MIA REGIONAL CONFERENCE 2009, 10 – 11 AUGUST 2009“Exploring Opportunities, Inspiring Growth Towards Sustainability”

En. Borhan bin SidikDeputy Chief Executive Officer, SMIDEC

SECURING FUNDS DURING ECONOMIC DOWNTURNPART 1 – SECURING FUNDS FROM GOVERNMENT

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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

2Banking Summit 2009

Transformation of SMIDEC to SME Corp. M’sia

Referral Centre on SME development

and issues

Mgmt of data & Info

dissemination & Research

One-stop SME advisory centre

Capacity Building Programme

Policy Development Programme Implementation

Financial AssistanceProgramme

Coordinate policies &

programmes

• SME Corp. M’sia, Secretariat to the National SME Development Council (NSDC), the highest policy making body to chart SME development

NSDC

SecretariatSME Corp. M’sia

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Source: Census of Establishment and Enterprise 2005, Department of Statistics Malaysia

Overview of SMEs in Malaysia

SME Overview

Employ 56%

workers

19% of total

exports

• 80% are micro-

enterprises

99.2% or 548,267 of

total establishments

• 87% services• 7% manuf.• 6% agriculture

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32% of GDP

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• Impact evident since 4Q’ 08 and intensified in 1Q’ 09• Manuf. experienced earlier than services, particularly those in export-

oriented sector

%

Timing of Crisis Affecting SMEs

Impact of fin. & econ. global crisis on SMEs: 77% of respondents affected

Source: SMIDEC Survey April/May 2009

(%)No

ImpactSlight Impact

Moderate Impact

Severe 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 Normal Normal

Above Normal

Not Applicable

- New orders 57.6 27.0 4.6 10.8- Inventory levels 30.1 39.5 8.5 21.9- Sales cancellation 15.6 29.9 14.4 40.2

• However, companies remained lean - low inventory level

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Sales, profit margin & selling price affected, and future orders indicate poor prospect s

Source: SMIDEC Survey April/May 2009

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Issues Measures

% %

Reduction in demand is the main issue

Source: SMIDEC Survey April/May 2009

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Worsen29%

Unchanged28%

Positive24%

Opportunity19%

• 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%)

Still in operation

77.7%

Downsize the operation

18.0%

Cease operation

1.7%

Relocate to another country

0.5%

Other2.0%

OUTLOOK

WHAT SMEs PLAN TO DO

SMEs Outlook for next 6 Months

Source: SMIDEC Survey April/May 2009

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• Policy measures huge and comprehensive• 25 funds and facilities : Total RM15.6 billion (2% of GDP)

• SME Assistance Facility

• SME Modernisation Facility

• Restructuring/ Rescheduling

RM 1.2 bil

• Working Capital Guarantee Scheme

• Industry Restructuring Loan Guarantee

• Financial Guarantee Institution (Danajamin)

Govt took aggressive measures to address SME’s concerns

Initially to assist SMEs cope with higher prices, later to weather the impact of global crisis

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Measures addresses key areas of concerns

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Mainly to enhance access to financing during the crisis.

Facilities that SMEs Can Avail Themselves

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Summary of Funds & FacilitiesJuly 2008: Special Package for SMEs to address higher cost

AmountRM

Min / Agency

1. SME Assistance Facility 700 million BNM2. SME Modernisation Facility 500 million BNM3. SME Loan / Financing Restructuring and Rescheduling -no value- BNM

Total 1.2 billionNov 2008: 1st Stimulus Package Amount Min / Agency

1. Micro Enterprise Fund 200 million BNM2. Provision for additional business premises for SMEs (2) 100 million PUNB3 Urban Micro Financing 100 million AIM

Total 0.4 billionFeb ‘09: BNM Packages to enhance access to financing Min / Agency

1. SME Assistance Guarantee Scheme 2 billion BNM / CGCTotal 2.0 billion

Mac 2009: 2nd Stimulus Package Min / Agency1. Working Capital Guarantee Scheme 5 billion MOF2. Industry Restructuring Financing Guarantee Scheme 5 billion MOF3. Danajamin National Sdn Bhd 1 billion MOF

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2nd Stimulus Package for SMEs: March 2009 (cont’d…) Amount RM

Min / Agency

4. Industry Content Development Initiative 55 million MOSTI5. Assistance prog. for smallholders for replanting of palm oil 100 million MPIC6. Integrated chili plantation based on fertigation syst. project 10 million MPIC7. Raw material support programme for Bumi -wood entrep. 10 million MPIC8. Malaysia Timber Promotion Centre 20 million MPIC9. Prov. of apparatus to make chocolate semi-finished product 5 million MPIC

10. Assistance of rubber plantation material for 1,000 Sabah smallholders

3 million MPIC

11. Prog. to promote the plantation of latex timber clone (LTC) by S’wak smallholders

3 million MPIC

12 Fishermen’s Welfare Fund 2 million MOA13 Additional fund for micro credit programme under AgroBank 300 million MOA14 Additional fund for micro credit programme under TEKUN 50 million TEKUN15 Upgrading of infrastructure in the tourism sector 200 million MOTOUR16 Additional fund for the Automotive Development Fund 200 million MITI17 Program Siswazah Perantis PUNB 50 million PUNB

Total 12. 008 billionGrand Total 15.608 billion

Summary of Funds & Facilities

Banking Summit 2009 14

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

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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

Financial assistance covers the entire spectrum of activities in the business cycle and scope will be extended to all sectors eventually

SME Corp. M’sia : Financial assistance programmes

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1. INDUSTRIAL LINKAGE PROGRAMME

2. SKILLS UPGRADING PROGRAMME

10. OUTREACH PROGRAMMES

8. ENTERPRISE 50 AWARD PROGRAMME

Focusing on facilitating linkages, enhancing skills & entrepreneurship technology innovation, motivation & advisory services

7. NATIONAL WOMEN ENTREPRENEUR AWARD (NWEA)

6. TECHNOLOGY AND INNOVATION PROGRAMME

9. SME EXPERT ADVISORY PANEL (SEAP)

SME Corp. M’sia: Capacity development programmes

3. BUMIPUTRA ENTREPRENEUR ENHANCEMENT PROGRAMME ( BEEP)

4. SME – UNIVERSITY INTERNSHIP PROGRAMME

5. SME COMPETITIVE RATING FOR ENHANCEMENT (SCORE)

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3-pronged approach for better outreach to SMEs & to reduce cost

Capacity building

SME Corp. M’sia: Advisory services - enhanced delivery system to reach more SMEs efficiently

Processes

• Standard loan application form for all Ministries / Agencies

Infrastructure

• Branches increased to all states

(from 4 to 18)

• SME Business Coaches

• SME Business Counsellors

Kedah / Perlis(Alor Setar)Pulau Pinang

(Bukit Mertajam)Perak(Ipoh)

Kuala Lumpur(HQ)N. Sembilan

(Seremban)Melaka(Ayer Keroh)Johor

(Johor Bahru)Sarawak (Kuching)

Sabah (Kota Kinabalu)

Kelantan(Kota Bahru)

Terengganu(Kuala Terengganu)

Pahang(Kuantan)

• Use of SMS to check status of loan/grant application

• SME Business Advisory Centre

• Business Licensing Electronic Support System (BLESS)

Basis:

• Identify weaknesses of SMEs to facilitate focused and integrated hand-holding assistance to SMEs;

• Link potential SMEs with large companies/ companies / MNCs ;

• Identify & facilitate suitable financial assistance for development of SMEs

SME

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Visit SCORE

SME Competitive Rating for Enhancement (SCORE), a tool to evaluate and track SME’s capabilities & performance

Analysis of SCORE Results

19Banking Summit 2009

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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

SME BUSINESS CENTRE

THANK YOU

Business Advisory Services (BAS)

VIRTUAL SMEINFORMATION CENTRE

info@smidec.gov.my/www.smidec.gov.my

INFOLINE1-300-88-1801

Send to 15888

SMS for Grants Status & Other Information

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