News – By administrator on Wednesday, March 2, 2011 – 00:19

Survey on SMEs: Business Performance Continued to Improve in the Third Quarter of 2010

Kuala Lumpur 28 Feb – In the latest survey conducted by SME Corporation Malaysia in November/ December 2010, more than three-quarters (76%) of the small and medium enterprises (SMEs) across all sectors of the economy experienced better performance in the third quarter of 2010 (3Q 2010) compared to second quarter 2010 (2Q 2010). SMEs also remained optimistic on the business outlook on the six months ahead despite an environment of rising business costs.

This is the fifth survey conducted in November / December 2010 to assess the performance of SMEs in the second and third quarters of 2010. The survey conducted with the assistance of Bank Negara Malaysia attracted 2,530 respondents from all states in the country, including East Malaysia, and covering all sizes of establishments and across the various subsectors.

Year-on-year sales growth moderated but still remained double-digit at 10.4% from 17.7% in the previous quarter. More than half of the respondents (63%) experienced an increase in sales during the quarter under review compared with the preceding quarter, of which majority cited an increase of up to 5%. Those sub-sectors that recorded high sales increase include tourism-related services and manufacturing subsectors such as transport equipment, other resources-based and furniture and parts industries.

The Survey also showed that about 42% of the respondents that served the external market experienced an increase in export sales compared to 2Q 2010. These were mainly SMEs in the rubber products; chemical and chemical products; food, beverage tobacco; as well as wood and wood-based products sub-sectors.

Other indicators such as production and profit margin also showed an increase of up to 5% during the quarter. About 46% of the respondents increased the selling price of goods and services during the quarter especially those in the resource-based activities (agriculture and related industries) who had the pricing power due to the rising global prices of commodities.

The Survey also showed that the key challenges faced by SMEs in the previous quarters such as increase in raw material prices, rising overhead cost and cash flow problems continued to remain in the third quarter of 2011.

On SME investment in new assets, the results showed a moderating investment growth of 5.5% in 2010 compared with 18.4% in 2009. Bulk of the new investments in 2010 was in the manufacturing sector (54%), mainly for plant and machinery, and in the services sector (45%) especially for new office building. About one-third of the respondents indicated having problems in investing or expanding in Malaysia. Key impediments to investments cited by them were high cost of raw materials and initial cost of investment, lack of Government incentives and shortage of skilled labours.

During the third quarter of 2010, SMEs continued to have access to external financing, particularly from financial institutions which remained as the key source of fund provider, with the approval rate of 85%.

The respondents remained positive on the outlook for the six months ahead of the period under review (until 1Q 2011). About 64% of the total respondents projected a positive outlook on business growth, while another 11% saw business opportunities. New orders/bookings of products and services continued to trend upwards (mainly from rubber products, logistics services, agriculture crops, and furniture and parts activities). Almost all (99.6%) of the respondents indicated that they would remain in operation, while some intended to execute various plans, such as introducing new products and services, opening new branches and outlets, increasing full-time employees, diversifying into new areas in Malaysia and expanding to other countries.

The Survey also highlighted that 71% of the respondents provided training for their employees, which included both technical and soft skills. The programmes were mainly conducted at their business premises through on-the-job and in-house trainings. Majority of the respondents found the training at Government institutes to be effective.

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