The newly released SME Sentiment Index results for the second half of 2024 (2H24) revealed a growing confidence in micro, small and medium enterprises (MSMEs) as it rose to 55.8 compared to 54.7 in 1H24.

The index, released by the Small Medium Enterprise Development Bank Malaysia Bhd (SME Bank), showed its third consecutive increase and achieved its highest score since the survey's inception.

SME Bank Acting Group President/Chief Executive Officer Datuk Dr Mohammad Hardee Ibrahim said the upward trend reflects improving economic growth, robust sales expectations and renewed plans for expansion and job creation.

"This reaffirms MSMEs' critical role in Malaysia's economic trajectory, further strengthened by the Madani government's focus on fostering sustainable and inclusive growth, particularly in paving a positive outlook for our MSMEs to continue to thrive in our ever-changing and competitive business environment," Hardee said in a statement.

Among the key highlights for the index were MSMEs led by the accommodation sector were more confident in economic growth, large businesses showed the highest optimism by reversing their earlier pessimism from 1H24, micro-businesses remained cautious but expressed strong aspirations to export as 20% were keen to enter foreign markets despite the current minimal exposure (5%), MSMEs may face lower profitability despite higher sales due to a broad-based increase in costs, MSMEs continue to steer towards sustainability-ready and hiring decisions were largely guided by business expansion plans.

"Other highlights include business expansion emerged as the top focus area amid growing confidence among MSMEs because marketing or branding has lost its crown to business expansion and neutral impact from targeted subsidy, progressive wage and e-invoicing. Micro businesses have the lowest cash reserves," Hardee shared while adding that SME Bank would continue to provide value to the MSMEs that extends beyond financing.

"The SME Sentiment Index survey reaffirms our commitment in providing a clear and succinct overview of the overall SME landscape and the resounding positive momentum recorded in the recent survey further reinforces our MSMEs' position as an important segment of our economy as they contribute significantly to Malaysia's overall growth trajectory," Hardee explained.

Meanwhile, Hardee revealed that a majority of the respondents (63%) from all business sizes foresee an economic expansion with large-sized businesses taking the lead while micro-sized are the least optimistic (50%).

"This was a complete reversal compared to 1H's results where large-sized businesses were the most pessimistic, expecting an economic slowdown compared to micro-sized ones which assumed an economic expansion.

"Large companies could be riding on resilient domestic demand and improvement in international trade, where merchandise trade volume is expected to broadly expand by 3% year-on-year in 2025 against 2.7% in 2024," Hardee said, adding that micro businesses currently have the least exposure to exports (5%) but are the keenest (20%) to sell their products to foreign countries in the future.

The survey, conducted between August and November 2024, has hit a new record high of 1,485 respondents (1H: 1,295), encompassing nationwide participants from a wide range of sectors and business sizes.

This in-depth study garnered valuable data on the perspectives and experiences of MSMEs — offering a macro-level overview of the business environment that serves as a benchmark for overall future economic performance. The complete SME Sentiment Index 2H24 report is available at .