SECURING FUNDS DURING ECONOMIC DOWNTURN
PART 1 – SECURING FUNDS FROM GOVERNMENT
MIA REGIONAL CONFERENCE 2009, 10 – 11 AUGUST 2009
“Exploring Opportunities, Inspiring Growth Towards Sustainability”
En. Borhan bin Sidik
Deputy Chief Executive Officer, SMIDEC
1
Presentation to cover…
•
Transformation of SMIDEC to SME Corp. Malaysia
•
Overview of SMEs in Malaysia
•
Impact of global crisis on SMEs
•
Government measures for crisis
•
Other Government funds and programmes
•
SME Corp. Malaysia’s assistance programmes
•
SCORE as comprehensive tool for risk evaluation
•
Moving forward
Banking Summit 2009
2
Transformation of SMIDEC to SME Corp. M’sia
• SME Corp. M’sia, Secretariat to the National SME Development Council
(NSDC), the highest policy making body to chart SME development
NSDC
Policy Development
Coordinate
policies &
programmes
Secretariat
SME Corp. M’sia
Mgmt of data
& Info
dissemination &
Research
Referral Centre on
SME development
and issues
Programme Implementation
Capacity Building
Programme
Financial
Assistance
Programme
One-stop SME
advisory centre
3
Overview of SMEs in Malaysia
99.2% or
548,267 of
total
establishments
• 80% are
microenterprises
32% of GDP
Employ
56%
workers
SME
Overview
• 87% services
• 7% manuf.
• 6% agriculture
19% of
total
exports
Source: Census of Establishment and Enterprise 2005, Department of Statistics Malaysia
4
4
Impact of fin. & econ. global crisis on SMEs:
77% of respondents affected
•
•
Impact evident since 4Q’ 08 and intensified in 1Q’ 09
Manuf. experienced earlier than services, particularly those in exportoriented sector
40.0
38
34
35.0
33
31
35
34
30.0
25.0
20.0
%
15.0
18
17
17
17
15
12
10.0
5.0
0.0
Q2/08
Q3/08
Manufacturing
Q4/08
Services
Q1/09
Total
Timing of Crisis Affecting SMEs
Source: SMIDEC Survey April/May 2009
5
Sales, profit margin & selling price affected, and
future orders indicate poor prospect s
• However, companies remained lean - low inventory level
(%)
No
Slight Moderate
Severe
Impact Impact
Impact
Impact
- Sales
8.1
29.2
41.0
21.6
- Exports
66.9
11.0
10.8
11.2
- Production
28.7
32.2
27.1
12.1
- Profit Margins
10.5
26.6
37.0
25.8
- Ave. Selling Price
15.7
30.9
36.8
16.5
Below
Above
Not
Normal Normal
Normal
Applicable
- New orders
- Inventory levels
57.6
27.0
4.6
10.8
30.1
39.5
8.5
21.9
- Sales cancellation
15.6
29.9
14.4
40.2
Source: SMIDEC Survey April/May 2009
6
Reduction in demand is the main issue
Issues
Overhead cost
Measures
24
Cost of raw
Materials
25
Lower Investment
25
Lower R&D expenditure
27
Increase price
29
Lower Production Volume
Funding
33
Postpone expansion
27
38
Downsize workforce
Payment delay
41
Additional source of financing
27
49
Lower Production Costs
54
Improve Productivity & Efficiency
Reduction in
demand
36
0
20
40
%
66
Explore new markets
71
0
20
40
60
80
%
Source: SMIDEC Survey April/May 2009
7
SMEs Outlook for next 6 Months
•
Overall : pessimistic on outlook
– >50%: conditions to worsen / remain unchanged
– 70%: recovery in 2010 and beyond
– 20%: contemplating downsizing operations, closing down / relocating
•
Nevertheless:
– 24% - positive view
– 19% - saw opportunity to grow business
(first survey: 12%)
Opportunity
19%
WHAT SMEs PLAN TO DO
Cease
operation
1.7%
Other
2.0%
Relocate to
another
country
0.5%
Worsen
29%
OUTLOOK
Positive
24%
Unchanged
28%
Downsize the
operation
18.0%
Still in
operation
77.7%
Source: SMIDEC Survey April/May 2009
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Govt took aggressive measures to address SME’s concerns
• Policy measures huge and comprehensive
• 25 funds and facilities : Total RM15.6 billion (2% of GDP)
July 2008
Nov 2008
Jan 2009
March 2009
Special Package
for SMEs
1st Stimulus
Package
BNM Special
Assistance
2nd Stimulus
Package
• SME Assistance
Facility
• SME Modernisation
Facility
• Restructuring/
Rescheduling
Various
microfinance funds
RM 1.2 bil
RM 400 mil.
SME Assistance
Guarantee
Scheme (SAGs)
RM 2.0 bil
• Working Capital
Guarantee Scheme
• Industry Restructuring
Loan Guarantee
• Financial Guarantee
Institution
(Danajamin)
RM 12 bil
9
Measures addresses key areas of concerns
Initially to assist SMEs cope with higher prices, later to weather
the impact of global crisis
Financial
Assistance
Social Safety
Net for
Vulnerable
Debt
Restructuring
Measures
Training &
Capacity
Building
Special
Measures to
Assist the Most
Affected
Sectors
Lower cost of
Doing
Business, incI
Interest Rate
Reduction
10
Facilities that SMEs Can Avail Themselves
Mainly to enhance access to financing during the crisis.
Assistance
programme for
smallholders
(RM 100m)
Fishermen’s
Welfare
Fund (RM2m)
Others
(RM48m)
Industry Content
Development (RM55m)
Automotive
Tourism
Infrastructure Development
Upgrading Fund (RM200m)
(RM200m)
Program
Siswazah
Perantis
Microcredit
PUNB (RM50m)
(RM350m)
SME Assistance
Facility (RM700m)
SME Modernisation
Facility (RM500m)
Micro Enterprise
Fund (RM200m) Prov. for business
premises (RM100m)
Urban Micro
Financing (RM100m)
Financial Guarantee
Insitution (RM1b)
SME Assistance
Guarantee
Scheme (RM2b)
Industry Restructuring
Financing Guarantee
Scheme (RM5b)
Working Capital
Guarantee
Scheme (RM5b)
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Summary of Funds & Facilities
July 2008: Special Package for SMEs to address higher
cost
Amount
RM
Min / Agency
1.
SME Assistance Facility
700 million
BNM
2.
3.
SME Modernisation Facility
SME Loan / Financing Restructuring and Rescheduling
Total
500 million
-no value1.2 billion
BNM
BNM
Nov 2008: 1st Stimulus Package
1.
2.
3
Amount
Micro Enterprise Fund
Provision for additional business premises for SMEs (2)
Urban Micro Financing
Total
Feb ‘09: BNM Packages to enhance access to financing
200 million
100 million
100 million
0.4 billion
1.
2 billion
2.0 billion
SME Assistance Guarantee Scheme
Total
Working Capital Guarantee Scheme
Industry Restructuring Financing Guarantee Scheme
Danajamin National Sdn Bhd
BNM
PUNB
AIM
Min / Agency
Mac 2009: 2nd Stimulus Package
1.
2.
3.
Min / Agency
BNM / CGC
Min / Agency
5 billion
5 billion
1 billion
MOF
MOF
MOF
12
Summary of Funds & Facilities
2nd Stimulus Package for SMEs: March 2009 (cont’d…)
4.
5.
6.
7.
8.
9.
Industry Content Development Initiative
Assistance prog. for smallholders for replanting of palm oil
Integrated chili plantation based on fertigation syst. project
Raw material support programme for Bumi -wood entrep.
Malaysia Timber Promotion Centre
Prov. of apparatus to make chocolate semi-finished product
10. Assistance of rubber plantation material for 1,000 Sabah
smallholders
11. Prog. to promote the plantation of latex timber clone (LTC)
by S’wak smallholders
12 Fishermen’s Welfare Fund
13 Additional fund for micro credit programme under AgroBank
14 Additional fund for micro credit programme under TEKUN
15 Upgrading of infrastructure in the tourism sector
16 Additional fund for the Automotive Development Fund
17 Program Siswazah Perantis PUNB
Total
Grand Total
Amount
RM
Min /
Agency
55 million
100 million
10 million
10 million
20 million
5 million
MOSTI
MPIC
MPIC
MPIC
MPIC
MPIC
3 million
MPIC
3 million
MPIC
2 million
300 million
50 million
200 million
200 million
50 million
12. 008 billion
15.608 billion
MOA
MOA
TEKUN
MOTOUR
MITI
PUNB
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BNM Special Funds and Guarantee Facilities
Fund
Allocation
(RM bil)
1.
Fund for Small and Medium Industries 2
6.8
2.
New Entrepreneurs Fund 2
2.9
3.
Fund for Food
1.3
4.
Bumiputera Entrepreneur Project Fund
0.3
5.
Micro Enterprise Fund
0.2
TOTAL
11.4
Guarantee Scheme/Facility
Allocation
(RM bil)
1.
SME Assistance and Modernisation (closed since Feb 09)
1.2
2.
SME Assistance Guarantee Scheme
2.0
Banking Summit 2009
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SME Corp. M’sia : Financial assistance programmes
Financial assistance covers the entire spectrum of activities in the business
cycle and scope will be extended to all sectors eventually
Matching
Grant
Soft Loan
• 50% of the approved
project cost is
borne by the Govt &
balance by
applicant
• Low interest rate
• Longer repayment
period
Manufacturing & Services:
• Business Start-Up
• Product & Process Improvement
• Certification & Quality Management
Systems
• Market Development
• Development & Enhancing Product
Packaging Promotion of Halal
Products
• Advertisement & Promotion
Manufacturing & Services
• Soft Loan for SMEs (SLSME)
• Soft Loan for Factory Relocation
• Soft Loan for ICT Adoption
15
SME Corp. M’sia: Capacity development programmes
Focusing on facilitating linkages, enhancing skills & entrepreneurship
technology innovation, motivation & advisory services
1. INDUSTRIAL LINKAGE PROGRAMME
6. TECHNOLOGY AND INNOVATION
PROGRAMME
2. SKILLS UPGRADING PROGRAMME
7. NATIONAL WOMEN ENTREPRENEUR
AWARD (NWEA)
3. BUMIPUTRA ENTREPRENEUR
ENHANCEMENT PROGRAMME ( BEEP)
8. ENTERPRISE 50 AWARD PROGRAMME
4. SME – UNIVERSITY INTERNSHIP
PROGRAMME
9. SME EXPERT ADVISORY PANEL (SEAP)
5. SME COMPETITIVE RATING FOR
ENHANCEMENT (SCORE)
10. OUTREACH PROGRAMMES
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SME Corp. M’sia: Advisory services - enhanced delivery
system to reach more SMEs efficiently
3-pronged approach for better outreach to SMEs & to reduce cost
Capacity building
• SME Business
Coaches
Infrastructure
Processes
• Branches increased
to all states
(from 4 to 18)
• Standard loan
application form for
all Ministries /
Agencies
• SME Business
Counsellors
Kedah / Perlis
(Alor Setar)
Pulau Pinang
(Bukit Mertajam)
Perak
(Ipoh)
Kuala Lumpur
Kelantan
(Kota Bahru)
Terengganu
(Kuala Terengganu)
Pahang
(Kuantan)
(HQ)
N. Sembilan
(Seremban)
Melaka
(Ayer Keroh)
Johor
(Johor Bahru)
Sarawak
(Kuching)
Sabah
(Kota Kinabalu)
• Use of SMS to
check status of
loan/grant
application
• SME Business
Advisory Centre
• Business Licensing
Electronic Support
System (BLESS)
17
SME Competitive Rating for Enhancement (SCORE), a tool
to evaluate and track SME’s capabilities & performance
Visit
SME
SCORE
Management
Certification
Operational
Basis:
• Identify weaknesses of SMEs to
facilitate focused and integrated handholding assistance to SMEs;
• Link potential SMEs with large
companies/ companies / MNCs ;
• Identify & facilitate suitable financial
assistance for development of SMEs
SCORE
Marketing
Technology
Financial
18
Analysis of SCORE Results
SCORE – 3 STAR FIRM
SCORE – 2 STAR FIRM
Business
Performance
Management
Capability
Compliance to
requirements
Marketing
Capability
5.22
4.64
4.06
3.48
2.9
2.32
1.74
1.16
0.58
0
Business
Performance
Financial
Capability
Management
Capability
Operation
Management
Compliance to
requirements
Marketing
Capability
Stock
Management
Banking Summit 2009
5.22
4.64
4.06
3.48
2.9
2.32
1.74
1.16
0.58
0
Financial
Capability
Operation
Management
Stock
Management
19
Moving Forward
• Govt has provided various assistance to SMEs complementing the
banking system
• Awareness of programmes still lacking, SME Corp. M’sia will intensify the
integrated outreach and promotional activities
• SMEs to remain relevant despite challenging environment
• Revisit business plan and strategies
• Take advantage of various funds / facilities and programmes
• Enhance capacity & capability, adopt new technology and processes
• Be ready to reap opportunity when economy recovers
• Info on Govt’s funds and facilities & development programmes:
• www.smeinfo.gov.my
• www.smidec.gov.my
• “Policies, Incentives, Programmes and Financial Assistance for
SMEs” Handbook (SMIDEC)
• SME Annual Report
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SME BUSINESS CENTRE
INFOLINE
1-300-88-1801
Business Advisory
Services (BAS)
THANK YOU
SMS for Grants Status
& Other Information
Send to 15888
VIRTUAL SME
INFORMATION CENTRE
info@smidec.gov.my/
www.smidec.gov.my
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