Promoting Business Incubation :
Malaysia Experience
presented by:
Borhan Sidik
Deputy CEO, SME Corporation Malaysia
7th INTERNATIONAL CEO FORUM FOR CHIEF EXECUTIVES OF
DEVELOPMENT FINANCE INSTITUTION
(18th November 2010)
Outline of Presentation
1.
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6.
Malaysia in Brief
Roles & Functions of SME Corp. Malaysia
Profile of SMEs
Strategies & Policies on SME Development
General Information on Business Incubator
Business Incubator in Malaysia
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SIRIM Berhad
MTDC Technology Centres
Technology Park Malaysia (TPM)
SME Bank Factory Complex
7. Success Story of Incubator
8. Closing Remark
Malaysia : Basic Statistic
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GENERAL INFORMATION
2009
2010
Population
Labour force
Employment
Unemployment rate
Nominal GDP
Nominal GNI
Real GDP growth rate
Per capita income
Inflation
Exchange rate (RM/USD)
27.9 million
12.1 million
11.6 million
3.7 %
RM 680 billion
RM 665 billion
-1.7 %
RM 23,841
0.6 %
3.52
28.3 million
12.2 million
11.8 million
3.6 %
RM 766.3 billion
RM 746.4 billion
6.0 %
RM 26,420
2.3 %
3.09 (1st November 2010)
Role & Function of SME Corp. Malaysia
Development of competitive and resilient SMEs
in all sectors
Vision
Mission
The premier organisation for the
development of progressive
SMEs to enhance wealth creation
and social well-being of the
nation
SECRETARIAT
TO THE NSDC
CORDINATION
OF POLICIES &
PROGRAMMES
Promote the development of
competitive, innovative and
resilient SMEs through effective
coordination and provision of
business support
‘ONE REFERRAL
CENTRE’ ON
ADVISORY &
INFORMATION
MANAGEMENT OF
DATA,
DISSEMINATION
OF INFORMATION
& RESEARCH ON
SMEs
BUSINESS
SUPPORT
ROLES & FUNCTIONS OF SME CORP. MALAYSIA
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Profile of SMEs
• Total establishments = 552,804
• No. of SMEs = 548,267 (99.2%)
SME Distribution by Sector
Establishment of Enterprises
LARGE
MEDIUM
SMALL
MICRO
4,537 (0.8%)
12,610 (2.3%)
100,333 (18.2%)
Manufacturing
(7.2 %)
Agriculture
(6.2 %)
Services
(86.6 %)
435,324 (78.7%)
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Source: 2005 Census by Department of Statistics Malaysia
Strategies & Policies on SME Development
5 strategic thrusts for development of SMEs under IMP3 (2006-2020):
Enhancing SME
competitiveness
Driving SME
growth through
technology,
knowledge and
innovation
Enhancing
growth &
contribution of
SMEs in
services sector
2. Closer collaboration with specialized
Government research institutes and
universities;
3. Enhancement of human capital of
SMEs;
SME
DEVELOPMENT
Instituting more
cohesive policy
and supportive
regulatory and
institutional
framework
MEASURES
1. Adoption and application of leading
technologies, including effective
utilization of ICT;
4. Nurturing innovative and
resilient SMEs;
Capitalising
outward
investment
opportunity
5. Acculturation of
entrepreneurship & innovation;
6. Creation of more conducive
business environment, which
stimulates vibrant and
innovative entrepreneurial
6
activities
What is Incubator?
BUSINESS INCUBATION :
“ Business incubation is an organization that helps entrepreneurs to
develop their ideas in a framework that has been established to help them.
It takes them systematically from inception through to launch and
beyond. Incubators nurture young firms, helping them to survive and
grow during the start-up period when they are most vulnerable.”
TECHNOLOGY INCUBATION:
“ A technology-incubating program is an innovative system designed to
assist entrepreneurs in the development of new technology-based firms,
both start-ups and fledglings. It seeks to effectively link talent,
technology, capital and know-how to leverage entrepreneurial talent in
order to accelerate development of new companies, and thus speed the
commercialization of technology”
Source: Ministry of Science, Technology and Innovation, Malaysia
Incubator Background
COUNTRY
NOS. OF INCUBATORS
USA/Canada
1300+
China
600+
South Korea
270+
Japan
200+
India
110+
Taiwan
97+
Malaysia
106 +
Uzbekistan
20+
Europe
900+
Source: National Incubation Network Association (NINA)
Incubator in Malaysia
INCUBATORS
NO’S
NINA Members (Tech-based Incubators)
25 +
MARA (Indigenious/ Bumiputera)
18 +
Banks
18 +
State Economy Development Corp.
17 +
MARDI (Agro-based)
10 +
Handicraft Incubators
9+
Universities
4+
MECD
2+
Others
3+
TOTAL
106+
Source: National Incubation Network Association (NINA)
EXAMPLE 1:
SIRIM TECHNOLOGY INCUBATION
SIRIM Berhad
Established in 1975 under Ministry of
Science, Technology & Innovation
16th November 1995: Corporatized as a
government-owned company under the Ministry
of Finance Inc.
Broad range of services:
Research & Technology
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R&D
Product Development
Process Engineering
Training & Consultancy
Standards & Quality
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Measurement & Calibration
Legal Metrology Services
Standards Management
Standards Development
Design & Engineering
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Product Development
Engineering Services
Plant Engineering
Machinery & Equipment
Technology Transfer
Hub
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Intellectual Property Centre
Commercialization and
Business Incubation Centre
SIRIM Incubator Model
Phase I:
Phase II:
Phase III:
Entrepreneur
Development Phase
Enterprise
Creation Phase
Market
Development Phase
• Skills
Development
SIRIM
Technology
Incubator
Program
• Facilities &
Services
• Networking &
Linkages
• After-Care
Service
•
Technology Transfer
& Consultancy
Services
• Advisory Services
EXAMPLE 2:
MTDC TECHNOLOGY CENTER
Malaysian Technology Development Corporation
MTDC Technology Centre
• Initiative by Malaysian Technology
Development Corporation (MTDC)
• Embodied under Government’s Technology
Development Cluster (TDC) program
• Formal and operational links
(collaborations) with universities or
research institutions.
• Main function
 Strengthen linkages between universities/research institutions and
industries.
 Activate and promote the acceleration of the commercialisation
activities of both the local universities and research institutions.
• Approached method:
 Develop technology incubation centres via JV collaboration with
Universities
MTDC Technology Incubation Centres
Centres are developed based on strength of respective universities
through JV collaboration:
UPM (Universiti Putra Malaysia)-MTDC Technology Centre
• ICT, multimedia, agri-bio
• Located at UPM - central of Malaysia
UKM (Universiti Kebangsaan Malaysia)-MTDC Technology Centre
• Biotechnology
• Located at UKM - central of Malaysia
UTM (Universiti Teknologi Malaysia)-MTDC Technology Centre
• Advanced engineering, life sciences
• Located at UTM - southern Malaysia
UPM-MTDC Technology Centre project
• Established 1996
• JV project between Universiti Putra Malaysia(UPM) - MTDC
• The first MTDC technology incubation centres established within Malaysian
universities' campus
• Second area awarded with Cybercity status after Cyberjaya
FACILITIES
• Covering total acreage of 167 acres
• Equipped with high speed bandwidth communication network
• Other facilities:
 Server Farm (15 acres)
 International Technology Centre (50 acres)
 MTDC Technology Centre (15 acres)
 Data Centre
 Computer Recovery Centre
UKM-MTDC Technology Centre project
• JV project between Universiti Kebangsaan
Malaysia (UKM) - MTDC.
• Planned to attract companies mainly
involved in biotechnology.
FACILITIES
• Covering total acreage of 6 acres
• Able to accommodate 12-15 tenants
• Conceptualized as ‘Pusat Teknologi Pintar’ : Formal and operational links with university or research institutes
 To encourage growth of technology-based businesses that reside on site
 Management functions which actively engaged in transfer of technology
and business skills to industries
UTM-MTDC Technology Centre project
• Established in 2001
• JV project between Universiti Teknologi Malaysia (UTM) – MTDC
OBJECTIVE
• Mainly for companies involved in life sciences.
• Develop strong science and technology-based
• Increase capability to adopt, adapt and improve
technologies through R&D
• Develop pool of skilled researchers capable of
handling new and emerging applied technologies.
FACILITIES
• Covering total acreage of 4.3 acre
• Located within university (UTM) vicinity
EXAMPLE 3:
TECHNOLOGY PARK MALAYSIA
(TECHNOLOGY & INNOVATION BUSINESS INCUBATION PROGRAM)
Technology Park Malaysia (TPM)
TECHNOLOGY & INNOVATION BUSINESS INCUBATION PROGRAM
• Main function:
 To spur development of innovative and knowledge-based companies
• Incubation program:
 Caters specifically to fledgling technology and innovation-based enterprises.
 Prospects vary from graduates, researchers, start-up SMEs, professional
employees & subsidiary of MNC’s & GLC’s.
• Incubation model:
SELECTION
EXIT POLICY
MARKET LINKAGES
TECHNOLOGY
HELP DESK
1.
2.
3.
4.
5.
ASSESSMENT TOOLS
INFRASTRUCTURE &
SHARED SERVICES
PROSPECTS
Graduates/ researchers
Start-up SME
Professionals/ workers
Subsidiary of big companies
Soft-landing
HANDHOLDING
Business coaching,
consultancy and training
RESEARCHERS &
EXPERTS
INTEGRATED FINANCIAL
ASSISTANCE
Spectrum of Services
Facilities - Support from
TPM and subsidiaries:
Technology Experts - Advisory
from researchers and expert panel
• TPM Engineering
• TPM IT
• TPM Biotech
Financial Assistance –
Access to funds by
Government/commercial
banks, venture capital
and angels.
Cubicles
Handholding – Integrated coaching,
consultancy and training by panel of
coaches, consultants & trainers.
Office units
Network - Market linkages
through incubation
associations membership:
• National Incubation Network
Association (NINA)
• Asian Association of Business
Incubation (AABI)
• Asia Pacific Incubation Network
(APIN)
• Association of University
Research Parks (AURP)
Land/ building lease
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EXAMPLE 4:
SME BANK FACTORY COMPLEX
SME BANK FACTORY COMPLEX
• Started in 1985
• Full support from Government
 Fund to build factories in each state in Malaysia.
• Initiated to encourage entrepreneurship in
manufacturing and service sector
• Facilties:
 24 factories with 419 lots nationwide
KUALA
LUMPUR
SME BANK INCUBATION MODEL
Integrated entrepreneurship development approach:
Financing
facilities
Advisory
• Participant selection by a Panel
• Project and concept development with
advisory and approval from SME Bank
Factory space
rental
• Project is fulltime owned and run by
participant
• Integrated financial assistance
Entrepreneurship
training
• Incubation period 9 years
SUCCESS INCUBATEES STORY
REDtone International Berhad
Green Packet Berhad
 Incubatee of TPM
 Listed on MESDAQ (now known
as ACE Market) in 2004.
 MSC status company
 Products:
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 High speed Internet services
 Data solutions
 VoIP services
 Operating in Malaysia and China
Incubatee of TPM
Listed on ACE Market in 2005
Transfered to Main Board in 2007
Products:
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
Personal Handy-Phone System
3G, WiFi and WiMAX space
 Operating in USA, Malaysia,
Singapore, Taiwan, China, Bahrain
and Thailand.
SUCCESS INCUBATEES STORY (Cont’d)
IRIS Corporation Berhad
Tricubes Berhad
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 Incubatee of TPM
 Established in 1998
 ICT company focusing in
identity authentication and
mobility solution
 Listed on Ace Market in 2004
 Products:
Incubatee of TPM
Establsihed in 1994
Listed on ACE Market in 2002
Products:
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Digital conference system
Radio frequency identity system
(RFID)
Automated electronic ticketing
and fare collection
Payment cards
Loyalty management program
solution
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Smartcard
Biometrics verification devices
CLOSING REMARK
RECOMMENDATION FOR SUCCESS OF INCUBATOR
1. University involvement:
Success of incubator depends on availability of graduates, access to R&D
facilities, and environment of intellectual creativity
2. Collaboration & networking:
Networking between industries, universities, research institutions and
incubators provide mutual support & encouragement
3. Experienced incubator management:
To render continuous support, coaching, mentoring and motivation to
start-up companies
4. Conducive business environment:
Incubators to function not as landlord but to create conducive business
environment to incubatees
5. Linking business & technology:
Constitute important channels for distribution of knowledge and tools
for business success
T
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SME Corporation Malaysia
Level 20, West Wing, Menara MATRADE
Jalan Khidmat Usaha, Off Jalan Duta
50480 Kuala Lumpur
03 6207 6000
03 6201 6564
www.smecorp.gov.my
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Promoting Business Incubation : Malaysia Experience