SME Corp - GMN Workshop Deck 2014
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Transcript of SME Corp - GMN Workshop Deck 2014
Global Malaysian Network (GMN) Workshop 17th May 2014, San Jose, California
Dato’ Hafsah HashimCEO of SME Corporation Malaysia
by
Pioneering Business Transformation
““Charting the Entrepreneurial Journey”Charting the Entrepreneurial Journey”
2
SME Corp. Malaysia journey map since establishment – key milestones & events….
1996
2nd May 1996, Small & Medium Industries Development Corporation (SMIDEC) was former under the MITI to develop SMEs to be competitive in the global market.
2004
National SME Development Council (NSDC) National SME Development Council (NSDC) was formed as the highest governing body. was formed as the highest governing body. Bank Negara was appointed as the Bank Negara was appointed as the secretariat of NSDCsecretariat of NSDC
2007
SMIDEC took over the role of SMIDEC took over the role of NSDC Secretariat from Bank NSDC Secretariat from Bank NegaraNegara
2000 SMI Development PlanSMI Development Plan
3
Cont….
2020
and beyondand beyond
2010
SME Corp. Strategic Plan SME Corp. Strategic Plan 2010-2015 was 2010-2015 was
developeddeveloped
2009
SMIDEC was officially rebranded on 2nd Oct 2009 into Small & Medium Enterprise Corporation Malaysia(SME Corp. Malaysia)
2012
SME Masterplan 2012 – 2020 SME Masterplan 2012 – 2020 was developed as a catalyst to was developed as a catalyst to
drive SME sector to achieve drive SME sector to achieve Vision 2020Vision 2020
Secretariat to NSDC
SME Corp. Malaysia: a dedicated Agency for SME development
NSDC
Ministries & Agencies
SMEs
Chambers & Industry
Associations
4
ROLES & FUNCTIONS OF SME CORP. MALAYSIA
Roles of SME. Corp.
5
6
Manufacturing,Manufacturing Related Services and Agro-based Industry
Full time employees < 75
Services, Primary Agriculture, Information and Communication Technology (ICT)
Employees Turnover
Annual sales turnover < RM 20 m
Full time employees < 200
Annual sales turnover
< RM50 m
OR
Definition of SMEs
New SME definition was endorsed at the 14th NSDC Meeting in July 2013
A business will be deemed as an SME if it meets either one of the two specified qualifying A business will be deemed as an SME if it meets either one of the two specified qualifying criteria, namely sales turnover or full-time employees, whichever is lower. criteria, namely sales turnover or full-time employees, whichever is lower.
SMEs are the backbone of the economy • SMEs account for large proportion of businesses in Malaysia:
- 98.5% of establishments - Size wise 77% microenterprises, with < 5 workers
Source: Economic/SME Census 2011, Malaysia
662,939 companies
7
Distributions of SMEs by Sector...
Agriculture (1%)Crops (70.4%),Livestock (13.4%),Fisheries (11.6%)
Construction (3%)Non-residential Buildings (21.5%),Civil Engineering (21%),Residential Buildings (17.3%)
Services (90%)
Textiles & Apparels (26.5%),Food & Beverages Products (15.9%),Fabricated metal products (10.5%)
Mining & Quarrying (0.1%)Stone quarrying (83.6%),Mineral Mining (16.4%)
Manufacturing (5.9%)Wholesale & Retail (49.9%),Food & Beverages Services (24.6%),Transport & Storage (6.9%)
Source: Economic/SME Census 2011, DOSM, Malaysia 8
SME Masterplan(2012 – 2020)
Manufacturing as leading sector
Shift to industrial-based
Light (textile, F&B) and heavy (automotive, E&E)
Import substitution
Transformation of manufacturing sector
Manufacturing ++
Cluster-based development
Global competitiveness through innovation
Manufacturing & services sectors
Creation of business ecosystem for SMEs
Towards achieving high income economy by 2020
Industrial Masterplan (1986 – 1995)
2nd Industrial Masterplan (1996 – 2005)
3rd Industrial Masterplan (2006 – 2020)
SMI Development Plan (2001 -2005)
Sectoral development
New Economic ModelTransforming Malaysia from middle income to advanced nation by 2020
SME policy has evolved over the years in line with the overall country’s development agenda
5-year Malaysia Plans
1 2 3 4
9
Chambers and Business Associations
SMEs
Ministries & Agencies
Think-tanks & researchers
SME Corp.
Top-down
Bottom-up
Development of SME policy is through public – private advocacy…
10
High-level endorsement
Private sector
engagement
... and the example is the SME Masterplan that was built from the consensus of all the stakeholders
11
12
GDP & SME Growth
Holistic approach to SME development brought positive results…
SME growth outperformed overall GDP growth during 2004 – 2012:• 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)
-4%-2%0%2%4%6%8%
10%12%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
GDP Growth SME Growth
%
Year
Source: DOSM and SME Corp. Malaysia
GDP & SME Growth (yoy change)
6%
32% share of GDP28.6% share
of GDP
National SME Development Council …high level body to chart SME policy direction
Council established in 2004
Chaired by Prime Minister
15 Ministers and 3 key agencies
Secretariat: SME Corp. Malaysia (w.e.f. 1 Aug 2008, previously the
Central Bank) Provides direction for comprehensive development of SMEs across all sectors
Formulates broad policies and strategies
Oversees coordination of programme and ensures effectiveness in policy
implementation
13
New products for SMEs• Trade Finance Products• Overseas Project Fund• Venture Capital Funds • Guarantee fundsStrengthening financial service providers• Sustainable Microfinance. • Transformation of SME Bank, CGC & Bank Pertanian
MalaysiaStrengthening financial infrastructure• SME Credit Bureau• Small Debt Resolution Scheme
Information dissemination• SME Annual Report 2005 –
2010/11• Financial Guide for SMEs• Govt. Funds & Schemes• SMEinfo Portal • HRD Training Portal Human capital, marketing & advisory services• Centralised training for SME • BNM’s LINK, SME Bank, Banks’
SME Unit• “One Referral Centre”
In the last 7 years, SME development achieved progress on all fronts…
Policy • Standard SME Definition• 5 – year policy targets (2006 – 2010)• SME Integrated Plan of Action• SME Central Coordinating Agency• SME Masterplan (2012 – 2020)• Outcome-based approach initiatives
at macro, programme and firm levels• SME special unit at Ministries &
AgenciesStatistics• Census of Establishment and
Enterprise 2005 / SME Census 2011• Time series value add data• National SME Database
PROGRESS
14
15
MASTERPLANSME2012 - 2020Catalysing Growth and Income
Chart direction until 2
020
SME Masterplan
ETP
RTP
GTP
High-income nation
The SME Masterplan charts direction for SME development till 2020
16
4 Goals & 6 Focus Areas
6 High Impact Programmes
National policies
GDP
Employt
Exports
41%
62%
25%
GDP
Employment
Exports
32%
59%
19%
2011
2020
Approach
Public-private partnership
‘Live’ plan
Outcome-based
Innovation and productivity-led
SME Masterplan takes a new approach in SME development
17
Masterplan is evidence-based, addresses gaps and leverages on strengths
%
Source: Schnider (2002)
Share of Informal Sector to GNI
• Material share of informal sector in the economy
10393
8578 76
6555 51
42
15
0
20
40
60
80
100
120
Source: World Bank from various sources
SME Labour Productivity (US$’000)
• SME labour productivity was far below other countries and 1/3 of large firms
18
Masterplan is evidence-based, addresses gaps and leverages on strengths
Change in Value Added 2000-2005
• High growth firms main contributors to gains in value added & employment
Source: World Bank based on Economic Census 2001 & 2006 and Census of Establishments & Enterprises 2005, DOSM, Malaysia
Top 1 percentile account for -70% of additional GDP -46% of new jobs
1/ Entry density: no of newly registered companies over working age population (15-64 years)
Source: Development Research Group, World Bank
Average Entry Density1/ (2004-09)
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Malaysia East Asia Pacific
Europe & Central Asia
Latin America & Caribbean
Middle East & North Africa
South Asia High Income
• Business formation was robust but lower than high income economies
19
Market Access
SME Development Framework
GoalsIncrease business formation
Intensifyformalisation
Expand number of high growth and innovative
firms
Raise productivity
Reliable database
Monitoring & Evaluation
Effective Coordination
Effective Business Services
Innovation & Technology Adoption
Human Capital Development
Legal & Regulatory Environment
Access to Financing
Infrastructure
Globally competitive SMEs across all sectors that enhance wealth creation and contribute to the social well-being
Vision
Focus Areas
Institutional Support
Action Plan
New SME Development Framework for innovation-led and productivity-driven growth
20
Through interaction with stakeholders, 6 focus areas were identified where constraints need to be addressed
Constraints to Growth
21
Plan proposes 32 initiatives across all focus areas, of which 6 are High Impact Programmes
6 High Impact Programmes (HIPs)
Measures across 4 Themes
Measures for East Malaysia
Other Measures
• 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%
• Resource pooling & shared services• Create demand for SME products• Reduce information asymmetry • Building capacity & knowledge
• Improve connectivity & basic amenities• Review restrictive laws & policies• Ease market access
• 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
22
Increase business formation
Expand no. of high growth & innovative firms
Raise productivity
Intensify formalisation
Average annual increase of 10%
in high growth & innovative firms
RM47,000
RM91,000
Avg. annual increase
RM/worker
15%
2000 2020
% of GNI
The high impact programmes to contribute significantly towards achieving targets under each
goals
23
Breakout Strategy forMicro Enterprises
(MEs)
25
5 programmes have been identified, targeting MEs across the various stages of the lifecycle …
GrowthStart-up Expansion / GraduationGraduate to
SME
ME lifecycle
Valley of Death
Firm size & turnover
ME lifecycle stages
≤ 5 employees, ≤ RM300,000
turnover
Programmes Targeting MEs across the ME Lifecycle
Awareness and Outreach
P1
P2
P3
P4
P5
Outcome is measured at 3 levels
26
Macro performance (GDP, exportsemployment)
Programme level
Firm level through
SCORE
27
Programme
KPIs
Common KPIs set at Programme LevelProgramme Level
28
SCORE a diagnostic tool for firm level measurement and to provide targeted assistanceSME Competitiveness Rating for Enhancement (SCORE):
A tool developed in-house in 2007
SCORE evaluation
Choose a model:•Manufacturing•Retail & Distributive Trade•Construction•ICT•Maintenance, Repair & Overhaul•Professional Services
0 – 2 stars:Very basic
business operation
3 – 5 stars:Competitive & export-
ready companies
Capacity building Financing & assistance to go global
Enhanced competitiveness
Improved performance
SCORE re-evaluation
1
23 3
4
SME Competitiveness Rating For Enhancement (SCORE)
• MDEC• PSDC• SME Bank• TM
• MPC• HDC• NCIA• MTIB
• 0 – 2 : Very basic business operation• 3 – 5 : Competitive and export-ready companies
Example of Radar Diagram for 3-Star company
Analysis: Weak in financial capability
Assistance: Requires training in financial management & improvement in quality management
• Technical capability• Quality System• Innovation
29
• a comprehensive diagnostic tool to enhance competitiveness of Micro Enterprises
• developed in Feb 2010
• Level 1 : Basic business operations• Level 2 : At average and has a potential• Level 3 : Complete the criteria
•TEKUN•AGROBANK•SME BANK
Example of Radar Diagram for Level 2 Micro Enterprise
Analysis:To measure capabilities of start-ups or existing micro enterprise businesses.
Assistance:To provide hand holding assistance
•BSN•AIM•ICU, JPM
M-CORE for the micro enterprises…
30
Simple assessment process…
31
Success stories…
32
0.00
2.00
4.00
6.00
BusinessPerformance
FinancialCapability
TechnicalCapability
ProductionCapabilityInnovation
QualitySystem
ManagementCapability
2008
2011
Significant Improvements in:- •Financial Capability•Technical Capability • Innovation• Management Capability• Quality System
Moderate Improvements in:-•Business Performance•Production Capability
Success story A
33
0.00
2.00
4.00
6.00
BusinessPerformance
FinancialCapability
TechnicalCapability
ProductionCapabilityInnovation
QualitySystem
ManagementCapability
2008
2011
Significant Improvements in:-Quality SystemTechnical Capability Innovation
Moderate Improvements in:-Management CapabilityBusiness PerformanceFinancial CapabilityProduction Capability
Success story B
34
1-INNOCERT
35
Innovation Certification Innovation Certification for Enterprise Rating and for Enterprise Rating and
TransformationTransformationNATIONAL INNOVATION AGENDA
NATIONAL INNOVATION COUNCIL
JTPIN
Market
Institution
Technology
36
THE KOREAN SUCCESS STORY
37
Impact Analysis Framework on SME Development Programmes
(IAFSP)
WEIGHTAGE
RANGE OF ACHIEVEMENTS
1.Exceed Target (ET):
80% - 100%2.On Target (OT): 70% - 79%3.Below Target (BT):
60% - 69%4.Unsatisfactory (US):
59% and belowNote:•Outcome-based that emulates the Guideline of Sistem Pemantauan Projek (SPP) by EPU
Impact Analysis Framework on SME
Development Programmes
(IAFSP)
Monitoring & Evaluation Mechanism
Newly Reported 20 RM508.5m
Deferred / Cancelled 18 RM864.9m
Implemented 157 RM11.6b63%101%
Programme “Report Card” for 2013
Planned ImplementedNo. of Programmes 155 157Financial Commitment (RM ‘mil) 18,396.27 11,586.87SMEs benefitted 467,838 884,911
Programmes Implemented in 2013 by Focus Area
(15 progs)
(59 progs)
(21 progs)
(28 progs)
(34 progs)157 progs @
RM11.6b
Benefitted 884,911
SMEs (189%)
PERFORMANCE:
82.9%EXCEED TARGET (ET)
Business Sustainability
(BS)
Increase Formation and Formalisation of
Businesses (IBF)
Increase Profitability
(IP)
New Employment Created (NEC)
High Growth and Innovative Firms
(HGIF)
Increase Productivity and
Efficiency(IPE)
Overall Performance 2013 for Ministries / Agencies (M&As)
Performance 2013 by Funds Allocation: Govt vs Private
EXAMPLE OF HIGH PERFORMANCE PROGRAMMES
Overall REPORT CARD for 2013
WEIGHTAGE KPIs Measured
27.3%• Beneficiaries• Sessions implemented• Training(s) conducted
• % increase in sales• % increase in knowledge• % of Non Performing Loan
RESULT
34%
23% 84% Overall Achievement for SME
Development Programmes
Programmes Planned for Programmes Planned for 20142014
• 131 SME programmes
• Total allocation: RM13.2b
GOVERNMENT FUNDING111 progs RM6.8b
PRIVATE SECTOR FUNDING20 progsRM6.4b
RM
In 2014, planned programmes In 2014, planned programmes cut across cut across 5 focus areas5 focus areas……
To benefitRM13.2 billion 526,359 SMEs
Focus AreasFinancial Allocation(RM mil)
No. of Programmes
13,172.9131TOTAL
Kick-OffKick-Off of Initiatives in 2014of Initiatives in 2014
Industrial Linkages
48
Facilitating access to market by integrating SMEs into the supply chain of the large companies
Concentration on high value-add portion of the supply chain…
RETAILRETAILMANUFACTURINGMANUFACTURING
INTE
RNAT
ION
ALIN
TERN
ATIO
NAL
LOCA
LLO
CAL
48
Integrating into global supply chain…
49
Composites Technology
Research Malaysia
Aero Composites
Spirit AeroSystems Malaysia Sdn
Bhd
50
Way forward
Government
Private Sector
• Facilitator• Act as catalyst
• Associations, chambers & NGOs to develop SMEs• Large firms to mentor SMEs • Participation in design & implementation of progs.
SME development a shared responsibility...
51
What needs to be done?
52
Strengthen industry
association
1
Increase range of services
provided by associations
2
Build bridges between public
and private sectors
through shared services
(funds, space)
3
Enhance capacity of
private training and
advisory provider
4
Encourage establishment
of private finance
providers
5
Develop capacity for
private professional services for
SMEs
6
…with private sector assuming a greater role
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
53
54
It’s the little pieces that make up the big picture,Generating wealth of no small measure,The collective strength of our nation’s economy,Providing employment, driving demand, creating opportunities.
Being small is more and the more the better,It’s in our interest to see them prosper,We’ve transformed to serve their needsWe’ve striving to ensure they succeed.
SMEs are the building blocks of our nation’s economic growth.
PowePowerr
TheThe
SmalSmalll
ofof
Thank youThank youwww.smecorp.gov.mywww.smeinfo.com.my 1-300-30-6000
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