The views expressed in this presentation are the views of the author and do not necessarily reflect the

views or policies of the Asian Development

Bank Institute (ADBI), the Asian Development Bank (ADB), its Board of Directors, or the governments they represent. ADBI does not guarantee
the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not
necessarily be consistent with ADB official terms.

IBRAHIM BIN YAACOB

Ministry of Finance, Malaysia
October 2018
SMEs in Malaysia

GDP
36.6% 42%
(2016) (2020)

Employment
65.3% 68%
(2016) (2020)

Export
18.6% 23%
(2016) (2020)
2
 Businesses have low digital adoption
Malaysia’s Digital Adoption Index 0.69 (out of 1.00)

Business Indicator: People Indicator: Government

0.42 0.80 Indicator:
0.85

Source : www.worldbank.org

98.5% of total business establishments

are SMEs 7.4% 27.2% Sell
Utilise
products/
100.0% e-commerce
services
76.5% marketplace
80.0% online
60.0%
907,065 firms
40.0%
21.2%
20.0%
2.3%
0.0%
Medium Small Microenterprises

3
Source: World Bank and SME Corp
 Promoting digital entrepreneurship requires
multiple reforms…

Initiatives will
be announced
in the upcoming
2019 Budget on
2 Nov. 2018

Source: World Bank (2018).

 SMEs Financing

100%
Source: Bank Negara Malaysia

88%

75%

63%

50%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 July
2014 2015 2016 2017 2018 2018
5
Banking Capital Market
 SMEs Financing Through
Capital Market
Listed Market : Leading Entrepreneur Accelerator Platform (LEAP)
1
Market
- first of its kind in ASEAN
- Inception : 25 July 2017

Unlisted Market : Equity Crowdfunding (ECF)

2 - RM22.3 mil (2017) from RM10.4 mil (2016)
- 56% : technology-based companies

Unlisted Market : Peer-to-Peer Financing

3 - Among the first country in ASEAN to regulate P2P financing
- 2017: 6 licensed platforms has raised RM37.2 mil.

Unlisted Market : Venture Capital and Private Equity

4 - VC : start-ups with high growth potential
- PE : established mature companies
 Initiatives on Digital Economy and Start Ups
DIGITAL ECONOMY
• Malaysia Digital Economy
Corporation (MDEC)
o E-commerce ecosystem &
Digital Maker Movement
o Malaysia Digital Hub
• Digital Free Trade Zone
• Expand coverage & quality of
broadband up to 20 Mbps
• Reduce price of broadband
packages by 50% with double the
speed in the next two years.
• Increase Ethernet broadband
speed in public universities to
maximum 100 Gbps
START UPS & SMES
• 2017 – Startup & SME
Promotion Year
• Reduce tax rate from 19% to 18%
for SMEs with taxable income up to
first RM500,000
• Provide guarantee up to RM7 billion
under Working Capital Guarantee
Scheme (WCGS)
• 2% rebate on interest to
SMEs borrowers
• RM200 million from WCGS Fund,
especially for startups.
• New pass category – Foreign
Knowledge Tech Entrepreneurs

New Government has reestablish Ministry of Entrepreneurship Development in 2018.

7
Previous Government, 6 ministries & 12 agencies with 47 programs for entrepreneurship.