SME Bank reports surge in MSME confidence for 2H 2024

KUALA LUMPUR (Dec 24): Small Medium Enterprise Development Bank Malaysia Berhad (SME Bank) released the results of its SME Sentiment Index for the second half of 2024 (2H 2024), which shows a notable increase in confidence among Micro, Small and Medium-sized Enterprises (MSMEs).

The index rose to 55.8, up from 54.7 in the first half of this year, marking its third consecutive increase and the highest score since the survey’s inception.

SME Bank acting group president Datuk Dr Mohammad Hardee Ibrahim, who is also chief executive officer, attributed the upward trend to improving economic growth, strong sales expectations, and renewed expansion and job creation plans.

“This reaffirms MSMEs’ critical role in Malaysia’s economic trajectory, strengthened by the Madani Government’s focus on fostering sustainable and inclusive growth,” he said.

He emphasised that these developments pave a positive outlook for MSMEs to thrive amid the dynamic and competitive business landscape.

The survey highlighted key trends in the MSME sector. Among the significant findings, MSMEs expressed growing confidence in economic growth, with the accommodation sector leading the way.

Large businesses also showed the highest optimism, reversing the pessimism seen in the first half of 2024.

Despite a cautious outlook from micro businesses, 20 per cent expressed aspirations to enter foreign markets, a significant increase from the current 5 per cent exposure to exports.

The survey also noted that while MSMEs anticipate higher sales, profitability may remain under pressure due to increasing costs.

Businesses are increasingly focusing on sustainability, with hiring decisions largely driven by expansion plans.

Business expansion emerged as the top priority for MSMEs, overtaking marketing and branding.

Despite these positive trends, challenges remain as MSMEs continue to face the impacts of higher costs, as well as vulnerability to exchange rate fluctuations, which could affect profit margins.

The survey also revealed a neutral impact from targeted subsidies, progressive wages and e-invoicing.

Micro businesses were found to have the lowest cash reserves, highlighting the financial strain on smaller enterprises.

Meanwhile, SME Bank chief economist Lynette Lee Li Qing noted that Malaysia’s economy had expanded by 5.2 per cent in the first nine months of this year.

She forecasted that the economy would grow between 4.5 per cent and 5.5 per cent in 2025, in line with the positive sentiment observed in the survey.

Lee also pointed to other indicators such as the Department of Statistics Malaysia’s Business Tendency Survey, which predict favourable business conditions in the months ahead.

The survey, conducted between August and November, included 1,485 respondents from across Malaysia, representing various sectors and business sizes.

This record-breaking participation provides valuable insights into the perspectives of MSMEs, offering a macro-level overview of the business environment.

This data serves as a benchmark for future economic performance and reinforces the important role of MSMEs in Malaysia’s overall growth trajectory.

-Agency

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