About this paper

In Malaysia’s pursuit of economic reforms, the significance of Small and Medium Enterprises (SMEs) cannot be overstated. These enterprises serve as the backbone of the nation’s economic growth, playing a pivotal role in driving innovation, creating employment opportunities, and fostering inclusive development. As the economic landscape evolves towards innovation-driven sectors, SMEs become central to this transformation, contributing to technological advancements and the overall resilience of Malaysia’s economy. This is in line with the government’s recent reform policies announced in 2023, such as Madani Economy, National Energy Transition Roadmap (NETR), and New Industrial Master Plan (NIMP) 2030.

To unlock the full potential of SMEs, it becomes imperative to establish a well-developed ecosystem where access to finance serves as a key enabler, connecting various other ecosystem enablers across distinct stages of a business’s life cycle. Limited financing poses a substantial hurdle for SMEs to grow and has the potential to jeopardise the entire SME ecosystem’s development. As such, the role of market-based financing in catalysing growth and innovation within SMEs has never been more critical.

To better understand the current state of access to market-based financing for SMEs in Malaysia, ICMR conducted an enterprise-level survey targeting key decision-makers in different types of SMEs, including startups, micro, small, and medium-sized enterprises (MSMEs), and mid-tier companies (MTCs). The survey, complemented by qualitative interviews and focus groups, provides a comprehensive overview of the financing landscape for SMEs, shedding light on the challenges and opportunities faced by startups, MSMEs, and MTCs. In light of the findings, ICMR’s report also presents a set of recommendations to effectively address the intricate funding requisites throughout the SME life cycle and fortify the overarching ecosystem.