Why Malaysian SMEs Are Falling Behind Their Southeast Asian Counterparts

In Malaysia, the Small and Medium Enterprises (SMEs) are seen as a critical growth engine of the country’s economy. They are one of the major contributors. However, it is sad to say that many of them are pretty much disconnected in their approach to growth. Most treat marketing like an optional department or an afterthought, unlike other departments. 

Contrast this with the country’s larger corporations. Big players see marketing as a vital, long-term investment when it comes to achieving their ultimate business goals, which is generating sustainable growth in 5 key areas, namely revenue, profit, cash flow, market share and brand reputation. For the typical SME owner, however, marketing is often seen as a volatile expense. It is usually the first thing to cut when times get tough. This reluctance is about two things: money and a short-sighted leadership mindset. 

The illusion of a tight cash flow problem

“We have a tight budget.” The discussion will start with this pointer. The company's management will tell you, truthfully, that every marketing investment must show an immediate return. Committing RM5,000 to a long-term marketing strategy feels like a massive gamble, money that could instead cover guaranteed operational costs.

Look around. The leadership team’s lifestyle often tells a different story: the luxury cars parked in front of the office’s lobby, the expensive overseas family trips, and the newly acquired properties made last month. Yet, the "tight cash flow" excuse is still being used. This quietly tells us the mindset of the company’s leadership.

When it comes to marketing, everyone knows that money isn't scarce. They view a new car as a necessary status symbol, but a marketing budget to generate sustainable growth for the company as an optional luxury that might go to ‘waste’.

The truth is best seen unspoken. Many SMEs will readily hire new operational-related staff, a new technical engineer, or a junior salesperson, yet they flinch at the salary of a dedicated Marketing Manager or specialist who is explicitly tasked with generating new revenue and expanding the customer base. They flinch at the advisory fee of RM3,000 per month, which will give them a strong, result-driven marketing strategy. They flinch at the RM1,000 per month ad budget, which will give them immediate leads. 

The arrogance of the 'I know better' leadership mindset

This is where experience becomes a liability. Many SME leaders boast they know everything because they have decades in the industry. They believe that their success in the 1990s or 2000s automatically translates to today’s digital landscape. 

This creates an "I-know-everything-and-marketing-should-listen-to-me" leadership mindset.

The boss, who may be technically brilliant at manufacturing or logistics, confidently dictates the design of the marketing strategy framework, social media posting, the tone of a website, or the newsletter format to be used. When this happens, the result of the campaign can be predicted. It will fail. 

The leaders confuse their deep product knowledge with genuine marketing expertise. They reject new ideas, out-of-the-box suggestions and proven formulas because it wasn't how they did business when they started. The qualified marketing staff or consultants they hire quickly become demoralised when their professional recommendations are sidelined or ignored by the leader's outdated assumptions.

Clueless marketing and zero results are fine because the paycheck clears every month-end

This is the toxic consequence of the "I-know-better" leader: it fosters a culture of apathy within the marketing function itself. The marketing department becomes haywire, clueless and operates without clear metrics or key performance index pressure.

While bigger companies use sophisticated suitable metrics such as a personalised KPI Dashboard, these SMEs, however, have no functional system to track whether this week’s WhatsApp blast or the one-off flyer distribution actually led to a purchase.

When marketing performance is never tied to revenue, the internal team has no genuine incentive to excel. The marketing manager is comfortable with their limited mandate. They are content with posting random content and low-impact work because the salary is still coming in every month-end. The leadership is okay with clueless marketing because they believe they are saving money, the older customers are still giving them business, and the internal staff is okay with no results because their paycheck is secure.

These are the very reasons why sales stagnate. The department tasked with growth has no pressure to measure, innovate, or truly drive revenue, locking the company into a vicious cycle of low investment and low performance.

So, what’s next then?

For Malaysian SMEs to truly thrive in the new economy, especially in 2026, they must know that marketing is essential to generate leads or sales acceleration. Marketing doesn’t require a massive budget, as it is way cheaper than maintaining the CEO’s Mercedes-Benz. They must start small, smart and early. The results are compounded, that’s why. The biggest companies weren't always big. They invested in their story, awareness and their future early on. The challenge for Malaysian SMEs is to realise that investment time is now, not when they finally become big.