KUALA LUMPUR: The government has outlined two main focus areas to catalyse the recovery of the micro, small and medium enterprises (MSMEs) -- they must pursue innovation, digitalisation and use of technology, as well as inculcate sustainability principles comprising environment, social and governance (ESG) over the long term.

Prime Minister Datuk Seri Ismail Sabri Yaakob said various activities via e-commerce, including digital payments, distance learning, video conferencing and logistics services, have become common in today's economy due to the increasing necessity and opportunities.

"These are among the efforts that allow MSMEs to get accustomed to the competition in the Industrial Revolution 4.0 era," he said during the launch of the Small and Medium Industries Development Expo (SMIDEX) 2021 today.

The prime minister also noted that MSMEs' online presence has doubled from 35.3 per cent in 2019 (pre-COVID) to 75.8 per cent in 2021 (post-COVID).

On the implementation of ESG, he said the focus should be on reducing costs and increasing productivity through energy efficiency, cyclical economic principles, good employment practices, and a strong corporate governance structure to meet sustainability goals.

The Prime Minister said SME Corp Malaysia and the United Nations Global Compact Network Malaysia and Brunei (UNGCMYB) are working together to develop sustainable MSMEs through a digital platform called the Action Centre for Sustainable Development of SMEs

"This platform will provide MSMEs with advisory services, capacity building, as well as networking with large companies involved in the practice of Sustainable Development Goals (SDGs) and ESG," he said.

He said the government would continue to intensify efforts to improve market access and opportunities to help MSMEs increase sales in the international market where the initiative was implemented through government-to-government cooperation, as well as joint-ventures among ASEAN and Asia-Pacific Economic Cooperation (APEC) countries, as well as other international organisations.

"Efforts will also be made to capitalise on the benefits of free-trade agreements (FTAs) in expanding market access and accelerating the internationalisation of MSMEs, including the implementation of the ASEAN Economic Community (AEC) Action Plan 2025 and the signing of new FTA agreements," he said.

He said various initiatives would be continued through international platforms to further improve the business environment, as well as reduce trade barriers and further elevate the MSME industry on the international stage.

Ismail Sabri said MSMEs' contribution to gross domestic product increased 72 percent to RM512 billion last year from RM298 billion in 2010.

"Currently, MSMEs employ 7.3 million workers and contribute RM118 billion to the country's exports," he said.

The Prime Minister said the government concurred that the MSME sector was one of the most affected groups and experienced a sharp 95.3 per cent drop in sales during the initial stage of the COVID-19 containment.

Earlier, Entrepreneur Development and Cooperative Minister Tan Sri Noh Omar said SMIDEX'21 provides new marketing and market exploration opportunities that emphasised e-commerce and digitilisation.

The exhibition, which runs from Dec 1 to 23, is expected to attract 10,000 virtual visitors and RM50 million in potential sales through various programmes and activities.

-- BERNAMA