Malaysia is a nation recognized for its booming economy and rich cultural heritage. It has confirmed itself as a center for entrepreneurial ventures. Malaysia offers an inviting environment for budding entrepreneurs to flourish. Especially with a supportive government, a thriving startup ecosystem, and a rising middle class.
Please join us as we explore the many sides of entrepreneurship in Malaysia. Especially revealing important statistics, national plans, difficulties, and the bright future that lies ahead. This thorough guide is guaranteed to offer helpful insights and inspiration, whether you’re a potential entrepreneur, a business enthusiast, or are just inquisitive about the entrepreneurial landscape in Malaysia.
Entrepreneurship in Malaysia – Economic Overview for Entrepreneurship
In Malaysia, entrepreneurship is gaining ground as more people start their businesses. In 2021, the total early-stage entrepreneurial activity (TEA) rate was 15.4%. it is a little over the 14.9% average for Southeast Asia. Additionally, Malaysia’s Established Business Ownership Rate (EBOR), which is somewhat higher than the regional average of 10.4%, rose to 10.7% in 2021. These numbers show that the nation has a strong entrepreneurship environment.
In Malaysia, the number of startups is likewise increasing, with 13,000 firms documented in 2021, up from 12,000 the year before. This expansion shows how entrepreneurs are becoming more engaged in a range of industries. Additionally, Malaysian companies have been effective at securing funding, having raised RM1.5 billion overall in 2021 as opposed to RM1.2 billion in 2020.
Several sectors are witnessing significant entrepreneurial activity in Malaysia. The top sectors for startups include Information and Communication Technology (ICT), creative industries, business services, food and beverage, healthcare, and tourism. Entrepreneurs in these sectors are leveraging innovation, technology, and Malaysia’s diverse market opportunities to establish successful ventures.
The Malaysian government has been actively supporting entrepreneurship through various policies and programs. The Technology Startup Malaysia (TSM) program provides funding and mentorship to ICT startups, while the Creative Industry Masterplan 2023 focuses on nurturing creative industries for economic growth. The National Entrepreneurship Development Policy 2030 outlines ten strategies to promote entrepreneurship and drive economic growth. This focus has led to a surge in startup activity and Malaysia becoming a regional hub for Islamic finance, with significant potential for entrepreneurship.
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Small Business Statistics in Malaysia
- As of 2021, Malaysia had 1,226,494 SMEs. They represent 97.4% of the nation’s total number of establishments. This demonstrates the significant influence and presence of SMEs on Malaysia’s business environment. – SME Corporation Malaysia
- Percentage of microenterprises: Among the SME establishments, microenterprises comprised 78.6% or 964,495 firms in 2021. Small-sized firms constituted 19.8% (242,540 firms), while medium-sized MSMEs accounted for 1.6% (19,459 firms). This breakdown showcases the dominance of microenterprises in the SME sector. (Source: SME Corporation Malaysia)
- Contribution to GDP: SMEs played a significant role in Malaysia’s GDP, contributing 37.1% in 2017. This demonstrates their substantial economic impact and underscores their importance as drivers of growth. – Institute for Democracy and Economic Affairs
- Employment: SMEs, which accounted for 66% of employment in Malaysia in 2017, were in charge of giving job possibilities to a sizeable section of the country’s workforce. This demonstrates the part that SMEs play in creating jobs and helping to lower unemployment. (Referring to the Institute for Democracy and Economic Affairs (IDEAS))
- Export: SMEs made a noteworthy contribution to Malaysia’s total exports, accounting for 17.3% in 2017. This highlights their involvement in international trade and their potential to contribute to the country’s export growth.
Malaysian SMEs confront obstacles to growth and sustainability, such as insufficient capital, a shortage of trained personnel, competition from overseas businesses, adherence to rules, and a lack of market understanding. These challenges make it difficult for them to increase operations, make technology investments, and hire more personnel. Additionally, it may be challenging for SMEs to manage complex rules because international corporations may have more resources and market presence.
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Doing Business Overview of Malaysia Entrepreneurship
In the World Bank’s 2023 Doing Business report, Malaysia was ranked 12th out of 190 economies, demonstrating that it provides an advantageous business environment for businesses. The time and costs involved in opening a business, obtaining finance, and conducting foreign trade have significantly decreased in this country.
Here are some key findings from the Doing Business report for Malaysia:
- Starting a business: Entrepreneurs can establish a business in Malaysia in an average of 5.5 days, with costs amounting to only 0.7% of income per capita. This is notably faster and more affordable compared to the average of 12.5 days and 7.0% of income per capita observed across the surveyed economies. This streamlined process enables entrepreneurs to swiftly bring their ideas to fruition.
- Getting credit: Small businesses in Malaysia enjoy relatively good access to credit. Approximately 42% of SMEs have access to loans or lines of credit, surpassing the average of 35% among the surveyed economies. This availability of credit facilitates business expansion, investment in new ventures, and overall economic growth.
- Trading across borders: Malaysia has simplified the process of trading across borders. Exporting goods from the country typically takes an average of 7.5 days, amounting to 1.3% of the value of goods. This efficient and cost-effective procedure outperforms the average of 10.2 days and 2.0% of the value of goods observed among the surveyed economies. Such streamlined trade processes enhance Malaysia’s competitiveness and attractiveness for international business.
Strengths of Malaysia’s Entrepreneurial Environment
Malaysia possesses several key strengths that contribute to its attractiveness as an entrepreneurial environment. These strengths include:
- A favorable regulatory environment: Malaysia boasts a business-friendly regulatory framework. The government has implemented policies aimed at simplifying business processes and reducing costs. For instance, the introduction of a single window system for business registration and the streamlining of licensing procedures facilitate smoother operations for entrepreneurs.
- A skilled workforce: Malaysia takes pride in having a workforce that is educated and skilled. Since it helps people excel in several industries, STEM education is given a lot of weight in the educational system of the country. This talent pool and the abilities of motivated and skilled workers are available to entrepreneurs.
- A strategic location: Situated at the crossroads of Southeast Asia, Malaysia enjoys a strategic location that provides entrepreneurs with numerous advantages. This geographical positioning grants access to a large and expanding market within the region. Furthermore, Malaysia’s network of international trade routes facilitates business opportunities and connectivity with global markets, offering entrepreneurs the potential for greater reach and market penetration.
- A helpful government: The Malaysian government actively encourages business development. The government offers financial support, training opportunities, and aid with business development to entrepreneurs through many programs and projects. This ecosystem of support enables information sharing, promotes innovation, and aids entrepreneurs in overcoming the difficulties associated with beginning and expanding a business.
- A vibrant startup ecosystem: Malaysia nurtures a dynamic and thriving startup ecosystem. The presence of incubators, accelerators, and other support organizations creates an environment conducive to entrepreneurial success. These entities offer mentorship, networking opportunities, access to funding, and valuable resources to startups. Additionally, Malaysia is home to successful startups that have gained international recognition, inspiring and paving the way for aspiring entrepreneurs.
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GDP Per Capita and GDP Growth Rate in Malaysia’s Entrepreneurship
|GDP Per Capita (US$)||9 556$||9 980$||11 074$||11 132$||10 161$||11 109$||11 972$|
|GDP Growth Rate (%)||4.4%||5.8%||4.8%||4.4%||-5.5%||3.1%||8.7%|
The GDP per person in Malaysia has been steadily increasing recently. In 2016, the GDP per person was $9,556. By 2022, it would have risen consistently to $11,972. This growing trend shows that living standards are rising and that consumer spending may be increasing. Expanding the market for their goods and services might benefit business owners.
The rate of GDP growth in Malaysia has fluctuated. 4.4% growth was seen in 2016. 5.8% growth was seen in 2017. It remained comparatively stable in the years after that. Due to the COVID-19 pandemic, Malaysia had a substantial recession. In 2020, with a negative growth rate of -5.5%. Since then, the nation has recovered, with growth rates of 3.1% in 2021. Impressive 8.7% in 2022.
Entrepreneurship Intention in Malaysia
In 2022, Malaysia’s TEA rate was 7.7%, surpassing Southeast Asia’s 6.2% and developing nations’ 5.7%. This indicates Malaysians’ higher propensity for starting businesses. The entrepreneurial intention rate in Malaysia was 43% in 2022, exceeding Southeast Asia’s 37% and developing countries 33%.
This strong inclination among Malaysians to pursue entrepreneurship is evident. Additionally, Malaysia’s entrepreneurial activity rate in 2022 was 12.7%, higher than Southeast Asia’s 10.6% and developing nations’ 9.7%.
Government support, simplified procedures, and a supportive ecosystem contribute to Malaysia’s favorable entrepreneurial environment. The blossoming of the startup ecosystem, incubators, accelerators, and social media platforms provide help, mentorship, and networking prospects. Social media encourages businesses to connect with customers and advertise. Also, forms partnerships, attract investors, and foster a vibrant business landscape.
Women and Youth Entrepreneurship in Malaysia
The latest data on women and youth entrepreneurship in Malaysia reveals a positive and dynamic landscape with significant contributions to the country’s business ecosystem.
Malaysia reported a rate of Women’s entrepreneurial activity of 19.8% in 2023. It is above the 13.5% global average for developing countries. Additionally greater than Southeast Asia’s regional average of 15.3%. This demonstrates the increased participation of women in entrepreneurship.
Similar to Malaysia, which beat the regional average for Southeast Asia of 14.0% and the global average for developing countries of 12.4% with a rate of 17.2% for young entrepreneurial activity in 2023. This demonstrates the youthful population’s motivation and excitement for starting their businesses.
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Number of Women and Youth-Owned Businesses
There are more than 2.3 million businesses in Malaysia that are operated by women. It’s a substantial figure. has almost 1.6 million enterprises run by youths. The country also exemplifies the rising entrepreneurial vitality of the youth. These statistics highlight the enormous contributions made by young people and women to Malaysia’s entrepreneurial environment.
Size and Revenue Differences
Women-owned businesses in Malaysia tend to be smaller in size. averaging 2.5 employees compared to enterprises run by men. which have 4.2 employees on average. The average income of these businesses reflects this notable variance. Compared to businesses run by young people, which generate an average of $55,000 annually. The average annual revenue of female-run businesses is $105,000. These companies contribute significantly to economic growth and employment creation despite varying in size and income.
Malaysia has a substantial proportion of women-owned enterprises in several industries. Those are retail, education, and healthcare. Conversely, youth-owned businesses tend to choose the retail, technology, and food & beverage industries. These many industries show the variety of entrepreneurial options that women and young people in Malaysia seek.
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Investments & National Plans for Malaysia in Entrepreneurship
Through major investments and the execution of extensive national plans, the Malaysian government has shown a strong commitment to promoting entrepreneurship. These programs aim to develop a conducive environment and promote entrepreneurship throughout the nation.
The government has invested a lot of money in various projects and has emphasized entrepreneurship as a key driver of economic growth.
The National Entrepreneurship Policy – This was introduced in 2020 and intends to encourage entrepreneurship across all demographic groups in Malaysia. The project focuses on women and young people in particular. The NEP assists budding entrepreneurs to explore their business ideas. Also helps beyond entrance barriers by offering focused support, tools, and training.
SME Master Plan – Launched in 2021, the SME Master Plan concentrates on the expansion and improvement of Malaysia’s small and medium-sized enterprises. This strategy offers SMEs a thorough framework to improve their sustainability and competitiveness. It enables them to make substantial economic contributions to the country.
MyBusiness.gov.my Portal – For businesses in Malaysia, the MyBusiness.gov.my portal acts as a central hub. It makes beginning and operating a business easier by providing helpful advice, direction, and access to government resources. This pleasant portal is a helpful resource for business owners, giving them the tools they need to manage the competitive business environment.
Technology Park Malaysia – This government-owned incubator gives companies access to buildings, physical infrastructure, and support services. Technology Park Malaysia enables entrepreneurs to transform their creative ideas into prosperous enterprises by providing a supportive atmosphere and resources that are suited to the requirements of early-stage ventures.
MaGIC, the Malaysian Global Innovation and Creativity Center, is essential to encouraging innovation and entrepreneurship in Malaysia. Magic empowers entrepreneurs to accelerate their growth and success by offering training, mentoring, networking opportunities, and access to capital through a variety of initiatives.
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National Plans for Entrepreneurship
In addition to investments, the Malaysian government has developed comprehensive national plans that serve as blueprints for fostering entrepreneurship:
Blueprint for the National Entrepreneurship Ecosystem (NEEB) – The NEEB was established in 2022 to foster entrepreneurship in Malaysia. It emphasizes expanding resource accessibility, lowering entrance barriers, and encouraging cooperation among various stakeholders. The NEEB offers a comprehensive strategy for promoting entrepreneurship and enhancing the ecosystem to promote economic development and innovation.
Blueprint for the National Innovation and Creative Economy (NICE) – The NICE was established in 2023 with a focus on encouraging innovation and entrepreneurship in Malaysia. The NICE strives to promote economic growth and establish Malaysia as a center for creativity and innovation by funding R&D, assisting businesses, and fostering an atmosphere that fosters innovation.
The government’s vision and dedication to creating a strong entrepreneurial ecosystem are reflected in these national plans. They provide an overview of the strategic measures, programs, and initiatives that will be put into place to promote entrepreneurship, encourage innovation, and guarantee long-term economic growth.
Entrepreneurship Education in Malaysia
In Malaysia, the private and public sectors alike understand the importance of entrepreneurship education. Especially in fostering economic growth. At various educational levels, there are a variety of programs and entrepreneurial courses for students.
To educate students about the fundamentals of entrepreneurship and develop their ambition to launch their firms, the Ministry of Education offers entrepreneurship programs at the pre-university level.
Numerous organizations provide comprehensive entrepreneurial programs and courses at the university level. Then they will have a greater understanding of entrepreneurship as well as the knowledge and abilities necessary for success. Here are a few degree programs:
- Universiti Teknologi Malaysia – UTM gives the Bachelor of Entrepreneurship (Honours) degree. They give students a strong foundation in entrepreneurship principles and techniques.
- Universiti Sains Malaysia – USM provides a Bachelor of Entrepreneurship (Honours) degree with an emphasis on promoting innovation and developing entrepreneurial skills.
- Universiti Malaya – UM provides a Bachelor of Entrepreneurship (Honours) degree with a focus on strategic management and entrepreneurial leadership.
- International Islamic University Malaysia – To encourage socially conscious entrepreneurs, International Islamic University Malaysia provides a Bachelor of Entrepreneurship (Honours) degree.
- Monash University Malaysia – They offer students the opportunity to develop their entrepreneurial knowledge and abilities through the Master of Entrepreneurship degree program.
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Entrepreneurship Eco-System in Malaysia
The entrepreneurship ecosystem in Malaysia is a dynamic and diverse landscape, comprising various actors and elements that contribute to its growth and vibrancy. Let’s explore the key components of this ecosystem:
Government agencies play a crucial role in supporting and fostering entrepreneurship in Malaysia. Entities like the Malaysian Global Innovation & Creativity Centre (MaGIC) and the Ministry of Entrepreneur Development and Cooperatives provide essential funding, training, and other forms of support to entrepreneurs. Their initiatives empower aspiring business owners to navigate the entrepreneurial journey with greater confidence.
In Malaysia, universities are crucial in developing entrepreneurial talent. They provide a selection of entrepreneurial courses and programs that give students and young people the information, abilities, and mindset necessary to succeed in the business world. Universities support a more entrepreneurial society by giving students a strong foundation in entrepreneurship principles and activities.
Entrepreneurial startups are nurtured at business incubators. They offer physical places, resources, mentorship, and networking opportunities to startups. The early stages of business growth are supported by these incubators, which aid businesses in honing their concepts, creating their goods or services, and establishing connections with possible backers and clients.
Accelerators, on the other hand, offer more intensive support to startups. They provide focused mentorship, training, and access to funding opportunities, accelerating the growth and scalability of startups. Through tailored programs, accelerators facilitate rapid progress and help startups overcome challenges.
Coworking spaces are thriving hubs within the entrepreneurship ecosystem. They offer shared workspaces, amenities, and a collaborative environment. Entrepreneurs can connect with like-minded individuals, foster creativity, and build valuable networks. These locations foster teamwork and provide entrepreneurs with a sense of community.
The ecosystem depends heavily on investors, including angel investors, venture capitalists, and funds funded by the government. They help entrepreneurs get the money they require and support their expansion. Their financial assistance enables business owners to scale their operations and implement their creative ideas.
Networking events act as catalysts for collaboration and growth. They provide platforms for entrepreneurs to connect with like-minded individuals, potential investors, and customers. These events foster valuable relationships, facilitate knowledge sharing, and open doors to new opportunities.
Trends in Entrepreneurship in Malaysia
Entrepreneurship in Malaysia is witnessing several noteworthy trends that are shaping the business landscape. Let’s delve into some of these trends and explore their impact:
The Rise of Digital Entrepreneurship
The advent of the digital age has spurred the growth of online businesses in Malaysia. Especially during the COVID-19 pandemic, many businesses have transitioned to the digital realm. Examples include e-commerce platforms, online learning platforms, and social media marketing agencies. FashionValet, an online fashion retailer, exemplifies this trend with its rapid growth and over 1 million customers in Malaysia and Southeast Asia.
The Growth of Social Entrepreneurship
Social enterprises are gaining traction in Malaysia as businesses align their objectives with social impact. These enterprises use innovative business models to address societal challenges. For instance, Social Enterprise Malaysia (SEM) provides training and support to social entrepreneurs and has successfully incubated over 100 social enterprises in the country.
Increasing Participation of Women and Youth
The government of Malaysia is actively promoting entrepreneurship among women and youth. Initiatives by the SME Corporation Malaysia offer funding and training programs specifically tailored to support women entrepreneurs. Furthermore, the She Loves Tech Malaysia initiative empowers women in the technology sector, encouraging their active participation in entrepreneurship.
Growth of Startup Accelerators and Incubators
Startup accelerators and incubators provide valuable support and resources to emerging businesses. In Malaysia, these organizations play a significant role in nurturing startups. MaGIC (Malaysia Global Innovation & Creativity Centre), a government-funded organization, stands as a prime example. It has accelerated the growth of over 1,000 startups by providing mentorship, training, and access to networks.
Future of Entrepreneurship in Malaysia
The future of entrepreneurship in Malaysia shines brightly, fueled by several factors that lay a strong foundation for entrepreneurial success. Let’s explore these factors and their significance:
A Young and Growing Population
Malaysia boasts a youthful population, with more than half of its people under the age of 35. This demographic advantage presents a vast pool of potential entrepreneurs, brimming with fresh ideas, energy, and a willingness to take risks.
A Growing Middle Class
The growing middle class in Malaysia is fueling demand for a variety of goods and services. Entrepreneurs have several options to meet the changing requirements and expectations of this consumer category thanks to this expanding market.
A Supportive Government
The Malaysian government actively encourages and supports entrepreneurship. It has implemented various programs and initiatives aimed at nurturing and empowering entrepreneurs across different sectors. These initiatives encompass financial support, training programs, mentorship, and streamlined regulations to facilitate business growth.
A Vibrant Startup Ecosystem
Malaysia hosts a dynamic and thriving startup ecosystem. Numerous startup accelerators, incubators, and organizations contribute to fostering an environment that nurtures innovation and supports the growth of new ventures. These entities provide essential resources, mentorship, and networking opportunities for startups to thrive.
Malaysian entrepreneurship has highlighted the vibrant entrepreneurial environment in the nation. With its friendly government, thriving startup scene, and expanding middle class, Malaysia has emerged as a hub for innovation and business prospects. The entrepreneurial spirit is thriving in Malaysia, as seen by the growth of digital entrepreneurship and the rising engagement of women and young people.
Despite obstacles to be overcome, including a lack of expertise and finance, the future appears bright thanks to a young, active population and a policy that supports entrepreneurship. We may anticipate even bigger contributions to economic growth, job creation, and societal development as Malaysia develops as an entrepreneurial powerhouse. So, use the information and motivation from this thorough review to start your own business in Malaysia’s dynamic environment.
FAQs Related to Entrepreneurship in Malaysia
Why is entrepreneurship important in Malaysia?
In Malaysia, entrepreneurship has importance because it may foster job creation, stimulate economic expansion, and address social issues. Entrepreneurs are those who launch new companies, which can foster innovation and employment. They can also contribute to the solving of social issues by starting enterprises that offer those solutions.
What is the entrepreneur issue in Malaysia?
One of the most significant issues Malaysian entrepreneurs have is access to finances. It might be challenging for startups to get the money they require to grow their businesses. Because venture capital and angel investment are lacking in the nation. Another issue is the lack of skill. There is a manpower deficit in several sectors. Such as technology and engineering. So, it could be difficult for startups to locate the individual they need to grow their businesses.
What is the entrepreneur policy in Malaysia?
There are several policies in place in Malaysia that foster entrepreneurship. These principles cover providing funding, education, and other types of support to entrepreneurs. Further, the government has various initiatives. They aim to promote entrepreneurship. the SME Master Plan and the National Entrepreneurship Policy are some examples.
What is Malaysia’s entrepreneurship situation?
Malaysia’s entrepreneurship situation is getting better. Incubators and accelerators for new businesses can be found in Malaysia, where there are an increasing number of entrepreneurs. Additionally, the government is helping entrepreneurs more.
Why Malaysia is good for business?
For several reasons, Malaysia is a good environment for business. The population is youthful and expanding, the middle class is expanding, and the government is supportive. Malaysia also benefits from a skilled labor base and an advantageous location.
What is the entrepreneur failure rate in Malaysia?
The failure rate for entrepreneurs in Malaysia is estimated to be more than 70%. This failure rate exceeds what is typical in other nations. The importance of failure in the business journey should be emphasized. Many successful businesses failed often before finding success.