Malaysian small and medium enterprises (SMEs) must adopt artificial intelligence (AI), enhance resilience, and focus on producing higher-value products to sustain stronger growth amid increasing global uncertainty, said Steven Sim, Minister of Entrepreneur and Cooperatives Development. He made the remarks during the Federation of Malaysian Manufacturing’s SME Conference 2026 in Kuala Lumpur on Thursday.

Sim emphasized that businesses can no longer depend solely on low costs or predictable markets as global trade, geopolitical tensions, and supply chain disruptions continue to cause volatility. He described the current global situation as one of “hyperflux,” characterized by rapid and unpredictable changes fueled by geopolitical conflicts and trade disruptions.

Highlighting the importance of preparedness, Sim urged companies to move from a “just in time” supply chain strategy to a “just in case” approach by building redundancy and securing reliable supply lines. He argued that reliability and security should be seen as valuable opportunities rather than additional expenses.

The minister also pointed to Malaysia’s geopolitical neutrality and its ability to maintain positive relations with various countries as strategic economic advantages. He encouraged Malaysian business leaders to act as “corporate diplomats,” engaging not only with customers but also with government agencies, industry groups, and other stakeholders to explore new markets.

Regarding AI adoption, Sim stressed that being “AI native” goes beyond merely purchasing software. He noted that companies require appropriate data systems, infrastructure, skilled personnel, and safeguards to leverage AI effectively. “Being an AI company doesn’t mean just buying an AI system,” Sim stated, underscoring the need for both AI experts and broader AI literacy within the workforce.

Sim also called for a stronger focus on developing Malaysian-owned intellectual property, technology, talent, and brands. He framed this as a shift from competing mainly on cost under a “made in Malaysia” model to creating higher-value products and services under a “made by Malaysia” approach, which offers a more sustainable competitive advantage.

The ministry has set targets to support SME growth, including allocating at least RM15 billion to the sector. Already, RM10 billion has been approved in the first eight months of the year for approximately 270,000 entrepreneurs. Additionally, the ministry aims to assist 10,000 businesses in advancing from informal operations to formal micro, small, and medium-sized enterprises.

Capacity building is another key focus, with plans to invest RM100 million to train 100,000 entrepreneurs. The government also expects the SME sector’s contribution to Malaysia’s gross domestic product to surpass RM700 billion this year. Medium-term goals include helping at least 100 companies achieve annual revenues of RM100 million.