Propelling Malaysian SMEs into
a Higher Economic Contributor
by:
Dato’ Hafsah Hashim
CEO of SME Corporation Malaysia
Saudi International SMEs Forum 2013, 29th May 2013
Definition of SMEs
Annual sales turnover
Manufacturing,
Manufacturing
Related Services
and Agro-based
Industry
< RM25 million
(£5.42 million)
OR
Full time employees
<150
Annual sales turnover
Services, Primary
Agriculture,
Information and
Communication
Technology (ICT)
< RM5 million
(£1.08 million)
OR
Full time employees
< 50
2
SMEs account for bulk of total businesses in
Malaysia … 97.3%
• 97.3% of total establishments
(645,136) versus 548,267 on 2003
• Mainly (77%) microenterprises
• Concentrated in services sector (90%)
3%
90.0%
Services
•
Distributive Trade and Repair
of Motor Vehicles and
Motorcycles (50%)
•
Restaurants (25%)
5.9%
Manufacturing
•
Textiles & Wearing Apparel
(26.5%)
•
F&B Products (16%)
20%
3.0%
Total:
645,136 SMEs
Micro
77%
Construction
•
Non residential buildings
(21.5%)
•
Civil Engineering (21.0%)
1.0%
Agriculture
•
Crops (70.4%)
•
Livestock (13.4%)
0.1%
Mining & Quarrying
•
Stone Quarrying (83.6%)
•
Mineral Mining (16.4%)
Small
Medium
3
Source: Economic Census 2011
SMEs are the backbone of the economy
97%
Total
Establishments
Important domestic source of growth
Foundation & support in supply chain
through forward & backward linkages
32%
GDP
Balanced growth
59%
19%
Employment
Exports
Strengthen resilience of the nation's
economy
Provide support for growth of new &
existing sectors
Promote private sector-led growth
4
Source: Economic Census 2011
SME Value Added and Overall GDP Growth…
SME growth outperformed overall GDP growth during 2004 – 2011:
• NSDC was set up and SME development accorded national agenda
• Other supportive policies (improvement in government delivery, higher domestic
demand and tourism, focus on farmers and small contractors)
GDP & SME Growth
12%
10%
%
GDP & SME Growth
(yoy change)
SME: 5.5 - 6%
8%
6%
4%
GDP: 5-5.5%
2%
0%
-2%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011e
-4%
Year
GDP Growth
SME Growth
Source: DOSM and SME Corp. Malaysia
5
Moving forward, SME development to be innovation-led
and productivity-driven through the SME Masterplan
“Unless we introduce a ‘game changer’, we
will be caught in a middle-income trap, and
no longer as competitive on cost...”
“… the Government would adopt a
differentiated approach to accelerate the
growth of SMEs and to provide the impetus
for growth led by the private sector.”
“ … an innovation-led economy demands a
new breed of SMEs that can help foster
market and technology-driven innovation
to create more high-skilled jobs in all
economic sectors.”
Prime Minister of Malaysia /
Chairman of National SME Development Council
6
SME Masterplan takes a new
SME development
Public-private
approach
in
Innovation and
productivity-led
partnership
Outcome-based
Approach
‘Live’ plan
7
New SME Development Framework for
innovation-led and productivity-driven growth
Vision
Globally competitive SMEs across all sectors that enhance wealth
creation and contribute to the social well-being
SME Development Framework
Goals
Focus
Areas
Increase
business
formation
Expand number
of high growth
and innovative
firms
Innovation & Technology
Adoption
Market Access
Raise
productivity
Human Capital
Development
Legal & Regulatory
Environment
Intensify
formalisation
Access to Financing
Infrastructure
Action Plan
Institutional
Support
Reliable
database
Monitoring &
Evaluation
Effective
Coordination
Effective Business
Services
8
Plan proposes 32 initiatives across all focus areas,
of which 6 are High Impact Programmes
6 High Impact Programmes
(HIPs)
• Integration of business
registration & licensing to
enhance ease of doing business
• Technology Commercialisation
Platform (TCP) to encourage
innovation
• SME Investment Programme
(SIP) to provide early stage
financing
• Going Export (GoEx)
Programme to expedite
internationalisation of SMEs
• Catalyst Programme to promote
more homegrown champions
• Inclusive Innovation to empower
the bottom 40%
Measures across 4 Themes
•
•
•
•
Resource pooling & shared services
Create demand for SME products
Reduce information asymmetry
Building capacity & knowledge
Measures for East Malaysia
• Improve connectivity & basic amenities
• Review restrictive laws & policies
• Ease market access
Other Measures
• Completion of Integrated trade
clearance and facilitation system
(single window)
• Bankruptcy Law to give entrepreneurs a
second chance
• Synchronise measures on productivity
enhancement technologies with other
relevant labour policies
Result-based approach with monitoring & evaluation
9
Target is to increase contribution to GDP to
slightly over 40% by 2020
CAGR (% change)
GDP Growth
9
New SME growth path
8
Quantum
leap
(8.7%)
7
“Business
as usual”
growth
6
Economic Contribution
in 2020:
2010
2020
GDP
(6.5%)
5
Employment
4
Exports
3
2000 - 05
2006 - 10
2011 - 20
Projections by SME Corp. Malaysia
10
Public – Private Collaboration
Malaysia Incorporated initiated in 1983 to recognise
importance of private sector in economic growth
Concept: Nation is a corporate or business entity, jointly owned by both sectors
and working together in pursuit of a common mission of nation
Deregulation of cumbersome bureaucratic
rules & regulations
Operating
Mechanism
Improving delivery system
Institutionalising consultative machinery
Establishing smart partnership
programmes in nation building efforts
Pursuing privatisation
11
3 structural mechanisms established to promote
intersectoral consultation and cooperation
Structure
Promotion
Funding
• Establishment of
consultative panels
• Dialogue sessions at various
levels in public sector
• Joint sponsorship of formal
or informal activities
12
Public-private sector collaboration scaled new heights
with establishment of PEMUDAH in February 2007
The Special Taskforce to Facilitate Business or PEMUDAH:
High-powered taskforce to address bureaucracy in business-government
dealings
13
Way Forward :
SME development a shared responsibility...
Government
• Facilitator
• Act as catalyst
Private
Sector
• Associations, chambers & NGOs to develop SMEs
• Large firms to mentor SMEs
• Participation in design & implementation of progs.
14
..with private sector assuming a greater role
Develop
capacity for
private
professional
services for
SMEs
Encourage
establishment of
private finance
providers
Strengthen
industry
associations
What
needs to
be done?
Enhance
capacity of
private training
and advisory
provider
Increase range
of services
provided by
associations
Build bridges
between public
and private
sectors through
shared services
(funds, space)
15
Bling - Business Linkages
OBJECTIVES
“good database”
“Pre-evaluated
companies”
“Good match”
“It's efficient”
To develop competitive and innovative
SMEs
To widen the business opportunity of
SMEs in supplying products and services
to large companies and Multinational
Companies (MNCs)
To encourage business networking
between SMEs and MNCs & GLCs
16
SME COMPETITIVENESS RATING
FOR ENHANCEMENT (SCORE)
What is
SCORE?
• A diagnostic tool to rate and enhance
competitiveness of SMEs based on
their performances and capabilities.
• Developed in August 2007.
Function
• Identify strengths and weaknesses for
improvements; and
• Facilitate linkages.
7 Parameters
Characteristics
Collaborators
• Business Performance
• Financial Capability
• Management Capability
• Production Capability
•0–2
•3–5
• PUNB
• CIDB
• MINDEF
• TPM
• Technical
capability
• Quality System
• Innovation
: Very basic business operation
: Competitive and export-ready
companies
•
•
•
•
MDEC
PSDC
SME Bank
TM
•
•
•
•
Example of Radar Diagram
for 3-Star company
Analysis:
Weak in financial capability
Assistance:
Requires training in financial
management & improvement in
quality management
MPC
HDC
NCIA
MTIB
17
1-INNOCERT
Innovation Certification for Enterprise
Rating and Transformation Programme
I.
Innovation
Ability
Mission
• To identify and certify innovative
SMEs and enterprises in Malaysia
Objective
• To foster and support innovative
SMEs and enterprises to be
global innovative competitive
players
To date, 115 companies have been
certified
II.
Commercialization
Ability
III.
Innovation
Management
IV.
Innovation
Outcome
18
NATIONAL MARK OF
MALAYSIAN BRAND
To enhance the visibility of Malaysian
products and services in both local and
international markets.
Operations Management
Management Commitment &
Capability
Financial Capability
Brand Management
& Marketing
ASSESSMENT
CRITERIA
Quality & Standards of
Products/Services
Management Best Practices
Social Responsibility
To date, 59 companies have been certified
19
www.smeinfo.com.my
www.smecorp.gov.my
SME Annual Report 2011/12
SME Corp. Malaysia
1-300-30-6000
Physical
KL Sentral