Realigning Malaysian SMEs to the New Economic Model & 10th Malaysia Plan - by SME Corp

REALIGNING MALAYSIAN SMEs TO THE NEW ECONOMIC MODEL

AND 10TH MALAYSIA PLAN

SMEs in Malaysia

Targeted Approach in SME Development

Contents

Targeted Approach in SME Development

SMEs in NEM and RMK10

Way Forward

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• 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

SMEs are the backbone of the economy

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

3Source: Census of Establishments & Enterprises 2005

Agriculture(6.2 %)

Manufacturing(7.2 %)

Plantation and horticulture

(65.6%)

Fishery and its services

activities (20.8%)Textiles & Apparels

• 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

Currently, SMEs are mainly in the services sector

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Services(86.6 %)

Source: Census of Establishments & Enterprises 2005

Wholesale & Retail (55.5%)

Restaurant & Hotel

(15.2%)

Transport &

Communication (6.5%)

activities (20.8%)

Poultry farming (7%)Textiles & Apparels

(23.4%)

Food & Beverages (15%)

Metal & metal products

(13%)

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 Annual Growth (2000 price)

5

SME Contribution to:

GDP 31.2%

Employment 56.4%

Exports 19%GD

P &

SM

E G

row

th

SMEs in the

SMEs are bedrock of high income

economy

Employment providers /

talent source

Targeted SME intervention to lift bottom 40%

Going forward, SMEs are important endogenous source of growth towards building a high income nation

SMEs in the NEM & RMK10

talent source

SMEs important for inclusive

and sustainable growth

Large firms cannot exists in isolation, require

strong SME

SMEs form critical mass to support

innovation, creativity and growth

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Promoting balanced SME development

New Economic

Model: Creating national

champions that

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Model:

Creation of a

high-income

nation

champions that

become regional

/ international

players

SRI1: Re-energising the private sector to drive growth

SRI2: Developing a quality workforce & reducing

dependency on foreign labour

SRI8: Ensuring sustainability of growth

SME policies to be aligned to the NEM

SRI3: Creating a competitive domestic economy

SRI4: Strengthening the public sector

SRI5: Transparent and market-friendly affirmative action

SRI6: Building knowledge base and infrastructure

SRI7: Enhancing sources of growth

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SRI1: Re-energising the private 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

SRI2: Developing a quality workforce &

reducing dependency

• Upgrading of skills through education & training• Reduce dependency on foreign labour through levy

system

Measures related to SMEs

reducing dependency

on foreign labour system

SRI3: Creating a competitive domestic

economy

• 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

SRI4: Strengthening the public sector

• 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

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• 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

• 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

SRI5: Transparent and market-friendly

affirmative action

SRI6: Building knowledge base and

infrastructure

Measures related to SMEs

• Promote environment for innovation through incentives funding and establishment of innovation lending institutions

• 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

• Support green technology investment through VC funds• Credit assessment by banks for green investment using non-

collateral based criteria

infrastructure

SRI7: Enhancing sources of growth

SRI8: Ensuring sustainability of growth

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Developing SMEs as the Engine of Growth and Innovation

Encourage collaboration between foreign and local SMEs, particularly in

modern technology

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

Green Lane for Procurement• For SMEs that have penetrated

international markets, obtained

… and RMK10 focuses on unlocking growth potential of SMEs

Bumiputera Development Agenda: New Approach• Areas of equity & property 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

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 drop-

outs• Enhancement of technical

education and vocational training

• RM500 million for Skills Development Fund Corp.

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

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• Areas of equity & property ownership, skills & entrepreneurship,

• A high-level Council

• High value added natural resources downstream activities

• Development of indigenous technology

• Corridors• Eco-tourism• Green technology• Alternative energy

generation

SMEs to venture into untapped areas with highmultiplier effect that raise productivity levels

Natural endowment

Sectors with

• E&E (high value add segments, shared services, partnership)

• Islamic Finance

• Commercial agriculture • Integrated Tourism

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AREAS TO VENTURE INTO:

Sectors with comparative advantage

Industries Malaysia has early mover advantage

Locationalconcentration

Emphasis would be to promote areas with high growth potential under NKEAs

Manufacturing Services Agriculture

Oil, Gas and Energy

Palm Oil and related

Financial Services

Wholesale

and Retail Trade

Innovation

Creativity

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Energyrelated

productsServices Trade

Tourism ICT

Education

Services

Electrical &

Electronics

Business

Services

Agriculture

Greater KL

Skilled labour force

• 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

Sectoral focus in creating an advantageous business ecosystem

Services

Focus InitiativesOpportunities

• 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

Manufacturing

Agriculture

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Conclusion

SME growth consistently

During economic shocks, SMEs are

stabilisers of Shift towards

outcome-based

SME Masterplanrequires bold measures for

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consistently outperformed

overall economy in last 5 years

stabilisers of growth – SMEsadjust better to

changes in market conditions

compared with large enterprises

outcome-based approach in monitoring

programmes

measures for quantum leap in

GDP and to reach developed nation by 2020

Recovery of SMEs firmly established but SMEs continue to face challenges

Produce national, regional and global champions

Vision

INITIATIVES FOR 2011

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Programmes to be

implemented in 2011

SME Corp will continue to develop SMEs as the engine of growth & innovation…

Promote development

of competitive

and resilient

• BAP (for SMEs) and E² (for micro

enterprises) - Programme-based approach

to develop dynamic, competitive & resilient

SMEs

• SCORE – as tool to identify capable

companies

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and resilient

SMEs in all sectors towards increasing SME contribution to the economy

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,

channeled through MIDF

• Bridging Financing

One Referral Centre (ORC)

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Business Advisory

Info CentreSME Registry Membership

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Towards producing national, regional and global champions

ONE REFERRAL CENTRE

Link of Ministries/

Agencies

Pocket Talk

Resource Centre

Product Gallery

Virtual ORC


BUSINESS ADVISORY

- Business Counsellor

- SEAP Experts

INFO CENTRE

Centralized Call Centre consists of :

Info Line, Info Email, General Line

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Info Line, Info Email, General Line

LINK OF MINISTRIES & AGENCIES

Referral Counter for Ministries, Agencies, Banks & DFIs

RESOURCE CENTRE

- Library

- Business Centre : Photostat, printing, etc

- Touch screen kiosk + Internet Kiosk


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

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Showcase of products by Industry/sector cluster

- Thematic showcase

- Events/ programme

VIRTUAL ORC

- SME Corp. Corporate Website

- SME Info Portal

SME REGISTRY MEMBERSHIP

- Membership Card

- Enjoy Benefits : current updates & Invitation for events & programmes

SME Business Counsellor

Provide business advisory & counselling to SMEs through effective coordination

and business support, focusing on 5 areas

BUSINESS COUNSELLORS

Ma

na

ge

me

nt

Pro

du

ction

Ma

rke

ting

Fin

an

cial

Hu

ma

n R

eso

urce

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Ma

na

ge

me

nt

Pro

du

ction

Ma

rke

ting

Fin

an

cial

Hu

ma

n R

eso

urce

DYNAMIC, COMPETITIVE & RESILIENT SMEs

Branding for Branding for Branding for Branding for

SMEsSMEs

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Depicts Quality, Excellence

and Distinction of local SMEs

products and services

Launched on 2 March 2009

by HRH the Crown

Prince of Perak,

Raja Dr. Nazrin Shah

THE NATIONAL MARK OF MALAYSIAN BRANDTHE NATIONAL MARK OF MALAYSIAN BRAND

The abstract design

represents a Malaysian

flower from the word

“MSIA”

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� Business incorporated / registered under the following:

• Companies Act 1965 (Act 125);

• Registration of Business Act 1965 (Act 197); or

• Certificate(s) of Practice from Professional Bodies.

� Operating from legal premises

�A minimum 3 – STAR rating under SME Corp SCORE programme

THE NATIONAL MARK OF MALAYSIAN BRAND PRE REQUISITETHE NATIONAL MARK OF MALAYSIAN BRAND PRE REQUISITE

�A minimum 3 – STAR rating under SME Corp SCORE programme

�For companies in any sector with Certified ISO 9001 or equivalent;

� For companies in Food Sector with HACCP or ISO 22000; or

� For companies in Automotive Supply Chain with ISO/TS16949;or

� For companies in Medical Device Sector with ISO 13485; and

� Owns a Registered Brand

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

Priority lane for the Brand Promotion Grant under

MATRADE


Special access passes to MICCI-SME Corp. Malaysia mentoring programmes

Invitation to specific training by SME Corp. Malaysia and its partners

BENEFITS

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How the company

systematically manages

all customer and consistently

How the company contributes

to its stakeholders,

society & environment as

it pursue its journey

How the company allocates

its resources to maintain

the brand and ensure

business sustainability

How the top management provides

guidance and direction towards

maintaining the brand success

ASSESSMENT CRITERIAASSESSMENT CRITERIA

all customer and consistently

delivers the brand

promise over time

How the company ensure

all processes needed for the brand

promise are established, implemented

and maintained to meet/exceed

clients’ requirements

it pursue its journey

towards brand excellence

How the company plans its

action to ensure

products/services

consistently meet/exceed

standards or brand promise

How the company maintains,

controls, improves its

internal processes towards

improving brand equity and

ensure business sustainability

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Business Accelerator (BAP) and

Enrichment & Enhancement (E²) Enrichment & Enhancement (E²)

Programmes

Programme-based approach

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BAP E²

DYNAMIC, COMPETITIVE &

RESILIENT SMEs

Programme-based

approach

Diagnose and identify strengths &

weaknesses of SMEs

Business advisory and

recommend action plan to SMEs

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BAP E²

DYNAMIC, COMPETITIVE

& RESILIENT SMEs

Capacity and capability building

(Training, Business linkages

matching, Branding)

Access to Financing (Commercial

Banks, Development FIs,

Ministries and Agencies)

Accelerate the development and performance of SMEs in a more

comprehensive manner using structured methodology

Holistic approach including measuring outcome and impact to

the SMEs leading to long term solutions and sustainability

Programme value proposition

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Enhance the developmental role of SME Corp

Reduce dependency on Government subsidies and ensure

SMEs/MEs prosper through main stream financial ecosystem

Facilitate by SME Business Counsellors (JICA trained) and

leverage on SEAP experts

YES

Request to Participate

Screening

SCORE / M-CORE

Action Plan

NO

PROCESS FLOW

START

SMEs (SCORE)2-star to 5-star

Micro Enterprises

Endorsement by SMEs

Implementation and Monitoring

Re-SCORE /M-Core Performance

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NO

YES

Micro Enterprises of Level 2 & Level 3

(M-CORE)

END

BAP: Eligibility Criteria

• SMEs incorporated under the Companies Act 1965 OR Registration of Businesses Act, 2001:- manufacturing sector – sales turnover not more than RM25 mil or full time employees not more than 150- services sector – sales turnover not more than RM5 mil or full time employees not more than 50

REGISTERED BUSINESSES

• At least 60% Malaysian equity

• LSIs shareholding of not more than 20%

• VCs / Co-ops shareholding of not more than 30%EQUITY

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• VCs / Co-ops shareholding of not more than 30%

• Valid premise/business license from local authorities

• Registration with Professional Bodies

• Other required permit/approval from relevant authorityLICENSE

• Not eligible to recipients of previous grant schemes of SME Corp / SMIDEC (applicable to both owner and company)

• Must undergo SCORE assessment with result of 2 to 5-Star

• At least 6 months in operation

OTHER CRITERIA

E²: Eligibility Criteria

• MEs incorporated under the Companies Act 1965 OR Registration of Businesses Act, 2001: -manufacturing sector – sales turnover not more than RM250,000 or full time employees not more than 5- services sector – sales turnover not more than RM200,000 or full time employees not more than 5

REGISTERED BUSINESSES

• At least 60% Malaysian equity

• LSIs shareholding of not more than 20%

• VCs / Co-ops shareholding of not more than 30%EQUITY

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• VCs / Co-ops shareholding of not more than 30%

• Valid premise/business license from local authorities

• Registration with Professional Bodies

• Other required permit/approval from relevant authorityLICENSE

• Not eligible to recipients of previous grant schemes of SME Corp / SMIDEC (applicable to both owner and company)

• Must undergo M-CORE assessment with result of Level 2 & 3

• At least 6 months in operation

• Owner operator and on full time basis

OTHER CRITERIA

Programme-based Approach Framework

DiagnosticsAccess to

FinancingCapacity

Building

Advisory &

Technical

Support

DYNAMIC, COMPETITIVE &

RESILIENT SMEs

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Commercial

Banks

DFIs

Ministries

and

Agencies

SEAP

Business

Counsellors

Business

Coaches

SCORE

M-CORE

Skills

Upgrading

Entrepre-

neurship

Training

Brand

Awareness

One

Referral

Centre

Please be aware of irresponsible parties claiming to be consultants or agents of

SME Corp. Malaysia for the implementation of developmental programmes.

We hereby inform that SME Corp. Malaysia does not appoint any consultants or

agent for any programmes, and the claim pertaining to the above matter is a

fraud. Should you have any problem or enquiries, kindly contact our

Info Line (1-300-88-1801). Thank you .

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Management of SME Corp. Malaysia

Terdapat pihak – pihak tidak bertanggung jawab mengaku sebagai

juru perunding atau agen bagi pihak SME Corp. Malaysia untuk pelaksanaan

program pembangunan. Sila ambil maklum bahawa SME Corp. Malaysia tidak

pernah melantik juruperunding atau agen bagi mana – mana program ini dan

dakwaan tersebut merupakan satu penipuan. Sekiranya anda mempunyai

sebarang masalah atau pertanyaan, sila hubungi

Talian Info ( 1-300-88-1801). Terima kasih.

Pihak Pengurusan SME Corp. Malaysia

Q&A

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Q&A

SME BUSINESS CENTRE

Business Advisory

Services (BAS)

INFOLINE

1-300-88-1801

THANK YOU

SMECORP STATUS [Ref.

No]SMECORP BORANG [alamat

emeil]

VIRTUAL SME

INFORMATION CENTREwww.smecorp.gov.my

SMS for SMEs Info& Other Information

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Transcript of Realigning Malaysian SMEs to the New Economic Model & 10th Malaysia Plan - by SME Corp