DOI: 10.7763/IPEDR. 2012. V54. 49 Strategic Competencies of Bumiputra Small and Medium Enterprise (SME) Owners in Central Malacca District Zaliha Hj Hussin 1 , Mohd Nazir Rabun 2 , and Mohd Zulhilmi Mohd Yunus 3 1.2 Faculty of Administrative Science &Policy Studies, Universiti Teknologi MARA, Shah Alam, Malaysia 3 Faculty of Administrative Science &Policy Studies, Universiti Teknologi MARA, Malacca City Campus, Malaysia Abstract. This paper focuses on the strategic competencies of Bumiputra Small and Medium Enterprise (SME) owners. The aim is to identify the competencies’ level among the Bumiputra SME owners and to investigate the extent of strategic management applications in the Bumiputra SME owners in Central Malacca District in achieving their business success and sustainability. The empirical data consisted of 46 Bumiputra SME owners in that area. The data were analysed based on the stage of strategic competencies namely strategy formulation, strategy implementation and strategy evaluation. The results reveal that, the Bumiputra SME owners are seem to be less competent in the strategy evaluation stage. It is suggested that the Bumiputra SME owners should appreciate the various tools applicable in the strategic management in measuring their organisational performance. Keywords: Strategic Competencies, Strategic Management, Small Medium Enterprise, Bumiputra 1. Introduction Over the past few decades, the government of Malaysia has realised the significant contribution of small medium enterprises (SMEs) to the national economy. A number of Government programmes and incentives were offered to the SMEs but it had limited impact to the economy (Sin, 2010). The role of small and medium enterprises (SMEs) is vital in the Malaysian economy and they are considered to be the backbone of industrial development in the country (Saleh & Ndubisi, 2006). According to Kotelnikov (2007), SMEs are the drivers of economic growth and innovation. SME is the most popular business entities registered by entrepreneur because of simple ownership structure, less procedural registration process and flexible in decision making process. It is reported that the number of SMEs have reached to almost 99.2 percent of the total business establishment in Malaysia. More than 548,267 SMEs were registered in 2010 (SME Annual Report 2010/2011). The continuous effort to increase the growth of SME in Malaysia includes encouraging the participation of Bumiputra entrepreneurs in SME. This can be seen from the average Bumiputra entrepreneurs registered as suppliers with Ministry of Finance, of which 77 percent have an average paid up- capital less than RM 50,000. In relation to this, it is observed that the level of technology specialised in management, education, experience, and exposure to competition among Bumiputra entrepreneurs are still low and need to be improved (Abdullah Badawi, 2002). The growth of SME however does not give a huge impact to the economy as mentioned by the Finance Minister II Datuk Seri Ahmad Husni Mohamad Hanadzlah (Business Times, 24 July, 2009). He said despite a rapid growth of these SME, it has only contributed to the employment sector for about 56.4 percent. Its contribution of SME to the gross domestic product (GDP) was only 32 percent, and 19 percent to the Malaysian export (Business Times, 24 July, 2009). Thus, based on the performance, it is considered that SME in Malaysia has been lagging behind. Malaysia is relying heavily on the SME as the engine of economic growth because export oriented strategy led by the Multinational Corporation (MNC) did not guarantee a stable and continuous economic growth (The Star, 2 August, 2010). This can be seen in the declining of FDI into Malaysia in 2009, which according to Tun Dr Mahathir Mohamad was a about 81% from RM24 billion to RM 4.4 billion (The Star, 2 August, 2010). In this situation some scholars view the failure of SME to stimulate the economic growth was due to the incapabilities and incompetencies of SME to 240