KUALA LUMPUR, June 16 — Operational outlook among Malaysian micro, small and medium enterprises (MSMEs) is resilient for the next six to 12 months despite a weaker SME Sentiment Index (SSI) reading for the first half (H1) of 2026.
In a survey released today, Small Medium Enterprise Development Bank Malaysia Bhd (SME Bank) said although the SSI for H1 fell to a historic low of 45.1 from 55.6 in H2 2025, a majority of businesses still anticipate sales growth, continued expansion and ongoing marketing efforts.
“Notably, most MSMEs intend to maintain their current workforce rather than reduce headcount, suggesting businesses view current challenges as cyclical and temporary, with concerns around future hiring costs and talent acquisition influencing their decisions,” it said.
According to SME Bank, the 45.1 reading, which fell below the 50-point threshold, indicated a contraction in MSME activity amid multifaceted challenges, including the United States-Iran war, the US tariff dispute and domestic policy reforms.
Conducted between January and April, the survey garnered responses from 1,803 businesses across 40 sectors nationwide and provides insights into the challenges, priorities and growth strategies shaping the MSME landscape over the next six to 12 months.
Despite weaker growth expectations, the survey showed that most MSMEs still foresee an increase in sales, especially among medium-sized firms, with 51 per cent of respondents remaining optimistic about sales growth over the next six to 12 months.
It added that sectors that continued to demonstrate optimism in business sales growth are primarily warehousing and support activities (64 per cent of respondents), basic metals (63 per cent) and fabricated metal products (59 per cent).
“Interestingly, manufacturers of basic metals anticipate a broader weakening economic environment, yet still expect strong near-term sales performance driven by existing order backlogs, ongoing infrastructure projects and firm contractual demand.
“These positive sales expectations are consistent with their plans for business expansion,” it said.
These industries also showed strong hiring intentions, particularly in basic metals (63 per cent of respondents) and warehousing and support activities (55 per cent), although most sectors are holding back on hiring, it said.
Meanwhile, the survey showed that about 55 per cent of exporters anticipated an increase in sales compared to 38 per cent of domestic-oriented firms.
