Malaysian Small Businesses Are Falling Behind in International Trade

Growing Globally 01

Growing globally, a report from ACCA (the Association of Chartered Certified Accountants) surveyed small and medium sized businesses (SMEs) and accounting practices around the world to identify levels of participation in and appetite for international trade. Malaysian small businesses are falling behind the global average when it comes to participating in international trade, with almost a third (29%) not participating in any relevant activities according to a new research.

“Internationalisation can potentially bring a range of growth benefits for both small businesses and the broader economy, whilst also driving productivity,” explained Edward Ling, Country Head of ACCA Malaysia.

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“As a leading member of the ASEAN Economic Community (AEC), SMEs in Malaysia are hopeful of ASEAN governments eliminating trade barriers to enable freer trade among the countries. It is therefore positive to see that Malaysian SMEs appear to have good access to government support for when they do seek international expansion: more than half (51%) access government advice or support to do so – a much higher proportion than the global average of 39%.

The report identified that the most significant barriers for Malaysian small business participation in international trade as foreign regulation (42%), competition (29%) and foreign exchange (25%).


“As a trading nation with a relatively small domestic market, Malaysia has to adopt an open trade and investment regime to promote economic growth and help its small firms internationalise. Consequently, there is a clear incentive for policymakers to address these barriers,” added Edward Ling.

“43% of Malaysian respondents supported a reduction in domestic regulation and licensing requirements as a way to enable more small businesses to participate in international trade: this was much higher than the global average (31%). Whilst Malaysia has made good strides in boosting its cross-border e-commerce activities, with the launch of its Digital Free Trade Zone (DFTZ) in 2017, this data perhaps suggests that future government initiatives should look at a reduction in domestic red tape for small business.”

The report also provides some recommendations for small businesses looking to expand their international capability, including embracing cloud technologies, developing the scalability of the finance function, creating a business strategy with global ambitions and identifying where external advice could support internationalisation.

“Accountants – and particularly small-to-medium sized practices (SMPs) which we focus on in Growing globally – are one of the most useful resources for supporting small businesses across all of these areas,” concluded Edward Ling.

“Accountants or SMPs play an important role in giving confidence for SMEs to grow globally, by ensuring the compliance with foreign regulatory frameworks to fulfilment of international tax obligations. We leverage on our international network to help SMEs in handling transfer pricing issues and cross borders tax duties. SMEs also view SMPs as reliable external advisors in accessing capital markets and external finance in the major capital markets around the world,” commented Dato’ Lock Peng Kuan, Partner of Baker Tilly Malaysia and Chair of SMPs Focus Group of ACCA Malaysia.