PETALING JAYA: About 15 per cent of micro, small, and medium-sized enterprises (MSME) are temporarily closed due to a lack of funds stemming from the pandemic, The Malaysian Insight reports.

According to the SME Association president, Ding Hong Sing there are 1.15 million SMEs, which account for 97.2 per cent of businesses in Malaysia.

Since 2015, SMEs have increased by an average 4.9 per cent each year. Eighty per cent of them are in the service industry, and in 2020, this figure increased to 85.5 per cent.

Ding said micro-enterprises make up the bulk of the sector at 78.4 per cent. Its numbers grew by 205,504 from 2015 to 2020 which puts its annual growth rate at 5.4 per cent.

Small businesses make up 20 per cent or 229,987 of SMEs and medium-sized enterprises, 1.6 per cent or 18,289.

The SME sector has also taken a hit for the first time in 17 years, posting -7.3 per cent growth.

Ding said in 2019, SMEs contributed to 38.9 per cent or RM553.5 billion of the GDP but this declined in 2020 to 38.2 per cent or RM512.8 billion.

In terms of employment, SMEs are also hiring 48 per cent less. In 2020, SMEs employed 7.24 million people, 0.9 per cent less than the previous year, when they employed 7.32 million people.

“The year-on-year decline shows SMEs have been severely hit by the coronavirus. Before 2020, the number of people employed increased by at least 3% or 200,000 a year,“ he told The Malaysian Insight.