KUALA LUMPUR (Sept 21): The country's small and medium sized enterprise (SME) sector grew by 5.2% in 2016, outpacing the gross domestic product (GDP) growth of 4.2% during the year.

The statistics department said the SME sector registered a nominal GDP of RM463.2 billion in 2016, increasing its contribution as a share to Malaysia's GDP to 36.6% from 36.3% in 2015.

"This reflects the importance of SMEs in gearing up the nation's economy," the department said in a statement today.

Under the services sector, SMEs' value add recorded a slower growth of 6.4% compared to 6.6% in 2015, pulled by the moderated growth in wholesale & retail trade, food & beverages, and accommodation sub-sector from 7% in 2015 to 6.8% in 2016.

The transportation & storage, and information & communication sub-sectors also recorded a lower growth of 5.8% compared with 6.6% previously.

In the manufacturing sector, value added of SMEs recorded a growth of 4.8% compared to 6% in 2015 led by food, beverages and tobacco sub-sector which increased to 2.8% from 2.6% in 2015.

Meanwhile, petroleum, chemical, rubber & plastic products moderated to 5.4% from 6.1%. Furthermore, non-metallic mineral products, basic metal & fabricated metal products were down at 6.2% from 7.5% in 2015.

"Services and manufacturing sectors maintained their stronghold as the prominent economic activities in Malaysia for both SMEs GDP and Malaysia GDP. The combined share from the two sectors represented more than 70% of the economy," the department added.

In the agriculture sector, SMEs GDP led the contribution with a share of 50.7%, an increment of 1.7% from 2015.

The department follows SME Corp's definition of SMEs as all micro, small and medium sized enterprise excluding public listed companies, multinational corporations, government-linked companies, Minister of Finance Inc companies, state-owned enterprises and all of its subsidiaries.