PETALING JAYA: Industry leaders are expecting 2025 to be a year of promising opportunities and difficult challenges for small and medium enterprises (SMEs).
SME Malaysia national president Chin Chee Seong said while there is cautious optimism among certain sectors, he believes that SMEs remain concerned about the uncertain global economic climate, rising costs and increasing competition.
“Various news reports and analyses have highlighted that 2025 will likely be a year of consolidation and adaptation for SMEs, as they navigate these complexities,” he told StarBiz.
Small and Medium Enterprises Association Malaysia (Samenta) national president Datuk William Ng said 2025 will likely be another challenging year for SMEs.
“The uncertainty in policies of the new president in the United States, coupled with a marked rise in protectionism means business will continue to be volatile.”
He added the government must rein in any increment in fees at all levels – including by the key infrastructure and communications companies, as well as at agencies and local authorities.
“SMEs are trying their best to survive and deliver better results. So, as a matter of principle – the government must walk its talk and be a partner of growth to SMEs.”
Ng noted that the bright spark continues to be the China+1 (or Minus China) policy, which he believes will drive more investment into South-East Asia.
“Another exciting opportunity is our chairmanship of Asean, which helps raise our profile not only among member states, but also globally.
“SMEs must leverage this increased spotlight to expand their businesses regionally.”
China+1 is the business strategy of avoiding investing only in China and diversifying the business into other countries.
Meanwhile, Chin said Malaysia’s strong commitment to trade agreements like the Regional Comprehensive Economic Partnership and Comprehensive and Progressive Agreement for Trans-Pacific Partnership, coupled with government initiatives to promote digital transformation and sustainability, provides significant opportunities for SMEs to access larger markets and embrace innovation.
“However, to ensure these opportunities translate into tangible benefits, SMEs require much clearer guidance, improved access to resources and targeted support tailored to their unique challenges.
“In particular, we strongly suggest the government introduce larger and more targeted grants or incentives, especially to assist SMEs in their digital transformation journey and to ease financing challenges.”
Chin emphasised that these measures are critical to enable SMEs to adopt new technologies, enhance efficiency and remain competitive both locally and globally.
Ng said SMEs that have yet to digitalise their businesses, need to start this year.
“The train may have left, but it’s never too late to start. E-invoicing will drive the digitalisation, but many of our SMEs, especially the micro ones, need to be helped to understand where and how to begin.”
He added more matured SMEs are pivoting into the digital space to take advantage of the digital economy.
“The immediate goal should not to expand their market – as that can often mislead SMEs into spending on digital advertisements and eCommerce before they are ready.
“The primary goal for digitalisation should be on efficiency and productivity – in streamlining processes and reducing errors.”
Ng said most SMEs are aware of the importance of digitalisation and artificial intelligence, adding however that adoption is still not very high.
“Digital adoption is not just about costs and technical expertise, it’s also the mindset and literacy. Additionally, many SMEs, especially smaller ones, either are not very highly educated or from the older generation.”
As such, Ng said the government needs to do more on the ground beyond just funding.
“This includes massive on-ground education and hand-holding by mobilising the government machinery at all levels, such as local councils, members of Parliament, members of the state legislative assembly, hawker associations, trade associations like Samenta, volunteers from universities and so on.”
Additionally, Chin said it is essential that the government implements any policies that could increase the cost of doing business gradually, in stages, and in alignment with the performance and capacity of SMEs.
“This approach will provide businesses with the time and stability needed to adapt without undue pressure, ensuring a more sustainable transition toward national economic goals.”
Source: https://www.thestar.com.my/business/business-news/2025/02/03/smes-expect-challenging-year-ahead