Article Preview
TopIntroduction
Microenterprise is widely recognised for its important contributions to sustainable development such as economic growth, creation of decent jobs, provision of public goods and services as well as poverty alleviation and reduced inequality (United Nation, 2017). Wolcott et al. (2008) stated that different types of microenterprises (full-time or part-time, home-based, street-front or farm-based) could facilitate the enterprise formation process. All of these microenterprises can contribute significantly to the socioeconomic development of low-income households to ensure sustainable economic growth (Al-Mamun et al., 2016). Microenterprise is a critical instrument for the development of low-income rural communities in many countries including Ethiopia, Nigeria, and Malaysia (Ayanda & Laraba, 2011; Banerjee, Karlan, & Zinman, 2015; World Bank, 2015). Fiseha and Oyelana (2015) mentioned that the development of microenterprise is important to alleviate poverty, inequality, and unemployment in the rural area. Zeng et al. (2010) stated that the development of microenterprise is connected to economic development. Microenterprise is one of the important instruments to tackle the challenges of poverty, inequality, and unemployment in rural areas (Fiseha & Oyelana, 2015). The job creation by microenterprises could provide income-generating opportunities to low-income segment.
Microenterprise is defined as an enterprise that has sales turnover less than RM300,000 per year or equipped with full-time employees that are less than five people in manufacturing and services (Bank Negara Malaysia, 2014). The manufacturing sector refers to physical or chemical transformation of materials or components into a new product, whereas the services sector refers to all services including distributive trade, hotel and restaurants, trading business, professional and ICT services, private education and health, entertainment, financial intermediation and manufacturing-related services such as research and development, logistics, warehouse, and engineering. The others sector refers to the remaining three key economic activities namely primary agriculture, construction, and mining and quarrying (SME Corp. Malaysia, 2016). SME Corp Malaysia promotes the development of microenterprises through their program with an integrated approach and provision of hand-handling assistance to help the micro-entrepreneurs to improve their productivity and accelerate their growth (SME Corp. Malaysia, 2018). Most of the micro-entrepreneurs are not trained to manage the operation or arrange the initiation cost of business setup (World Bank, 2015). The government had initiated a sponsored program such as AIM to arrange the necessary set-up cost for new business ventures as well training programs that can equip entrepreneurs with skills to manage and upgrade their microenterprises. This microcredit can help the micro-entrepreneurs to increase their microenterprise performance. Moreover, the microcredit’s core objective is to uplift the poor and give them the opportunity for a better life (Anwar, 2014).