Malaysian SMEs can be grouped into three categories: Micro, Small or Medium. These groupings are decided based on EITHER the number of people a business employs OR on the total sales or revenue generated by a business in a year.

The development of the SME sector is an important economic agenda of the Government as the extremely viable and dynamic SME sector is essential to promote domestic-led growth and to strengthen the resilience of the economy in a more competitive and challenging economic environment. Over 99% of business establishments are SMEs but their contribution to the economy is relatively small. Targeting the development of SMEs will have positive spill-over effects to the country’s economic growth in terms of greater contributions of output, productivity, employment and innovation.

The NSDC was formed on 1 June 2004 as the highest policy-making body to chart the future strategic direction for Government policies and strategies for SME development. The Prime Minister chairs the NSDC, and members comprise Ministers and Heads of 18 key Ministries and Agencies involved in SME development¹. Bank Negara Malaysia serves as the Secretariat to the Council. The formation of the NSDC represents the Government’s commitment to the development of SMEs at the highest level.

Given the number of stakeholders involved in the development of SMEs, the NSDC provides the strategic framework for a more focused and coordinated inter-agency effort on SME strategy development and policy implementation that effectively responds to the development needs of SMEs across all sectors of the economy.

A 3-pronged approach strategy has been adopted to develop resilient and competitive SMEs in a more effective and efficient manner, namely by strengthening the enabling infrastructure for SME development, building the SMEs’ capacity and capability, and improving their access to financing.

Over the last 2 years, the major achievements of the Council are as follows:

1. Strengthening Infrastructure for SME development

• Adoption of standard definitions by all Ministries, Agencies and financial institutions for SMEs in the manufacturing, manufacturing-related services, agriculture and services sectors, which are based on annual sales generated and the number of employees.
• The Baseline Census for Establishment and Enterprise 2005 launched by the Department of Statistics Malaysia in March 2005 is the first statistical information compiled on SMEs as one of critical inputs to facilitate effective policies formulation for SMEs.
• Formulation of an annual SME Development Blueprint – this one-year action plan for implementation by Ministries and Agencies involved in SME development provides a clear statement of Government strategic intent and focus for SME development.
• Publication of the SME Annual Report since 2006 to enhance dissemination of information on SMEs in Malaysia and provide comprehensive review on status and performance of SMEs and highlights major programmes of the Government to promote SME development.

2. Building Capacity

• Launch of the SMEinfo Portal (www.smeinfo.com.my) as a platform to provide a one-stop online information resource centre for SMEs (information such as financing schemes and funds, government programmes, business support & advisory services). The Portal, accessible in Bahasa Malaysia, English and Mandarin, receives an average hit of 205,000 per month from various countries and has more than 14,000 SMEs registered in the Business Directory;
• Launch of the HRD Portal (www.hrdportal.com.my), a web-based training portal by Pembangunan Sumber Manusia Bhd., for greater access to information on training programmes available to SMEs and entrepreneurs, offered by various training providers both from the Government and private sector.
• Establishment of the SME Marketing Committee, an inter-Ministry Committee chaired by the Ministry of International Trade and Industry, for marketing of SME products and services at overseas market. A comprehensive programme for 2007 has been formulated to assist SMEs in capacity building, promotion, information management and provision of financial support  to help our SMEs in marketing their products and services overseas.
• Provision of financial advisory services by BNM as well as SME Bank.
• Establishment of the SME Business Adviser Network (SME-NET), a one-stop web-based directory on the SMEinfo Portal to connect all SME business advisers and various expertise available in other agencies and financial institutions for better delivery of advisory services to SMEs.

3. Enhancing Access to Finance

• Launch of SME Bank in October 2005 to complement the banking sector and support the development of SMEs through the provision of financial and business support services to SMEs. Since its establishment, RM3.2 billion has been approved to 1,935 SME accounts as at end-March 2007.
• Enhancement of Credit Guarantee Corporation’s organisational structure and operations to provide a wider range of credit enhancement products, financial and business advisory services and credit information services.
• Securitisation of SME loans via credit-linked notes, the first synthetic securitised product in the country, issued by Cagamas Bhd amounting to RM600 million, was launched on 22 May 2007.
• Launch of two new trade financing products: i.e. Multi Currency Trade Finance and Indirect Exporter Financing Scheme for SMEs in January 2006 to encourage SMEs to export, particularly to non-traditional markets such as members of the Organisation of Islamic Conference, by providing financing to Malaysian direct exporters at lower costs and without collateral requirements.
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