KUALA LUMPUR (Jan 6): The Federation of Malaysian Manufacturing (FMM) has called on the government to review the definition of small and medium enterprises (SMEs) in the manufacturing sector to better align with current industrial demands.
While the federation welcomed the government's recent targeted relief for SMEs, FMM president Jacob Lee Chor Kok noted that the existing thresholds for SMEs are increasingly restrictive and no longer reflect “today’s industrial realities”, particularly for mid-tier companies that sit between traditional SMEs and large corporations.
“Compared with international benchmarks, Malaysia’s SME definition is relatively narrow,” Lee said in a statement on Tuesday.
Malaysia currently defines manufacturing SMEs as firms with an annual turnover of up to RM50 million or a workforce of up to 200 employees.
Lee pointed out that other countries, such as Japan, the US and Germany, apply higher financial and employee thresholds, allowing mid-sized manufacturers to continue accessing targeted support.
“In contrast, Malaysia’s current framework risks misclassifying mid-tier manufacturers as large firms, potentially excluding them from assistance programmes and subjecting them to regulatory and cost burdens that are disproportionate to their scale," he said.
The FMM emphasised that mid-tier manufacturers are vital to the national economy, serving as essential links between small suppliers and multinational corporations while contributing heavily to exports, innovation and employment.
To address the issue, the FMM reiterated its long-standing recommendation to expand the SME definition to firms with an annual turnover of up to RM100 million and a workforce of up to 300 employees.
Lee said this move would better align Malaysia with regional and global standards, reflect economic and currency changes since 2013, encourage scaling and consolidation among firms, and strengthen the overall resilience and competitiveness of Malaysia’s industrial ecosystem.
The call follows Prime Minister Datuk Seri Anwar Ibrahim's announcement on Monday involving several relief measures for micro, small and medium enterprises. These include a deferral of penalties for e-invoice implementation, and a reduction in service tax on rental services from 8% to 6%.
Source: https://theedgemalaysia.com/node/788244