Malaysian SMEs are a vital component of the country’s economic development. According to SMIDEC (2002):
SMEs accounted for 93.8 per cent of companies in the manufacturing sector. They contribute- •27.3 per cent of total manufacturing output,
•25.8 per cent to value-added production, own
•27.6 per cent of fixed assets, and
•employ 38.9 per cent of the country’s workforce.
In addition, valueadded products from SMEs are expected to be worth RM 120 billion — or 50 per cent of total production — in the manufacturing sector by 2020.
Despite these statistics, Malaysian SMEs’ share of total exports is approximately 20 per cent lower than many other countries’, such as the Philippines, Hong Kong, Taiwan and even the US (SMIDEC, 2002). SMEs in Malaysia are concentrated in the textile and apparel, food and beverages, metals and metals products and wood and wood products sectors. The majority of manufacturing companies are located in the central parts of Malaysia and around the country’s major industrial regions.
The Malaysian Government’s commitment to and concern for the development of SMEs has been clearly evident since the early 1970s. The ‘New Economic Policy’ was introduced in 1971, which aimed to improve people’s welfare and restructure ethnic economic imbalances. The government’s commitment to the development of SMEs can also be seen in the second Industrial Master Plan (IMP2), which ended in 2005, which is followed by the Third Industrial Mater Plan (IMP3) 2006–2020, to coincide with the country’s vision for 2020 (MITI, 2005). The Malaysian Government has implemented various policies and strategies under these plans. The IMPs were formulated to enhance the growth of the manufacturing sector across the entire value chain and cluster-based industrial developments. Hence, this plan provides an integrated approach to the development of industrial areas and...