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SME e-readiness in Malaysia: Implications for Planning and Implementation - page 5 / 44





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Research Problem

Over the years, Malaysia has transformed from a commodity-based producing nation to being

a manufacturer of industrial products. When the economic slump hit Malaysia in 1997, many

companies suffered tremendous losses with the exception of the small and medium industries

(SMEs). At present, SMEs are recognized as the backbone of the country’s economy. SMEs

form a significant portion of the manufacturing and services sector. As at December 2003,

89.8 per cent of the more than 20,000 companies recorded in the manufacturing sector were

SMEs. Meanwhile, SMEs comprise 98.8 per cent of the close to 193,000 enterprises in the

services sector. (http://www.necinfrontia-ap.com/news_20040805.htm). With the advent of

the ASEAN Free Trade Area (AFTA) 2003, WTO and globalization, SMEs need to

strengthen their resilience to the challenges and to explore the opportunities in this new

economic era (SMIOSS, 2002).

[Insert Table 1 about here]

SMEs are so numerous and productive that their total economic output exceeds those of large

companies. Therefore, in order to determine their relative economic importance, it is essential

to measure the percentage of the economy’s total output and service (GDP) that come from

SMEs (Hashim 2000a; 2000b).

[Insert Table 2 about here]

The Ministry of International Trade and Industry (MITI) and its Agencies, the Malaysian

Industrial Development Authority (MIDA) and the Small and Medium Industries

Development Corporation (SMIDEC) have been tasked to look into the development of


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