In Malaysia, MSMEs are essential to the country’s economy. The Malaysian Department of Statistics reports that these small companies employ almost 70% of the country’s workforce and make up an astounding 98.5% of all businesses in the nation. Amazingly, in 2022, Malaysia’s MSMEs showed incredible growth and resilience, with their GDP rising by an astounding 11.6%, surpassing the 8.7% growth of the country’s GDP overall.
This suggests that MSMEs are becoming increasingly important in propelling Malaysia’s economic growth. Moreover, their share of the national GDP has grown to 38.4%, indicating a noteworthy rise in value added from RM520.0 billion in 2021 to an astounding RM580.4 billion.
To find out more about the growth of the SME and MSME market, Sheikh Ezaiddin, Chief Executive Officer of Ejen2u shared some of his insights. He co-founded and runs the company that supports SME growth in the market. The company recently closed a RM7 million round in Pre-Series A funding from Gobi Partners and Artem Ventures.
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By 2023, Ejen2u will have provided digital support to over 340,000 resellers nationwide, over 500 clients, and over 600 female leaders by way of their proprietary digital platforms, EjenGO and EjenVenture. Large businesses and brands are also catered to by EjenVenture, who assists them in creating their own reseller distribution channels. In addition, Ejen2u uses WEMAP to train brands and their resellers in entrepreneurship.
Congrats on the funding. How do you plan to use the new investment?
Thank you for this opportunity to speak with Tech Collective! We have exciting plans to incorporate Artificial Intelligence (A.I) into our ecosystem. This is to enhance the quality of our products and provide our customers with more personalized and efficient services.
With this funding, we are also planning to create more products and platforms that enhance the experience for our resellers. This includes developing innovative tools and resources that empower resellers and improve their businesses.
Next, our first target for market expansion is Indonesia, where we see immense potential. We will use the funding to establish a strong presence in this market and adapt our offerings to cater to the specific needs of Indonesian consumers.
We also plan to onboard more skilled and brilliant in-house talent. The investment will enable us to attract and retain top professionals who will contribute to Ejen2u’s success and long-term goals.
On top of that, a significant portion of the investment will be allocated towards a comprehensive Customer Relationship Management (CRM) system with well-defined and effective strategies. This will help us retain our existing customers, provide excellent service, and build lasting relationships with them.
What are some of the benefits of working with an investor like Gobi?
We are truly ecstatic about working with Gobi for a myriad of reasons. First and foremost, Gobi is a prolific venture capital firm, which is an honour in and of itself, boasts a diverse portfolio of investee companies across various industries. This network of companies becomes a valuable asset for us. By partnering with Gobi, we gain access to a wide network of potential collaborators, suppliers and even customers.
Furthermore, as Gobi’s funding is derived from Dana Impak fund from Khazanah, it offers a distinctive advantage to us. It opens up opportunities for collaboration and the potential to acquire Khazanah-funded companies as future clients, as Khazanah is a reputable and influential source of capital in the market.
In essence, our partnership with Gobi extends beyond the financial investment. Not only does it provide financial support, but Gobi also facilitates strategic connections and growth opportunities that can significantly contribute to our overall business growth and success.
Malaysia’s economy is heavily reliant on the MSME and SME segments. How has the industry evolved in the last couple of years?
The MSME and SME segments of the industry have grown and evolved immensely for the better over the last few years.
Firstly, there has been a significant enhancement of healthy competition due to increased exposure to both local and international markets. This has allowed businesses in these segments to refine their strategies and products, ultimately contributing to the growth of these sectors.
Furthermore, the industry has shown a vast and direct contribution to bolstering Malaysia’s national Gross Domestic Product (GDP), with an increase from RM520.0 billion in 2021 to an impressive RM580.4 billion in 2022. Their consistent growth and expansion have further solidified their position as key drivers of economic progress in the country and this upward trend will hopefully continue to be projected in 2023 and beyond.
On top of that, the industry has also witnessed the emergence of a modern ecosystem focused on capacity-building and technological innovation. This transformation has paved the way for businesses in the MSME and SME segments to adapt to the changing landscape, keeping pace with the latest advancements in technology and information.
Lastly, with the government’s countless initiatives of listed accelerator programs and funding escalators in the past couple of years, as well as the sustainable and localised upskilling of talents from within, the industry is only going to grow further in the years to come.
What are the industries that are growing and what is fueling this growth?
During the pandemic, we observed significant growth in the food and beverage (F&B) sector. This growth can be attributed to the changing consumer behaviour and increased demand for home delivery and takeout options due to lockdowns and social distancing measures. The F&B industry quickly adapted to this shift in demand, leading to its expansion during the pandemic.
Following the pandemic, once the restrictions were eased, we noticed a boom in the health and beauty industry. From our observation, the growth of the health and beauty industries is driven by the sustained high demand from end-users, particularly when purchasing through resellers. Consumers have become more health-conscious and invested in self-care, and the increased utilization of resellers and online platforms has made health and beauty products more accessible, which has fueled the growth of this industry.
What can we expect from Malaysia’s SME and MSME segments in the next 12 months?
In the coming year, we anticipate several significant developments in Malaysia’s SME and MSME segments. First, there will be increased opportunities and signals indicating the expansion of SMEs and MSMEs. This growth could be attributed to factors such as improved access to funding, streamlined regulatory processes, and greater support from the government and financial institutions.
Moreover, there will be a greater emphasis on highlighting and giving more weight to the involvement of gig workers in these segments. The evolving landscape of work is increasingly embracing the gig economy, and this shift is likely to lead to innovative solutions and more flexible working arrangements for SMEs and MSMEs in the country.
Lastly, we also anticipate a significant surge in job opportunities, partnerships, investments, and growth within Malaysia’s SME and MSME sectors. As the quality and resilience of SMEs continue to improve, they will become more attractive to distinguished and credible investors.
What’s next for Ejen2u?
At Ejen2u, our next steps involve further enhancing our strategic partnerships with government bodies, agencies, big brands and corporate entities. By fostering these collaborations, we aim to create more opportunities for impactful projects that can benefit both our organization and society.
Additionally, we are committed to contributing back to society through consistent and continual corporate social responsibility (CSR) activities. This reflects our dedication to making a positive difference in the communities we serve.
We are also planning to play a pivotal role in filling the gaps in our nation’s needs from a green digital perspective. This aligns with our core values of environmental, social and corporate governance (ESG). We believe that by addressing these gaps, we can contribute to a more sustainable and responsible business environment.
Last and most importantly, we also aim to further empower the gig economy by incorporating them into the reseller industry. We envision creating more opportunities and support for freelancers and independent workers, thereby facilitating economic growth and flexibility for the workforce.