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KUALA LUMPUR: Prime Minister, Datuk Seri Najib Abdul Razak today said small and medium enterprises (SMEs) must increase their productivity to achieve 41% contribution to the country's gross domestic product (GDP) by 2020.

He said SMEs were the backbone of the nation's development and a major contributor to the GDP.

"Although the sectorial growth of SMEs is impressive, we need to grow at a rate of 8% higher to achieve that target of 41%.

"At present they contribute 36.9% to the GDP. We need to transform our SMEs to be competitive players on the global market as they will not only be the drivers of the economy but they will also be one if the biggest employers," he added.

Najib said that though he was happy with the rate of development of SMEs, he was unhappy with their overall productivity which must see a steep increase.

During the town hall meeting before officially launching the SME Annual Showcase and Conference, the Prime Minister said young entrepreneurs are the future of the nation but they must first learn to overcome obstacles if they want to be successful.

"Knowledge is important but entrepreneurs must have the attitude and values and be very passionate about what they are doing if they want to be a success.

"We want to see quality entrepreneurs not numbers," Najib added, while urgimg them to embrace e-commerce as a way to move forward.

On investments by Multiple-National Corporations (MNCs), he said the government will continue to help them by providing specialised and customised incentives.

He said the government wants SMEs to be part of the vendor programme of MNCs but it is important that these small firms produce quality products that meet international standards.

"We do not want SMEs to be chosen as vendors because of political consideration, only those who are capable of meeting the MNC standards should be picked.

"At the same time the government only wants investments from MNCs that will develop small firms in the country because it will give local firms a foothold in the global market," Najib said.

He said the government wants local SMEs to be part of the global supply chain and they must raise their standards and keep it high.