Sentiment among Malaysia’s micro, small and medium enterprises (MSMEs) moderated in the first half of 2026 amid evolving economic conditions, although businesses continue to demonstrate resilience through investments in digitalisation, productivity improvements and market expansion, according to the latest SME Sentiment Index released by SME Bank.
The survey, conducted between January and April 2026, gathered 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 twelve months.
One of the survey’s most notable findings was the emergence of digitalisation as the top priority among MSMEs, overtaking business expansion and marketing for the first time. More than half of respondents (51%) indicated plans to increase investments in technology adoption to improve operational efficiency and productivity.
Relief President and Chief Executive Officer of SME Bank, Samad Majid Zain, said the shift reflects a growing recognition among businesses that digital transformation is essential to strengthening resilience and competitiveness.
“As the backbone of Malaysia’s economy, MSMEs must continue to strengthen their resilience, productivity and competitiveness to navigate an ever-changing business and operating environment,” he said.
“Businesses are placing greater emphasis on digitalisation and operational efficiency, reflecting a shift towards building stronger, more sustainable and future-ready enterprises.”
The survey also revealed that access to financing remains a key concern, with 51% of respondents identifying working capital financing as their primary funding requirement.
Despite softer business sentiment, cash positions among MSMEs showed signs of improvement. Seven in ten businesses reported having more than six months of cash reserves, indicating stronger financial preparedness compared to previous periods.
However, the survey noted that micro enterprises remain more vulnerable to liquidity constraints and continue to require targeted support.
Cost pressures also remain elevated across the MSME segment, driven largely by rising raw material prices, transportation expenses, logistics costs and labour-related expenditures.
Head of Macro-Monitoring and Analytics at BPMB Group, Mazlina Abdul Rahman, said businesses are responding to these challenges by focusing on strengthening their operational foundations and diversifying revenue streams.
“While sentiment has moderated, the survey demonstrates that MSMEs remain focused on strengthening their fundamentals through digitalisation, productivity enhancement and market diversification, positioning themselves to navigate evolving economic conditions and pursue sustainable growth opportunities,” she said.
The survey found that export-oriented businesses remain more optimistic than domestically focused firms. Approximately 55% of exporters expect sales growth in the coming months, compared to only 38% of businesses serving primarily domestic markets.
Meanwhile, workforce stability remains a priority, with 61% of MSMEs indicating plans to maintain their current staffing levels while continuing to invest in operational improvements.
Mazlina noted that these findings highlight the adaptability of Malaysian MSMEs and their commitment to long-term competitiveness.
“As businesses adapt to evolving market conditions, many are also exploring opportunities to diversify revenue streams and tap into regional and international markets,” she said.
To support the sector, SME Bank said it continues to strengthen its developmental role through a combination of financing and beyond-financing initiatives. These include close to RM2 billion in strategic initiatives under Budget 2026, the SME Bank Relief Programme and participation in Bank Negara Malaysia’s RM5 billion SME Stabilisation Relief Facility.
The bank said targeted policy interventions and financing support will remain crucial in helping businesses manage rising costs, accelerate technology adoption and strengthen long-term sustainability as economic conditions continue to evolve.
This version is structured as a news report rather than a rewritten press release, leading with the key findings, incorporating quotes strategically, and ending with broader economic implications.