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KUALA LUMPUR: Malaysia’s small and medium enterprises’ (SMEs) contribution to the gross domestic product (GDP) contracted by 7.3 per cent in 2020, according to the Department of Statistics Malaysia (DOSM).

It said the contraction was higher than the decline in Malaysia’s GDP and non-SMEs GDP which registered negative 5.6 per cent and negative 4.6 per cent, respectively, mainly due to the health crisis caused by the COVID-19 pandemic in 2020.

 

"The nationwide Movement Control Order (MCO) to curb the spread of the pandemic resulted in a decline of all Malaysia’s economic sectors,” it said in a statement today.

Chief statistician Datuk Seri Dr Mohd Uzir Mahidin said this was the first time the SMEs performance was lower than Malaysia’s GDP and non-SMEs GDP since 2004.

 

"The contribution of SMEs GDP eased to 38.2 per cent in 2020 with a value added of RM512.8 billion against 38.9 per cent or RM553.5 billion in the preceding year,” he said.

Commenting further on SMEs GDP performance by kind of economic activity, he said SMEs GDP for all sectors recorded negative growth in 2020.

"SMEs value added for services sector decreased 9.2 per cent in 2020 from 7.5 per cent in 2019, attributed to the decline in wholesale and retail trade; food and beverages; and accommodation sub-sector which posted a negative growth at 7.8 per cent.

"Finance, insurance, real estate and business services sub-sector also decreased in 2020 to negative 10.6 per cent,” said Mohd Uzir.

He also said SMEs contribution in the construction sector declined by 15.4 per cent, contributed by the decline in all its sub-sectors.

Value added of SMEs for the manufacturing sector registered negative growth of 2.9 per cent influenced by non-metallic mineral products, basic metal and fabricated metal products which plummeted to 13.1 per cent.

However, Mohd Uzir said petroleum, chemical, rubber and plastic products, and food, beverages and tobacco products continued with positive growth at 3.2 per cent and 2.0 per cent, respectively.

Value added of SMEs in the mining and quarrying sector dropped to 7.1 per cent in 2020, while for the agriculture sector, it decreased to 0.3 per cent attributed to a decrease in all sub-sectors except for livestock and other agriculture which continued with positive growth.

On SMEs exports, he said its contribution to total exports in 2020 was 13.5 per cent, with 9.4 per cent from the manufacturing sector, the services sector contributed 3.9 per cent, and the agriculture sector 0.3 per cent.

"Exports of SMEs registered a decline of 33.1 per cent to RM117.8 billion in 2020, compared to a growth of 2.6 per cent in 2019, attributed by services (-62.1 per cent) and manufacturing (-3.6 per cent) sectors.

"SMEs exports of agriculture sector in 2020 was RM2.3 billion, recording a growth of 2.5 per cent, driven by the increase in SMEs exports for vegetables, fisheries, poultry, banana, and durian,” said the chief statistician.

He noted that the exports of durian (including fresh, frozen, pulp and paste) registered an increase of 34.6 per cent in 2020 to RM570.8 million, compared to RM424.1 million in 2019, with the main export destinations being China (70.3 per cent), Singapore (8.3 per cent) and Hong Kong (6.1 per cent).

Meanwhile, exports of SMEs in the manufacturing sector, which contributed 69.3 per cent of total SMEs exports in 2020, were supported by miscellaneous manufactured articles, manufactured goods and machinery and transport equipment.

Singapore was the main destination for the sector which constituted 20.6 per cent, followed by China (12.3 per cent) and the United States (7.4 per cent).

Mohd Uzir said SMEs employment recorded a slight decrease of 0.9 per cent to 7.3 million persons in 2020, constituting 48.0 per cent of the national employment as compared with 48.4 per cent in 2019.

"SMEs employment for the agriculture sector, which comprised of 41.8 per cent or 779,000 persons, was the only sector posting an increase in 2020, albeit at a marginal rate of 0.5 per cent,” he said.

Elaborating on SMEs labour productivity, he said the labour productivity, as measured by value added per employment, dropped by 6.5 per cent in 2020 to record a value of RM70,706.

"All economic sectors posted a decline in SMEs labour productivity during the year.

"The construction sector dropped 11.1 per cent followed by services (-8.6 per cent), and mining and quarrying (-5.9 per cent) sectors,” he said.

Mohd Uzir said the vulnerable segments of the economy, especially micro SMEs, were expected to continue facing immense challenges in the near term.

"The vulnerable segments are going to experience harder consequences in recovering especially in the midst of the prolonged health crisis attributed to the escalation of COVID-19 cases and social and economic restrictions that imposed nationwide,” he said.

However, Mohd Uzir believes that the ongoing measures in the form of specific economic stimulus packages for SMEs that have been initiated by the government could limit the human and economic impact of the pandemic on Malaysia’s SMEs.

Source: https://www.thestar.com.my/business/business-news/2021/07/28/sme039s-contribution-to-gdp-down-73-in-2020