Impacts of Disaster to SMEs in Malaysia

Small and medium sized enterprises (SMEs) play an important role in the economy of many countries, crucial in terms of social inclusion, local employment and innovation. In the developed world, such as the European Union, around 99 percent of economic activities can be traced back to SMEs, accounting for almost 66 percent of all jobs in the private sector. A similar scenario can be seen in the developing world where SMEs account for over 90 percent of all enterprises. In Malaysia, SMEs contributed 32 percent of the country’s GDP, employed 59 percent of the nation’s workforce and contributed to 19 percent of its exports in 2013. However, SMEs are also exposed to various risks such as natural disasters those may affect their business badly. Therefore, this study is evaluating the impacts of natural disaster to SMEs in Malaysia. A survey was conducted among SME in Malaysia in 2016 to identify the type of disaster occurred and their impacts. The survey was also used to identify the problems for the SMEs in mitigating natural disaster. The results of this study show the impacts of natural disaster are severe for SMEs in Malaysia and flood was identified as the main natural disaster among them. Based on the result, recommendations were proposed for the SMEs to overcome or at least to reduce the impacts of natural disaster to their business.