors, threats and opportunities together with an internal examination of strengths and weaknesses assists in forming a vision of the future.

2.2 SWOT analysis for NEKMAT


NEKMAT was participate in various trade fairs such as the Malaysia International Halal Showcase(Mihas),the Malaysia International Food & beverage Trade Fair(MIFD) and the Malaysia Agriculture, Horticulture and Agro tourism show(MAHA).

Enna products are position as a premium product. NEKMAT is currently in talks to develop an open market product for mass market which will be offered at a lower cost without any compromise quality.


Limited reach through hypermarkets as not many supermarkets are interested in selling and showcasing SME products.


Interested in exploring the international market and were looking to export to Singapore.

Trying to increase the yields and income of the fishermen through an increase in production, upgrading of skills and provision of initiatives.


Competitor pricing may influence of the market brand. Increasing if raw materials supply due causes of depletion of fish supplies.


Business strategy is the foundation of successful business. But there are, of course, different types of business strategy. The best business strategies must steer a course between the inevitable internal pressure for business continuity and the demands of a rapidly changing world for revolutionary business strategies.

One of business strategy is Strategic Management can be defined as "the art and science of formulating, implementing and evaluating cross-functional decisions that enable an organization to achieve its objective." "The on-going process of formulating, implementing and controlling broad plans guide the organizational in achieving the strategic goods given its internal and external environment".

Interpretation. On-going process Strategic management is a on-going process which is in existence throughout the life of organization. Shaping broad plans it is an on-going process in which broad plans are firstly formulated than implementing and finally controlled.

Strategic goals are those which are set by top management. The broad plans are made in achieving the goals. Internal and external environment: Internal and external environment generally set the goals. Simply external environment forced internal environment to set the goals and guide them that how to achieve the goals

Business strategy is who led Intel to greatness, makes a clear distinction between strategic action and strategic plans. He believes that business strategy models should not: just be statements of intent; come across like a political speech; have concrete meaning only to management; concern themselves with events far in the future or have little relevance to today.

Information system or technology can support business by using Decision Support Systems (DSS).Support for problem-solving phases including Intelligence, design, choice, implementation, monitoring. Support for different decision frequencies Ad hoc DSS: Concerned with decisions that come up once in every 5 years (ex., where should a company open a new distribution center?), Institutional DSS: Concerned with decisions that repeat (ex., what should the company invest in? Support for different problem structures highly structured problems: Known facts and relationships Semi-structured problems: Facts unknown or ambiguous, relations vague ex. Which person to hire for a position? Support for various decision-making levels Operational level: Daily decisions, Tactical level: Planning and control and Strategic level: Long-term decisions.

Figure 1: show the decision frequency

Decision support system (DSS) is a class of computerized information system that supports decision-making activities. DSS are interactive computer-based systems and subsystems intended to help decision makers use communications technologies, data, documents, knowledge and/or models to complete decision process tasks.

A decision support system may present information graphically and may include an expert system or artificial intelligence (AI). It may be aimed at business executives or some other group of knowledge workers.

Figure 2: Conceptual Model of DSS

Data in databases including data marts and warehouses. By using data mining to help with the decisions making. Decision makers perform quantitative analysis on data. Model base contains a list of models for mathematical computations. Model management system: Allows access to such models. By using DSS it has group that use DSS method in organization that call group decisions support system.

Figure 3: configuration of a DSS

Special design Effective communication. Group decision making Ease of use. Flexibility Accommodate different perspectives .Anonymous input Individuals names are not exposed. Parallel communication. Decision-making support Delphi approach is decision makers scattered around the globe. Brainstorming is together say things as you think and think out loud. Group consensus approach the group reaches a unanimous decision (everybody agrees).Nominal group technique voting Reduction of negative group behavior. A trained meeting facilitator to help with sidetracking and automated record keeping.


Method I/IT that suggest to NEKMAT are:

1) Corporate Social Responsibility (CSR) is generally used to describe business's efforts to achieve sustainable outcomes by committing to good business practices and standards. While the concept may be relatively new in the region, the actual practices and related policies are not new. The key role and responsibility are often discussed in the aspects of business, social and the environment.

Most businesses compete either on price, level of quality or service as their competitive advantage. Non-profit organizations often use efficiency, values of service or societal benefit to generate their competitive advantage. Today consumers, investors, governments and even employees have become more sophisticated and more aware of good corporate behavior, or lack thereof. In this new business environment, a company's reputation has become one of its most valuable assets, and CSR has become one of the key components of corporate reputation.

Positive CSR experiences build confidence and goodwill with stakeholders. Many organizations have developed clear CSR efforts as strategic branding and management approach in achieving a win-win outcome.

CSR is increasingly being seen as an important and integral part of normal business operations. So how does responsible business help to enhance business operations, in achieving a sustainable outcome.

Create Shareholder Value 

Investors are becoming more concerned to invest in companies that act with good corporate governance and social responsibility. Increasingly, a company's performance as a responsible business is key to its financial and stock market standing, helping to protect it from instability and share price volatility.

Increased Revenue Base 

CSR can boost factors that drive revenue in important ways. CSR initiatives and cause-related marketing could build reputation and goodwill among suppliers and customers. Employees who identified with the social mission are likely to be motivated, committed and more prepared to make sacrifices as a team member.

Strategic Branding  

A company's reputation is fundamental in maintaining and attracting new customer base. Consumers today are more sophisticated, becoming more selective and sensitive to a company's image and CSR efforts. A distinctive CSR profile serves as a strategic branding tool in differentiating from competitors.

Operations Efficiency  

The efficiency of a business is about productivity and effective use of resources. CSR can help to increase efficiency through environment conservation and recycling initiatives, as part of Eco-efficiency strategy. Positive management-employee relations are also crucial in bringing about good customer service, productivity and product innovation.

Better Access to Capital 

Access to capital enables a company to grow and make timely investment. Companies with good CSR standing are likely able to secure equity and debt capital with most ease. The growth emphasis in Socially Responsible Investment (SRI) is a clear indication of likely future trends.

Human & Intellectual Capital 

A company's human and intellectual capital is one of its most valuable assets. Good workplace conditions and relations can help a company to attract, keep and develop human capital, keeping operations and staff morale high. Community involvement can play a complementary role in developing new skills set, encouraging participation, sharing and team spirit in the workplace as well.

Lower Business Risk  

Companies are being held increasingly accountable for their actions today. Such business risk could affect reputation, access to capital and even long-term viability in some instance. Proactive dialogue with external stakeholders can help to foster understanding, in preempting and minimizing the repercussions


SME can for advice is by manager provide training for NEKMAT which is in expend the business tu worldwide need skills and ability in dealing a business,this is company provide traning UNI Strategic Pte Ltd. Established in early 2002, UNI Strategic Pte Ltd is the key provider of bespoke corporate and training events. Our conferences and training workshops are attended by Fortune 500 companies and publicly listed firms all across the globe. We remain a leader in providing quality business to business information platforms to provide companies with the critical edge in corporate strategy today. We identify and develop key market segments across all industries and make headway into new and proven frontiers, bringing you the very best and latest in all our programs. At UNI events, we listen to our executive clientele. The result is an open concept training platform developed in response to our client's needs with lots of interaction between audience and speaker alike.

Moreover the company provides service to business is PLATO SOLUTIONS SDN BHD. focus is in banking and business enterprise solutions. They expertise in professional services team has many years of experience in the systems integration business. Specialize in the delivery of business solutions to meet the unique needs of the financial services industry, large corporations, and SME's and manufacturing companies. Members consist of project managers, business consultants, technical consultants and financial services industry analysts.

Plato Solutions has established strong partnerships with premier global solution providers while providing local domain and technical expertise to implement and support software solutions.

Our areas of focus are in the financial services industry as well as the commercial sectors. They have successfully installed mission critical IT systems for several leading institutions in the region.

Today, they have strategic partnerships with CDC Software and Microsoft Corporation to offer a complete Enterprise Resource Planning and related solutions to businesses and corporations. 

The solutions and offer are Microsoft Dynamics NAV, a highly customizable ERP solution and ROSS Enterprise, an ERP solution which caters specially to process manufacturers.

For example FINANCIAL SERVICES SOLUTIONS In the Financial Services industry, they have partnered with leading financial solution providers, ODYSSEY and Fiserv, to offer a flexible and robust Web-based Wealth Management and Internet Banking solution. The solutions they offer are WEALTHMANAGER from ODYSSEY, a robust and scalable wealth management solution, and VOYAGER from Fiserv, secure, flexible and functionally complete Internet Banking Solutions.


In Malaysia, SMEs are and will continue to be a vital component of the economy. With the new

Millennium, the Malaysian SMEs sector will face new opportunities as well as challenges, particularly in view of the liberalization of trade and investment under the ASEAN Free Trade Area (AFTA), the ASEAN Investment Area (AIA), the European Union (EU) and the emerging market economies of Eastern Europe.

The increasing global competition, technology advances, social changes, changes in government trade and investment policies, and changing consumers markets will be some of the difficulties facing the Malaysian SMEs sector as well as the policy makers. Therefore, SMEs and the government must further adopt, formulate and implement new strategies that will enable them to cope with these new challenges.

The current environment brings new challenges to SMEs whereby SMEs need to improve their competitive levels and strategies their business focus to be in position to shift strategies according to the changing economic environment, both domestically and externally. Malaysian SMEs must actively move forward and look for new opportunities to enhance their competitiveness through strengthening their capability and capacity.


This assignment gives me information about SME in Malaysia such as in food industry NEKMAT maybe not every organization or business would know about this organization, from the research I get extra information about information system by give a new methods for that company, my opinion is CSR this methods may not using in many company but I should be consider of company in involve in food industry. Many aspect that SME facing in maintaining and expand their business. Moreover need a training and guide as references to overcome a competitive strategy compete with other food industry.