Performance of the MSMEs Manufacturing Sector in Malaysia: An Overview

Micro, Small, and Medium Enterprises (MSMEs) form the backbone of Malaysia’s economy, accounting for nearly 97% of business establishments and contributing 39.1% to the GDP in 2023 (SME Corp Malaysia, 2024). This study provides a comprehensive review of the performance of the Malaysian MSME sector. This study synthesizes recent statistical data and empirical studies to explore MSMEs’ contributing factors, MSMEs establishment by size and sector, state, value of MSMES GDP and overall GDP, number and annual percentage change of employment, MSMEs’ employment by type of economic activity, value and annual percentage change of labor productivity, and ongoing challenges faced by MSMEs. In addition, this study discusses government policy and support, as well as the impact of technological adoption among MSMEs in Malaysia. Furthermore, this study highlights the overall performance of MSMEs in the manufacturing sector and their determinants. The key determinants include technological capability, managerial competence, financial access, supply chain integration, and government support. In conclusion, to enhance MSME performance, policymakers must streamline access to government support and incentivize digital transformation. These strategies will help manufacturing MSMEs become more resilient and competitive.