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Training Incentives for SMEs Scheme

Posted on:
04.02.2020 by SEA-VET Content

Implementing Institutions:
Pembangunan Sumber Manusia Berhad (PSMB)

Supporting Institutions:
Malaysian Government


Scale of Initiative:


 Who, What, Where

For a period of 4 years, between 2011 and 2015, Pembangunan Sumber Manusia Berhad (PSMB), also known as Human Resources Development Fund (HRDF) were entrusted with RM47.5 Million to provide the necessary resources and tools for employees of Small and Medium-sized Enterprises (SMEs) across Malaysia. They were given a government-supported mandate to upgrade the skills and capabilities of the existing workforce in SMEs in Malaysia under the Training Incentives for SMEs Scheme.

Problem Statement

SME’s are considered one of the key forces towards driving the momentum in growing Malaysia’s national economy. They have also been recognised as an important accelerator of economic expansion in Malaysia. However, with recent changes in the business environment and transformation that has been affected by Industry 4.0 and Digitalisation, SME’s are facing entirely new challenges that restricts their ability to impact the nation’s economy positively. As SME’s face these new challenges, there are limitations in creating higher levels of productivity, with a growing concern regarding the lack of skilled labour amongst employees in SME’s. The constraints faced by SME’s regarding lack of skilled labour comes from the limited or no access to training resources needed by SME’s.

Description of Initiative

The Training Incentives for SMEs Scheme offers assistance to SME’s in Malaysia, to provide the necessary resources and training that will focus on skills upgrading. With support from the Malaysian Government, training and skills-upgrading will be provided by PSMB to employees of SMEs registered (i.e. with PSMB), across the whole of Malaysia. External training providers will offer the training programme to individuals who will attend the sessions and take on the opportunity. Eligible employers are able to nominate up to three employees to attend these programmes, which come from a list of approved programmes developed and provided by PSMB.

Description of Solution

A number of employees, employers and training providers have all benefited from the Training Incentives for SMEs Scheme as seen in a study done by the Corporate Strategy and Insights Department, PSMB, Malaysia (2018). The funds provided had opened up a lot of opportunities for SMEs and their employees, benefitting 16.248 Employees, 5,502 Employers and 276 training providers. The success of the training scheme was highlighted by the oversubscription to the training incentive scheme, which emphasised the dire situation for SMEs in sourcing for additional funds or resources of training. The scheme was effective for both the financial and non-financial aspect of the companies and had a positive impact on employee retention for SME employers.


PSMB (2018) Training Incentives for Malaysian SMEs: an Impact Evaluation, International Journal of HRD Practice, Policy and Research. 30(01), pp. 73-88. [Online