Malaysia needs to develop more SMEs into stronger mid-tier companies capable of anchoring domestic supply chains and competing internationally as the country moves towards a higher-value economy, Bank Negara Malaysia (BNM) Governor Datuk Seri Abdul Rasheed Ghaffour said.
Abdul Rasheed said small and medium enterprises (SMEs), which account for about 40% of Malaysia’s GDP and nearly half of total employment, will play an increasingly important role in driving productivity, innovation and the country’s broader economic transformation.
“Malaysia needs more SMEs that can evolve into stronger mid-tier companies. We want SMEs to anchor domestic supply chains. We want SMEs that can compete internationally,” he said in a special address at the 31st CGC Awards on Aug 11.
The push comes as businesses contend with higher input costs, tighter margins, supply-chain disruptions and slower customer payments, despite Malaysia entering the period from a relatively strong economic position where the economy expanded 5.4% in the first quarter of 2026, while unemployment eased to 2.9% and headline inflation stood at 1.6%.
Abdul Rasheed said access to financing alone would not be enough to create stronger businesses. SMEs must simultaneously invest in productivity, management capabilities, technology adoption and access to new markets.
At the same time, he called for the financial sector to rethink how viable businesses are assessed, particularly start-ups, young enterprises and asset-light companies that may lack lengthy credit histories or substantial collateral.
Cash flows, transaction records, electronic invoices, payment behaviour and supply-chain information could provide lenders with a fuller picture of a company’s viability, he said, while stressing that such data should complement rather than replace prudent underwriting.
The RM10 billion BNM-CGC Guarantee Scheme forms part of that effort, supporting microenterprises, start-ups and companies investing in areas including sustainability, innovation, strategic sectors, food security and external resilience.
BNM is also pushing financial institutions to expand financing into activities that could move Malaysia further up the value chain, including research and development, prototyping, process innovation, technology and opportunities arising from the climate transition.
CGC has facilitated more than RM103 billion in guarantees and financing to over 544,000 SMEs since its establishment.
Abdul Rasheed said the ultimate measure of SME financing initiatives should not simply be how much credit is disbursed, but whether businesses become more productive, innovative and competitive.
“Our ambition is not simply to support more financing. It is to support stronger businesses,” he said.
