SME DEVELOPMENT PROGRAMMES
UNDER NEW ECONOMIC MODEL
AND 10TH MALAYSIA PLAN
by
Czarif Chai Abdullah
Manager
SME Corp. Malaysia
25 February 2011
Contents
SMEs in Malaysia
Targeted Approach in SME Development
SMEs in NEM and RMK10
Initiative for 2011
Way Forward
ORC / Business Counselors
2
SMEs are the backbone of the economy
•
SMEs account for a large proportion of businesses in Malaysia:
- 99.2% of establishments (548,267)
- Majority are micro enterprises, with 5 workers and less
Important domestic source of growth
Foundation & support in supply chain
through forward & backward linkages
Balanced growth
Strengthen resilience of the nation's
economy
Provide support to growth of new &
existing areas
Promote private sector-led growth
Source: Census of Establishments & Enterprises 2005
3
Currently, SMEs are mainly in the services sector
• Services: 87% share, largest subsector is distributive trade
• Manufacturing: 7% share, mainly in textiles/apparels and F&B industries
• Agriculture: 6% share, plantation/horticulture and fishing
Manufacturing
(7.2 %)
Agriculture
(6.2 %)
Textiles & Apparels
(23.4%)
Food & Beverages (15%)
Metal & metal products
(13%)
Services
(86.6 %)
Plantation and horticulture
(65.6%)
Fishery and its services
activities (20.8%)
Poultry farming (7%)
Wholesale & Retail (55.5%)
Restaurant & Hotel
(15.2%)
Transport &
Communication (6.5%)
Source: Census of Establishments & Enterprises 2005
4
Performance of SMEs outpaced the overall economy
SME growth outperformed overall economy for the period 2005 – 2009 mainly
due to supporting policy initiatives such as:
• Establishment of NSDC in 2004; and
• Other supportive policies (PEMUDAH, Visit Malaysia Year, Government
salary increment, RMK9 projects)
GDP & SME Growth
GDP Annual Growth (2000 price)
SME Contribution to:
GDP
31.2%
Employment
56.4%
Exports
19%
5
Going forward, SMEs are important endogenous source
of growth towards building a high income nation
Targeted SME
intervention to
lift bottom 40%
SMEs are bedrock of
high income
economy
SMEs in the
NEM &
RMK10
Employment
providers /
talent source
SMEs important
for inclusive
and sustainable
growth
SMEs form critical
mass to support
innovation, creativity
and growth
Large firms
cannot exists in
isolation, require
strong SME
6
Promoting balanced SME development
New Economic
Model:
Creation of a
high-income
nation
Creating national
champions that
become regional
/ international
players
7
SME policies to be aligned to the NEM
SRI1: Re-energising the private
sector to drive growth
SRI8: Ensuring sustainability
of growth
SRI2: Developing a quality
workforce & reducing
dependency on foreign labour
SRI3: Creating a competitive
domestic economy
SRI7: Enhancing sources of
growth
SRI6: Building knowledge base
and infrastructure
SRI4: Strengthening the public
sector
SRI5: Transparent and marketfriendly affirmative action
8
Measures related to SMEs
SRI1: Re-energising the
private sector
SRI2: Developing a
quality workforce &
reducing dependency
on foreign labour
SRI3: Creating a
competitive domestic
economy
SRI4: Strengthening the
public sector
• Promote SME growth in innovative & technologically
advanced areas
• Facilitate timely access to funding
• More support & assistance for micro enterprises
• Creating regional champions
• Creating ecosystem for entrepreneurship &
innovation
• Upgrading of skills through education & training
• Reduce dependency on foreign labour through levy
system
• Building entrepreneurship through initiatives to
support micro enterprises & start-ups
• Remove market distortions through removal of price
controls & subsidies
• Social safety net for bottom 40% of households &
Transformation Fund for distressed firms
• Enhance delivery of Government services
• Social safety net for bottom 40% of households &
Transformation Fund for distressed firms
• Use result-based budgeting & strengthen public
finance management i.e GST
9
Measures related to SMEs
SRI5: Transparent and
market-friendly
affirmative action
• Reduce income disparity by focusing on bottom 40% of
households & business owners
• Promote equal & fair access to business opportunities including
setting up of Equal Opportunities Commission
• Social safety net for bottom 40% of households & Transformation
Fund for distressed firms
SRI6: Building
knowledge base and
infrastructure
• Create an eco-system for entrepreneurship through easing of
entry/exit of firms & revamping seed & VC funds for budding
entrepreneurs
• Promote environment for innovation through incentives funding
and establishment of innovation lending institutions
SRI7: Enhancing
sources of growth
• E&E - focus on new niche areas i.e. R&D and design
• Agriculture - high value activities i.e. large scale, high yields &
new technologies
• Services – promote new areas i.e. education, tourism (medical
tourism, edu-tourism & eco- tourism), Islamic finance, green
technology, biotechnology & creative industries
• Support innovative SMEs by changing credit assessment from
conventional lending to partial guarantees
SRI8: Ensuring
sustainability of growth
• Support green technology investment through VC funds
• Credit assessment by banks for green investment using noncollateral based criteria
10
… and RMK10 focuses on unlocking growth
potential of SMEs
Developing SMEs as the Engine of Growth and Innovation
Support SMEs at early stage
& those that have potential to
become global players
Access to Financing
• RM3 bil for Working Capital
Guarantee Scheme of which half for
Bumiputera entrepreneurs
• RM500 mil Mudharabah Innovation
Fund
• RM150 mil Business Growth Fund
• Increase financial resources of SME
Bank & Agro Bank
• Adequate financial allocation to
SME Corp. Malaysia
• AIM and TEKUN micro-credit
facilities for estate workers
Encourage collaboration between
foreign and local SMEs, particularly in
modern technology
Green Lane for Procurement
• For SMEs that have penetrated
international markets, obtained
recognition in terms of quality
& innovation.
Skills Upgrading
• Expand the scope of the HRDF
and SME Corp. grants
• Skills training for school dropouts
• Enhancement of technical
education and vocational
training
• RM500 million for Skills
Development Fund Corp.
Bumiputera Development
Agenda: New Approach
• Areas of equity & property
ownership, skills &
entrepreneurship,
• A high-level Council
Social Justice Policy
• Raise the income and quality of
life of the bottom 40% household
• Reduce price controls and
subsidies in stages
Labour Market Efficiency
• Talent Corporation
• Streamline foreign worker
employment policy
11
SMEs to venture into untapped areas with high
multiplier effect that raise productivity levels
•
•
•
•
Corridors
Eco-tourism
Green technology
Alternative energy
generation
Locational
concentration
• E&E (high value add
segments, shared
services, partnership)
• Islamic Finance
Natural
endowment
AREAS TO
VENTURE INTO:
Industries
Malaysia has
early mover
advantage
• High value added natural
resources downstream
activities
• Development of indigenous
technology
Sectors with
comparative
advantage
• Commercial agriculture
• Integrated Tourism
12
Emphasis would be to promote areas with high
growth potential under NKEAs
Innovation
Manufacturing
Services
Agriculture
Creativity
Oil, Gas and
Energy
Education
Services
Palm Oil and
related
products
Financial
Services
Tourism
CCI
Electrical &
Electronics
Business
Services
Greater KL
Healthcare
Wholesale
and Retail
Trade
Agriculture
Skilled labour force
13
Sectoral focus in creating an advantageous
business ecosystem
Focus
Services
Manufacturing
Agriculture
Opportunities
Initiatives
• Wholesale & retail trade
• New areas in tourism
• Business & financial
services
• ICT
• Private healthcare
• Private education
• Construction services
• Franchise business, direct selling, e-commerce,
specialised SME & modern retail outlets
• Medical tourism, (MICE), eco-tourism
• Professional services on new areas
• Outsourcing activities
• Wealth management, insurance & unit trust
businesses
• Creative industry
Development activities
relating to the NKEA and
Greater KL
• High value added
activities along value
chain of E&E sector
• Supporting industry to:
− tourism sector;
− oil & gas industry; and
− agriculture sector.
• R&D and design
• Precision machining
• Fabrication of oil & gas industry equipment
• Cottage industry
• Downstream resource-based industries
• Green technology
• Strengthening of existing
industrial cluster
• Development of new
industrial cluster . e.g
downstream activities in
palm oil
• Large-scale production
• Good agriculture
practices
• Agronomic
management and
mechanisation
Swiflet farming, aquaculture, seaweed, sago,
ornamental fish, herbs and spices, organic fruits,
vegetables, mushroom and floriculture.
• Centralise procurement
or bulk purchase of
agriculture inputs to
reduce input costs
• Collaborative R&D with
established agriculture
institutes
14
INITIATIVES FOR 2011
15
SME Corp will continue to develop SMEs as the engine
of growth & innovation…
Programmes to be
implemented in 2011
•
Promote
development
of competitive
and resilient
SMEs in all
sectors
towards
increasing
SME
contribution to
the economy
•
•
•
•
•
•
BAP* (for SMEs) and E² (for micro
enterprises) - Programme-based approach
to develop dynamic, competitive & resilient
SMEs
SCORE – as tool to identify capable
companies
1- InnoCERT Programme – promote and
support the development of innovative
SMEs
The National Mark for Malaysian Brand - to
increase awareness on the importance of
branding
Skills Upgrading – provides training to
enhance the skills and capabilities of
employees of SMEs
Soft Loan for SMEs – existing programme,
channelled through MIDF
Bridging Financing
* To be implemented in collaboration with SME Bank
16
Programme-based Approach
Reduced funding for grant & loan from average RM239 m / year
(RMK9) to RM125 m / year (RMK 10)
Large numbers and high expectations of SMEs & Stakeholders
Capacity building is still very much required
Programme-based approach
BAP
E²
DYNAMIC, COMPETITIVE &
RESILIENT SMEs
17
Programme-based approach (cont.)
Diagnose and identify
strengths & weaknesses of
SMEs
BAP
Business advisory and
recommend action plan to
SMEs
SMEs 2-star
(SCORE) and
above
Capacity building
E²
Provide and facilitate financial
support
Micro Enterprises
of level 3(M-CORE)
In collaboration with Bank Rakyat
18
In collaboration with SME Bank
Conclusion
SMEs are
important source
of economic
growth and have
potential
SMEs are
stabilisers of
growth during
economic shocks
Shift towards
outcome-based
approach in
monitoring
programmes
SME Masterplan
requires bold
measures for
quantum leap in
GDP and to
reach developed
nation by 2020
Towards producing national, regional and global champions
Vision
19
One Referral Centre (ORC)
20
One Referral Centre (ORC)
Business
Advisory
SME Registry
Membership
Virtual ORC
Info Centre
ONE
REFERRAL
CENTRE
Link of
Ministries/
Agencies
Towards producing national, regional and global champions
Product Gallery
Pocket Talk
Resource Centre
21
One Referral Centre (ORC)
BUSINESS ADVISORY
- Business Counsellor
- SEAP Experts
INFO CENTRE
Centralized Call Centre consists of :
Info Line, Info Email, General Line
LINK OF MINISTRIES & AGENCIES
Referral Counter for Ministries, Agencies, Banks & DFIs
Towards producing national, regional and global champions
RESOURCE CENTRE
- Library
- Business Centre : Photostat, printing, etc
- Touch screen kiosk + Internet Kiosk
22
One Referral Centre (ORC)
POCKET TALK
- Talk from SME Corp.
-Talk from other Ministries, Agencies, Banks, DFIs
- Company presentation
- Book Launch/ Review
PRODUCT GALLERY
Showcase of products by Industry/sector cluster
- Thematic showcase
- Events/ programme
VIRTUAL ORC
- SME Corp. Corporate
Website
Towards producing national,
regional
and global champions
- SME Info Portal
SME REGISTRY MEMBERSHIP
- Membership Card
- Enjoy Benefits : current updates & Invitation for events & programmes
23
SME Business Counsellor
BUSINESS COUNSELLORS
Provide business advisory & counselling to SMEs through effective coordination
and business support, focusing on 5 areas
Human Resource
Financial
Marketing
Production
Management
DYNAMIC, COMPETITIVE & RESILIENT SMEs
24
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Business Advisory
Services (BAS)
INFOLINE
1-300-88-1801
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