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Domestic Investment Seminar, Pullman Hotel, 28 July 2011Kuching, Sarawak

DEVELOPING COMPETITIVENESS SMES THROUGH INTERGRATED PROGRAMMES BY

SME CORP MALAYSIA

by

Ursla Unnie Thomas SalangSME Corporation Malaysia

28 July 2011

1. SMEs in Malaysia

2. SME Development Programmes

3. Conclusion

Contents:

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SMEs in Malaysia

DOMESTIC INVESTMENT SEMINAR

• 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

SMEs in Malaysia: Backbone of the Economy

4Source: Census of Establishments & Enterprises 2005

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5

Services(86.6 %)

Agriculture(6.2 %)

Manufacturing (7.2 %)

Source: Census of Establishments & Enterprises 2005

Restaurant & Hotel (15.2%)Transport & Communication (6.5%)

Plantation and horticulture (65.6%)Fishery and its services activities (20.8%)

Poultry farming (7%)

Textiles & Apparels (23.4%)Food & Beverages (15%)

Metal & metal products (13%)

Current: Majority of SMEs are in Services Sector

Wholesale & Retail (55.5%)

SMEs in Malaysia

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

SMEs in Malaysia: Backbone of the Economy

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SMEs in Malaysia: Positive Results in Comprehensive Approach to SME Development

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)

SME Contribution to:

GDP 31.2%

Employment 56.4%

Exports 19%

GDP Annual Growth (2000 price)

GD

P &

SM

E G

row

th

SMEs in the NEM & RMK10

SMEs are bedrock of high income economy

Employment providers / talent source

SMEs important for inclusive and sustainable

growth

Large firms cannot exists in isolation, require

strong SMEs

SMEs form critical mass to support innovation,

creativity and growth

Targeted SME intervention to lift bottom 40%

Going forward, SMEs are important endogenous source

of growth towards building a high income nation

SMEs in Malaysia: SMEs in the NEM & RMK10

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SME Development

Programmes

DOMESTIC INVESTMENT SEMINAR

Encourage competitive & resilient SMEs in all sectors towards increasing SMEs contribution to the

economy

SME Corp.’ Initiatives:

Advisory

One Referral Centre (ORC)

Business Coaches & Counselors

SME Expert Advisory

Panel (SEAP)

Capacity Building

Skill Upgrading

Business Accelerator Programme (BAP)

Enrichment & Enhancement

(E2)

SMEs Internship & Apprentice

SME Entrepreneur Centre in IPTA

Bumiputera Enterprise Enhancement

Program

Awards & Recognition

Technology & Marketing

1-InnoCERT

National Mark

Industrial Chain

Financing

Soft Loan for SMEs

Bridging Financing

Monitor & Measure

SCORE & M-CORE

Impact Study Program

Macro Performance

Programmes are focused on the development of SMEs as the engine of growth & innovation

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SME Competitiveness Rating for Enhancement (SCORE)

Diagnostic tool used to rate & enhance competitiveness

of SMEs based on their performance & capabilities

Identifies strengths and areas for improvement at firm level, to enable the

right assistance to be provided

Facilitates linkage of potential SMEs with large companies / MNCs

Link export-ready companies to MATRADE

SCORE

Objectives

The capability & performance are measured

based on 7 parameters that vary across sectors.

SCORE Parameters

SCORE

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SCORE

Example of Radar Diagram for 3-Star company

Analysis: Weak in financial capability

Assistance: Require financial management training

• Business Performance

• Financial Capability

• Technical Capability

• Production Capacity

• Innovation

• Quality System

• Management Capability

Example of SCORE Parameters for Manufacturing & MRS:

SME Expert Advisory Panel

(SEAP)

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3-Phase Programme that provides on-site assistance &

transferring technology as well as technical know-how to

SMEs by industry experts

Undertake diagnostic audit on SMEs to identify weaknesses & strengths for them to undertake remedial measures to

enhance their capabilities

SEAP

Objective

SMEs are able to receive advice & guidance

from industry experts

The essence of the remedial measures is to

improve business practices, production and

productivity

Benefits

SME Expert Advisory Panel (SEAP)

SME Expert Advisory Panel (SEAP)

Implementation Mechanism:

PHASE 1 PHASE 2 PHASE 3

WORK SCOPE Preliminary Consultancy

Services

Consultancy Services at

Factory Sites of SMEs

Consultancy Services by

experts to implement the

proposed improvement

based on diagnostic

audit report

ACTIVITY Expert conduct free

preliminary consultancy

services & will prepare

report to SME Corp

Experts visit Factory Sites of

SMEs and undertake

diagnostic audit on the

SMEs.

Experts will make

recommendations on the

respective improvements.

Implementation of the

recommended

improvements from

Phase 2 diagnostic audit

report.

FINALIMPLICATION

SME Corp bears cost of

mileage, toll fare &

consultation fee

SME Corp bears cost

consultation maximum 3

man-days

The costs of consultation

fee & daily allowance

will be borne by SME

Corp. & Company (50:50

ratios). A maximum of

RM 18,000.00 or 60 man-

days for one (1) project,

whichever is lower.

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1-InnoCERT: Innovation Certification for Enterprise

Rating & Transformation Programme

A programme to recognise & certify innovative

enterprises & SMEs

To foster & support innovative SMEs &

enterprises to be globally innovative

& competitive players

1-InnoCERT

Objective

Eligible to participate in the Annual SMEs

Innovation Award

Facilitated access to financial incentives and

wider market

1-InnoCERT

Eligible for business coaching

Benefits

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1-InnoCERT

Certification Criteria:

19

I

Innovation

Ability

II

Commercialisation

Activity

III

Innovation

Management

IV

Innovation

Outcome

• Technology manufacturing ability

• Ability to develop products using

Technology

• Marketing ability

• Outcome of Technology

• Competitiveness Progress

• Technology management result

• Technological Achievements

(forecasting)

• R&D activity index

• Technology innovation system

• Technology innovation administration

• Technology analysis ability

• Management’s innovation ability

• Ability to respond to changes

• CEO’s sense of values

The National Mark of Malaysian Brand

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Increase global & regional market penetration

Quality, Excellence and

Distinction of local companies

Increase awareness & importance of branding

Priority lane for MATRADE’s Brand Promotion Grant

Access to MATRADE’s local & international trade promotion and A&P activities

Special access to MICCI-SME Corp. mentoring programmes

The National Mark of Malaysian Brand

Create & build a strong brand presence towards customer recognition

Objectives

Invitation to specific training by SME Corp. & its partners

Benefits

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Assessment of the National Mark

Top management’s guidance & direction towards brand

success

Allocation of company resources to maintain brand &

business sustainability

Systematic management of customer to ensure constant delivery of brand promise

Ensuring processes to deliver brand promise established, implemented & maintained

Plan action to consistently meet/exceed standards or

brand promise

Maintain, control & improve processes towards improving

brand equity

Contribution to stakeholders, society & environment in pursuing brand excellence

Mgt. Commitment & Capability

Financial Capability

Brand Management & Marketing

Operation Management

Quality & Standard

Social Responsibility

Management Best Practices

CRITERIA

ASSESSMENT BASED ON:

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Skills Upgrading Programme

To provide short-term courses under 41

training centres appointed by

SME Corporation Malaysia

To enhance skills & capabilities

of SMEs in hard & soft skills

Skills Upgrading Program

Objective

To enhance the skills of the workforce in order to

increase the efficiency, productivity,

professionalism & capacities of SME.Benefits

Skill Upgrading Program

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SMIDEX – SME Innovation Showcase

For large skills companies (MNCs) to seek potentialsuppliers among SMEs

Discover new market opportunities & technology through

meetings with potential customers and suppliers

Forge closer linkages and networking between

SMEs & large companies as well as MNCs

Exhibit products and services of Malaysian Companies &

As venue for outsourcing exchange

Exchange & sharing of experiences & know

how on best business practices & strategies

Business Networking Sessions

Product Presentation

Business Matching Opportunity

Annual event for SMEs to exhibit their products & services

Exhibition

SMIDEX Showcase

Objectives

Benefits

SMIDEX Showcase

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One Referral Centre

One Referral Centre

SME Corp MalaysiaCentral Coordinating

AgencyLiaison for domestic and international communities on SME matter

Centre on advisory and information

Disseminate information on

Government funds and incentives for

SMEs

Channel for feedback on SMEs

issue

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BUSINESS ADVISORY

Business Coaches

Business Counselors

SEAP Experts

ORC LINK

Other Ministries

Agencies

Banks

DFIs

Associations

POCKET TALK

Talk from SME Corp.

Talk from the ORC Link participant

Company presentation

Book Launch/ Review

SME REGISTRY MEMBERSHIP

Updates on programmes &

events

Invitation for programmes &

events

One Referral Centre

VIRTUAL ORC

SME Corp. Corporate Website

SME Info Portal

SME PRODUCT GALLERY

Showcase of products by Industry/sector

cluster

Thematic showcase

Events/ programme

RESOURCE CENTRE

Library

Business Centre Services

Info kiosk

Internet Kiosk

INFO CENTRE

Info Line

Info Email

One Referral Centre

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ORC: Virtual SME Info Centre

ORC: Virtual SME Info Centre

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ORC: Info Line, Info Email & SMS

Info Linefor Information on SME Corp’s

Information:

1-300-88-1801

SMSfor Information on SME Corp’s

Information:

Send to 15888

Emailfor Information on SME Corp’s

Information:

info@smecorp.gov.my

Conclusion

DOMESTIC INVESTMENT SEMINAR

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Conclusion:

Vision

Creating national, regional and global

champions

• SME growth consistentlyoutperformed overalleconomy in last 5 years

• Support for innovativeSMEs in the new growthareas

• Targeted financialassistance and supportfor microenterprises

• Shift towards outcome-based approach inmonitoring programmes

THANK YOU