Kota Kinabalu: Small and Medium Enterprises (SMEs) need to innovate to stay competitive and rise above other markets, said Sabah Entrepreneurs Transformation (SET) founding president, Dato George Lim.
He said that SMEs in Malaysia are grappling with an innovation gap that hinders their growth and potential.
This challenge encompasses struggles to secure capital from financial institutions, human capital constraints, the urgent need to embrace digitalization, and risk-averse mindsets.
“The banks typically require a minimum of two years of operational track record to demonstrate an SME’s ability to make a profit and reduce the risk for lenders.
“However, this requirement slows the growth potential of SMEs and is detrimental to start-ups that need to enter the market quickly.
“Despite support from banks, government agencies, and foundations, it is still not enough to meet the ever-increasing demand for access to capital among SMEs.
“As a result, 70pc of SMEs rely on their savings and the financial support of family and friends as their primary source of seed money,” he said during his speech at the SET Pitch Competition here.
George emphasised that the current capital market accessibility needs to be reviewed for Malaysia’s SMEs to thrive and prosper.
He also said the issue of brain drain, with many youths moving overseas for better career opportunities, which is prevalent in growing economies such as Sabah and the Peninsular East Coast States.
He described the situation as a “chicken and egg” problem where SMEs need young talent and skills to grow and offer more job opportunities.
“Our SMEs need to be strategic and innovative with their talent pool hire and management to attract the right people.
“We need to offer and highlight non-financial benefits such as better work-life balance, more flexible hours, work-from-home options, and employee stock options so that talents will be attracted to stay and work on the growth of the SMEs,” he said.
George said fear of change, rejection from financial institutions, and losing talents lead to a reluctance to grow. SMEs often remain the same size for years, even across generations, and a shift from a fear mindset to a growth mindset is essential.
“We need to focus on scaling up two times, three times, ten times, and move beyond just being an SME within Sabah or Malaysia.
“We need to start reskilling ourselves to change our mindset towards bigger and bolder goals. It is by pushing our limits and going beyond our current position that we can move past fear and into a growth mindset,” George said.
The Start-Up Pitch Competition, organized by V Creator Ignite Entrepreneur, involved ten finalists pitching their ideas.
The competition was officiated by the State Minister of Industrial Development and Entrepreneurship, Datuk Phoong Jin Zhe.
Managing Director of Remajaya Sdn Bhd, Datuk Sr. Chua Soon Ping, also spoke at the event, emphasising that innovation and sustainability in SMEs are key to their development.
Chua, who is also President of the Sabah Housing and Real Estate Developers Association (Shareda), said they are introducing products designed for long-term sustainability.
“One of our goals is to create buildings with a lifecycle of 60 years, which initially cost more but save on maintenance in the long run,” he said.
He mentioned that future projects will focus on low-rise, low-density developments to meet market demand.
Moreover, Chua stressed the importance of networking and seizing opportunities rather than relying solely on a large initial capital.
“You don’t need a lot of money to begin. There are many fund managers, landowners, and tycoons who are willing to share profits. They can offer equity funds, making you a key person for loans,” he said.
