An excerpt of this interview was published on theSun | Biz & Finance printed and web editions on Mar 13, 2025. The published interview is posted here.

Q1: How do SMEs contribute significantly to GDP and employment, yet their struggles threaten economic stability?
A1: According to 2023 statistics, small and medium-sized enterprises (SMEs), along with micro-enterprises, makeup about 97% of Malaysia’s economy. They contribute around 38% to the country’s GDP and account for nearly 48% of total employment. These numbers underscore the fundamental role SMEs (and micro enterprises) play in economic growth, job creation and overall market resilience.

Despite their significance, SMEs are often faced with systemic challenges such as limited access to financing, talent shortages, access to new markets, and struggle in the adoption of new technologies. The inability to overcome these challenges can lead to stagnation or business closures, which in turn, disrupts supply chains, reduces employment opportunities and slows down economic progress.

While large corporations and multinationals will continue to shape Malaysia’s economic future, SMEs will always remain an indispensable pillar of economic wealth and stability, an asset that must be continuously supported and nurtured.

Q2: What is really holding SMEs back from thriving?
SMEs in general have shown remarkable resilience and adaptability by capitalizing on domestic opportunities within a consistently growing economy. Many have successfully expanded into nearby markets like Singapore, selected ASEAN countries and China. However, the real challenge lies in scaling beyond these familiar territories and competing on a global stage.

One of the key factors holding SMEs back is their limited internationalization effort. In my travels across Asia and beyond, I rarely encounter Malaysian SMEs with a strong overseas presence, highlighting a gap in global expansion. Several barriers contribute to this challenge, primarily a combination of mindset, funding, resources and support, difficult elements for small businesses to secure in the right balance.

To truly thrive, Malaysian SMEs must embrace a global mindset, adapt to the realities of international markets, secure funding and operational support, and build the resources and capabilities needed to compete on a larger scale.


Q3: Can you provide real-world examples of Malaysian SMEs facing barriers towards SME growth?
A3: A key barrier to SME growth in Malaysia is the limited demand for international expansions through acquisitions. A recent experience highlighted this challenge: I collaborated with European colleagues who specialize in matching international buyers with privately owned, profitable SMEs that lack a succession plan and are seeking transition. In many global markets, this model is a common pathway for business growth, allowing SMEs to scale quickly by acquiring established businesses.

However, when I explored this opportunity within my Malaysian SME network, I observed a significant difference. There was limited interest in pursuing overseas acquisitions as a growth strategy, with many successful SMEs focusing more on domestic expansion and organic growth rather than taking bold steps toward internationalization.

This mindset can limit growth potential, as international expansion offers SMEs an opportunity to scale, diversify revenue streams, and strengthen their competitive position.


Q4: How does the lack of skilled decision-makers act as a critical bottleneck for internationalisation?
A4: I wouldn’t frame it as a lack of decision-making skills but rather as a cautious approach to decision-making that acts as a significant bottleneck to the internationalization of Malaysian SMEs. Many of these businesses are led by first- or second-generation entrepreneurs with strong business instincts and operational expertise but limited global exposure, networks and familiarity with the complexities of internationalization. This combination often results in reluctance to step into unfamiliar territory, particularly when domestic opportunities are readily available and can be prioritized.

In fact, unlike large corporations with established global organizations, partnerships and support networks, SMEs often struggle to access the right insights needed to develop solid plans and build the right connections, whether with potential trading and manufacturing partners, industry bodies, investors, consultants, or institutions abroad. Without this crucial knowledge and these links, even businesses with high-quality products face significant challenges in scaling internationally.

Moreover, the absence of professional management structures in many SMEs further limits their ability to scale efficiently. Without structured leadership with international expertise, companies face challenges in developing effective strategies, securing international funding and leveraging resources for cross-border expansion.

The real breakthrough will come when Malaysian SMEs actively nurture and empower a new generation of leaders who combine strong educational backgrounds, global vision and international business experience. This new generation will be instrumental in guiding SMEs toward global competitiveness.


Q5: Why is human capital even more crucial in emerging markets like Malaysia compared to developed countries?
A5: In developed countries, businesses benefit from well-established systems and advanced infrastructures that help bridge skill gaps and drive technology adoption, efficiency, and performance in business operation. In contrast, emerging markets like Malaysia often face structural inefficiencies and resource constraints, all within a context of rapid economic shifts, making human capital a critical factor in business success.

For SMEs, the ability to navigate market uncertainties and drive growth relies heavily on having skilled, adaptable and forward-thinking talent. Unlike large corporations that may have vast organizational knowledge, sound processes and established global strategies, SMEs must depend on individuals to identify market trends, develop strategies and seize emerging opportunities.

Without the right talent and leadership, companies in emerging markets risk stagnation or being outpaced by better resourced and more agile competitors. Investing in human capital is not just a growth driver, but it is a survival imperative.


Q6: Why Malaysian SMEs struggle to go global and why many of them fail to adapt their products to foreign markets?
A6: Many Malaysian SMEs have historically found sufficient opportunities in domestic and nearby markets. As a result, they have not prioritized global expansion and, consequently, have not built the necessary asset base of knowledge and expertise to compete internationally.
Furthermore, a key side effect of this domestic market focus is that most SMEs remain too small to compete on the global stage. Referring back to the figures mentioned earlier, out of over 700,000 SMEs and micro-enterprises, 70% are micro, 28% are small, and only about 2% are medium-sized enterprises. Scale enables access to funding, economies of scale, integration into the supply chains of large corporations, the ability to attract talent and the implementation of new technologies. This distribution is both a cause and a consequence of why even strong domestic SMEs struggle with internationalization.

Coming to product adaptation, when adapting products for foreign markets, Malaysian SMEs face challenges similar to those encountered by companies from other regions. Despite globalization, local nuances remain significant and can greatly influence the success or failure of market development initiatives. As they enter markets with different characteristics, demand patterns, and competitive landscapes, their ability to adjust product offerings and go-to-market strategies will be critical to securing and expanding their presence.


Q7: What would it take for Malaysian SMEs to expand and compete on the global stage?
A7: First, cultivating the right mindset is critical. This begins with fostering a culture of innovation and international ambition within SME companies. One way to accelerate this is by integrating a new generation of talent— individuals who have been exposed to global markets, emerging trends and international business practices. Their fresh perspectives and understanding of cross-border operations can help SMEs think beyond local markets and position themselves competitively on a global scale.

Second, access to capital and strategic resources is crucial. While Malaysia offers institutional support through government incentives and programs, securing access to diverse funding options is key. International investors can provide not only financial backing but also valuable market insights and connections, which can significantly ease the process of entering foreign markets.

Finally, agility and adaptability to meet the demands of international trade are essential. In this regard, many foreign businesses entering Asia struggle to adjust to unique market demands. Similarly, Malaysian SMEs must be prepared to navigate the complexities of foreign markets, including compliance with international standards, localization of products and services and an understanding of cultural nuances.


Q8: How can collaborations with multinational corporations (MNCs) and foreign investors help accelerate SME growth?
A8: Collaborations with MNCs and foreign investors can significantly accelerate SME growth by providing access to global markets, operational expertise and much-needed capital. MNCs bring extensive industry knowledge, particularly in areas such as productivity, operational efficiency, technology adoption and talent development. By partnering with established global players, SMEs can learn best practices in supply chain management, compliance with international standards, and strategies for scaling their business sustainably.

Foreign investors, on the other hand, offer not only financial backing but also strategic guidance and access to broad networks. Their investments can help SMEs expand production capacity, enhance research and development and adopt innovative technologies that improve competitiveness. Additionally, foreign investors often introduce SMEs to new customer bases, suppliers and distribution channels, reducing barriers to entry into international markets.

While some SME entrepreneurs may be hesitant to collaborate with larger entities due to differences in scale and culture, the reality is that such partnerships can unlock otherwise inaccessible resources.


Q9: What is next for Malaysian SMEs?
A9: The road ahead for Malaysian SMEs is both challenging and full of opportunity as the country transitions into a high-income economy and moves up the supply value chain. With a stronger focus on high-value industries, the accelerated adoption of advanced technologies, digital transformation, green energy, automation and sustainable practices will no longer be optional but essential.


These shifts will profoundly reshape the SME landscape. Some businesses will exit, new players will emerge, and consolidation will accelerate. Strategies that worked in the past may no longer be enough to remain competitive. To thrive in this evolving market, SMEs must be ready to adapt, innovate and embrace change.


Q10: What emerging global trends will shape the future of SME internationalisation in the next few years? and How can Malaysian SMEs proactively position themselves for success?
A10: Despite geopolitical turbulence and shifting policies, long-term global trends—such as the adoption of advanced technologies, digital transformation, sustainability, decarbonisation and automation—will continue shaping the future of SME growth both domestically and internationally. To stay competitive, Malaysian SMEs must align with the rising demands of high-value supply chains and embrace advanced technologies to drive innovation, productivity and operational efficiency through effective, sustainable practices.

Beyond domestic success, SMEs must also secure access to funding, talent, expertise and technology to compete on an international level.

Ultimately, mindset, innovation and adaptability will be key. As the saying goes, “What got you here won’t get you there”—a reality that perfectly reflects the challenges and opportunities facing Malaysian SMEs today.