National Entrepreneurship Framework Strategic Thrusts & Objectives

KEMENTERIAN PEMBANGUNAN USAHAWAN

MINISTRY OF ENTREPRENEUR DEVELOPMENT

The Ministry of Entrepreneur Development (MED) was re-established on 2 July 2018 by the new Government with the objectives of formulating an inclusive and competitive National Entrepreneurship Policy aims to rationalize and refocus all functions and roles of entrepreneur development programmes in order to support the nation’s economic agenda and create a conducive and integrated entrepreneurship ecosystem.

Since its establishment, work has gone into the preparation of a National Entrepreneurship Framework involving various stakeholders and entrepreneurs through the Bumiputera Entrepreneur Congress which has been organised by MED in the different states. In addition, inputs from the Entrepreneur Development Advisory Council (EDAC) which comprises of experts in entrepreneurship from various industries have also been included.

The Framework consisted of 21 Strategic Objectives grouped into 4 Strategic Thrusts namely Accelerating Economic Growth Through Innovation Driven Entrepreneurship, Comprehensive and Integrated Entrepreneurship Development, Boosting Entrepreneurship Among B40 and Scaling-Up Entrepreneurs.

STRATEGIC OBJECTIVE 1 : INCREASE SME CONTRIBUTION TO GDP

MED aims to strengthen the economic contribution of Small and Medium Enterprises (SMEs), which stood at 37.1% in 2017 of the country's Gross Domestic Product (GDP) to 41% by 2020.

Among MED’s focus would be as a facilitator to entrepreneurs and SMEs in establishing their business, ensure cooperation and strategic networking between the public and private sectors, as well as planning and implementing activities to promote the entrepreneurial culture. This will help entrepreneurs and SMEs to ultimately become homegrown champions in their respective sectors and be successful in both domestic and global markets.

MED will also look into new trends that will accelerate SME’s growth such as megatrends and Industrial Revolution 4.0 (IR4.0). A two-pronged strategy needs to be undertaken for sustainable and inclusive development by:

High Growth and Innovative Firms Microenterprises (B40)

STRATEGIC OBJECTIVE 2 : INNOVATION DRIVEN ENTERPRISES

MED aims to create and develop Innovation-Driven Entrepreneurs adopting the exponential entrepreneur framework; to achieve very high and fast growth, incorporating the latest exponential technological trends (Big Data, IoT and AI), psychological tools (innovative business models) and power of the crowd (crowdfunding, community building etc).

Ramping up creation of high growth and innovative firms by the creation of more global SMEs through targeted assistance in automation, digitalization and robotization

Increasing microenterprises (B40) contribution to the economy through support for microenterprises and startups

Technological

Trends

Psychological Tools

Power of The Crowd

The Government had also identified main subsectors that will further accelerate the economic growth namely the rail industry, medical devices, aerospace, automotive, digital economy, biotechnology and renewable energy. Manufacturers and service providers in these subsectors have bigger potential and capabilities to diversify their products and services towards a more complex and higher value projects which in turn will generate a higher economic return to the GDP.

In addition to this, MED will also look into enhancing the potential and business opportunities in creative industry such as bamboo and wood carving that would create more job opportunities and eventually enhance the contribution of this

sector to the economic growth of the country.

This must also be supported by a thriving ecosystem that provides access to finance which includes venture capitals, angels, market access etc and a business environment that is collaborative which links to relevant industry mentors, other enterprises, corporates and so on. With all this in place, an entrepreneur will be able to churn new innovative products and services built on effective sustainable long-term business models.

STRATEGIC OBJECTIVE 3 : STRENGTHENING THE STARTUP ECOSYSTEM TOWARDS FUTURE INDUSTRIES

Process of Ideation

In order to ensure that Malaysia continuously grows the funnel of startups for future industries, MED will ensure that the process of ideation from startup to scaleup is inclusive and accessible by ensuring enough touch-points for individuals to explore ideas.

Realizing that funding is an important element in the Startup Ecosystem, MED will be driving the movement to attract more venture capital funding, impact investments via incentives and schemes so that high performing startups will be able to timely seize the opportunities and potentials, which MED hopes will enable the discovery of another Unicorn in Malaysia.

Creating an Innovation Supercluster for Future Industries

MED also plans to ensure that entrepreneurs/ startups dealing with Future Industries are given the opportunity to flourish. In order to do this, Industries and Startups cannot work in silos. MED intends to create an innovation supercluster of identified sectors of the future such as Mobility, Clean Energy, Smart City, Healthcare and Agritech.

These Innovation Superclusters aims to bridge industry players and Startups/Entrepreneurs in driving new innovations faster to the market. Superclusters are essentially micro-entrepreneurial ecosystems of the identified industries.

Establishing a National Open Innovation Platform

In order to stimulate new type of Innovation Driven Opportunities for Startups, there is a need to establish a platform that allows for the challenges and issues of the Government, corporates and SMEs to be exposed to startups.

Startups are known to be able to solve problems more efficiently and effectively. The creation of such platform will transform the country into a citizen of problem solvers and we hope that this will in turn support the countries’ aspiration as an Entrepreneurial Nation.

STRATEGIC OBJECTIVE 4 : EASE OF ACCESS TO FUNDING STRATEGIC OBJECTIVE 5 : ALTERNATIVE SOURCE OF FINANCING

Economic and SME Census 2016 (reference 2015) shows that 73% of source of financing for SMEs is from internally sourced fund. MED believes that the growth

1 of SMEs can be intensified if they take full advantage of the conducive financing ecosystem for businesses in Malaysia. Access to financing remains a challenge for certain categories of businesses due to lack of access to information, stringent eligibility criteria and risk adverse attitude of financiers.

MED shall act as focal point for access to financing for entrepreneurs and SMEs in an inclusive manner catering for among others, B40, youth, women

2 entrepreneurs, OKU, social entrepreneurs, co-operatives and startup businesses. Coordinated effort shall be made to enhance access to information about holistic financing ecosystem for different target groups and business lifecycles.

Access to finance shall also be facilitated by:

3 Provision of direct financing through MED and its agencies; and/or

Referral to other sources of financing across Ministries, Agencies and private sectors

Awareness about the Government Guarantee Schemes shall also be

4 enhanced to assist businesses especially SMEs to gain access to financing from the financial system.

Advancement in technology and evolution of investment tools, intermediaries and platforms have enhanced the alternative financing sources for businesses. It enables greater participation and lower investment threshold by investors.

MED shall facilitate and promote access to diversified financial landscape to focus groups via alternative financing platforms such as crowdfunding, Leading Entrepreneurs Accelerator Platform (LEAP) and ACE Market. Together with Bursa Malaysia, MED and SME Corp will be organizing more market awareness sessions beginning December 2018 onwards to encourage more entrepreneurs to participate in listing their businesses on Bursa Malaysia.

To ensure a vibrant alternative financing ecosystem, mobilization of investment by public institutional funds (e.g.: EPF, KWAP and LTAT etc), business angels, waqaf funds, venture capitals and private equity companies shall be encouraged as their contribution to stimulate organic growth of local SMEs. The investment can be done directly or through licensed / registered intermediaries like the SME Investment Partners (SIPs) where Government will also be co-investing.

Incentives may be considered for alternative financing players that support certain entrepreneurs’ target group in order to accelerate growth. Public-private smart partnership shall be intensified to fund specific economic sectors to broaden the range of financing instruments available to entrepreneurs and SMEs. Reliance on government funding and grants to finance business needs shall be reduced over time.

STRATEGIC OBJECTIVE 6 : ENHANCING THE ROLE AND OUTCOMES OF DFIs

STRATEGIC OBJECTIVE 7 : TO DEVELOP AN INTEGRATED ENTREPRENEURSHIP AND SME DATABASE

Development Financial Institutions (DFIs) in general take higher risk profile customer than commercial banks particularly SMEs that lacks the necessary collateral and financial track record. DFIs need to be assessed differently than commercial banks to undertake this responsibility more effectively. According to the 2016 Economic Census, only 4.2% of SMEs are funded by DFIs in Malaysia as compared to 24.1% by commercial banks.

MED in partnership with Bank Negara Malaysia, will be focusing on enhancing the role of DFIs such as TEKUN, Bank Rakyat and SME Bank in providing the necessary funding support to local SMEs while at the same time ensuring the continued sustainability and fiscal accountability of DFIs.

MED will be developing an Integrated Entrepreneurship and SME Database which consists of data from various entrepreneurship development organizations and agencies to assist in the national entrepreneurship development agenda. Currently, data on entrepreneurs are collated by various Ministries and agencies, some of which may be duplicating and are not easily accessible by stakeholders.

There is real need for the Government to produce a centralized database on the entrepreneurial ecosystem which include the number of entrepreneurs, employment generated by entrepreneurs and value creation of entrepreneurship to the country.

Comprehensive and Integrated Entrepreneurship Development

Strategic Thrust 2

60

STRATEGIC OBJECTIVE 8 : STREAMLINE / RATIONALIZE ROLES AND FUNCTIONS OF ALL EDOs

STRATEGIC OBJECTIVE 9 : STREAMLINING ENTREPRENEURSHIP TRAINING

Despite various entrepreneurship training programmes being provided by Ministries and agencies, many of them are duplicating and inconsistent with each other. In addition, complaints have been received regarding the quality and outcomes of these programmes as compared to the costs expended by the Government.

+ Entrepreneur Development

Agencies

Streamline and

Rationalize

Malaysia currently has more than 60 entrepreneur development agencies scattered across various Ministries and states. In 2018, a total of 151 SME development programmes have been planned with financial commitments amounting to RM12.89 billion.

The establishment of MED is timely with relevant key agencies parked under it which are involved in planning and coordination, funding and training. This would allow the Ministry to design, coordinate and implement SME and entrepreneurship-related policies, regulations as well as action plans across all sectors in a cost effective and efficient manner. At the same time, there is need for MED to streamline and rationalize the role and functions of all these agencies so that there is no duplication and overlap of resources.

A National Entrepreneurship Training Council will be formed under MED to align and monitor all matters pertaining to entrepreneurship training :

To develop a National Entrepreneurship Training Framework to ensure consistencies in all aspects of entrepreneurship training. This Framework will be the source of reference to be adhered by all the agencies and training providers.

To align the curriculum used by agencies and training providers.

To monitor the outcome of such programmes.

Accreditation will be carried out by the National Entrepreneurship Training Council to ensure the curriculum is aligned to 11th MP and other policy directions.

MED will be introducing a legislation to upgrade the status of Maktab Koperasi Malaysia (MKM) to an Institute in order to enhance the quality of training provided to co-operatives.

STRATEGIC OBJECTIVE 10 : ENTREPRENEURSHIP SKILLS FOR UNEMPLOYED GRADUATES

Newly revamped programme based on current modus will be implemented as a platform to not only assist unemployed graduates, but also producing job creators by providing relevant training for the graduates with additional entrepreneurial modules. This new concept is aimed to assist the unemployed graduates through several initiatives such as :-

Entrepreneurship

STRATEGIC OBJECTIVE 11 : CONSOLIDATION OF EXISTING ENTREPRENEURSHIP DEVELOPMENT FUNDS

MED aspires for entrepreneurship training and courses be made available to the Rakyat by introducing a new service delivery model of subsidization by credit points system, making it affordable for all especially the B40s.

The Entrepreneurship Development Fund (EDF), is a concept whereby an entrepreneur who registers To collaborate with relevant agencies to provide real entrepreneurial training with live business set up to boost the graduates' experience & new interest as job creators.

To reach out to graduates through nationwide

Entrepreneurial and Employability Outreach Programme.

An Intensive Boot Camp for Graduates already in business.

To provide ‘the right awareness approach’ for entrepreneurial to university students.

To assist in providing seed money through a revolving fund initiated by the private sector or Co-operatives.

Providing employability training through soft skills and genuine on-the-job training with the industries such as GLCs, VDP companies and also Government tender receiving companies as part of their Corporate Social Responsibility (CSR) programme.

will be allocated EDF credit points per year, based on their income bracket. The allocation given will be more favored towards B40s.

To enhance the quality of training, MED will also be monitoring the standard of entrepreneurial training providers across the country. They would need to register and be certified by MED as an EDF Training Provider, together with the proposed structure of cost subsidization model for each training.

This concept will allow all income groups in the country to have affordable access to various certified entrepreneurship training and courses. The model will not require monetary fund per se from the Government, but substituting it with a working credit points system thus establishing a new service delivery model.

STRATEGIC OBJECTIVE 12 : CO-OPERATIVES AS KEY INSTRUMENT TO BOOST ENTREPRENEURSHIP AMONG B40

Co-operatives currently account for less than 1% of the National GDP with the total number of co-operatives amounting to 14,000 across the country. The Government sees the potential of co-operatives as a growth vehicle for the economy particularly to address the needs of low income households and rural communities.

To ensure co-operatives remain competitive and viable, this sector will be given exposure and incentives to explore and penetrate new strategic businesses that will yield high return.

The new aspirations and ideals will bring new challenge to co-operatives to not only uplift the standard of living for its members but also to realize the development agenda. Therefore, the co-operative movement should ensure effective intervention in issues like co-operative membership, finance, leadership and management. Steps need to be taken to overcome shortcomings and help co-operatives to operate efficiently. Ultimately, co-operatives not only bring returns to its members but also act as economic booster to B40s.

Boosting Entrepreneurship Among B40 Strategic Thrust 3

STRATEGIC OBJECTIVE 13 : POTENTIAL OF CO-OPERATIVES AS ECONOMIC DRIVER

From the point of view of a business enterprise, in many aspects co-operatives are similar to other businesses as they have similar facilities to undertake their businesses, undertake similar functions and follow good business practices

STRATEGIC OBJECTIVE 14 : CO-OPERATIVES AS DRIVER OF SOCIAL ENTREPRENEURSHIP

Co-operatives are not treated as an SME in Malaysia. For example, co-operatives have to register with the Malaysia Co-operative Societies Commission (SKM) whilst other business enterprise are registered with the Companies Commission of Malaysia (SSM). In addition, co-operatives have different tax treatment than SMEs.

There have been more demands from co-operatives to benefit from various assistance and access provided to SMEs such as brand development (packaging and brand certification), financing (loan, credit guarantee and grant), capacity building (promotion and training) and market access (domestic and international). MED will be looking at this long standing proposal to ensure some parity between co-operatives and SMEs.

MED will be conducting a review on the current legislation pertaining to co-operatives namely Akta Suruhanjaya Koperasi Malaysia 2007 (Akta 665) & Akta Koperasi 1993 (Akta 502) through a public consultation process beginning December 2018 to ensure co-operatives remain relevant and competitive to the current development.

Social Entrepreneurship is a key agenda for MED in empowering the people to address social and environmental issues. Co-operatives is one of the tools to achieve this goal since its natural DNA combines business and community building

In our various socio-economic agenda, people should be involve in meaningful and constructive manner that allow the economy to be mobilized through the communities unity without over relying to the Government. Social Entrepreneurship (SE) through co-operatives will be promoted to bring social change in community by individuals who combine the pragmatic and result oriented method of business enterprise with the goals of social reformer. SE can be used as a tool to inspire community to address social and economy common needs through potential entrepreneurship.

STRATEGIC OBJECTIVE 15 : MULTI PLATFORMS FOR MARKET ACCESS OF B40 PRODUCTS AND SERVICES

B40 entrepreneurs will be encouraged to get on-board of e-commerce. MED through its agencies such as SME Corp will continue to provide guidance and training for entrepreneurs to promote and sell their products and services via online platforms.

In 2017, SME Corp and strategic partners such as MDEC, AliBaba, Google, Boost and Lazada have trained more than 25,000 SMEs on e-commerce. Strategic collaboration with existing online portals such as 11 Street, Shopee and Lazada as well as local online platform such as Fashion Valet and AMAXMall will be strengthened in providing platform for entrepreneurs to promote and market their product.

Scaling-Up Entrepreneurs

MED will encourage private sector players to partner with B40 entrepreneur to market their products. This will enhance visibility of B40 products as well as provide more opportunities for B40 to market their products both locally and for the export market through various platforms.

In addition, MED will also utilise its agencies online portals such Bank Rakyat TV (BRTV) to promote products and services of B40 entrepreneurs.

Strategic Thrust 4

STRATEGIC OBJECTIVE 16 : EXPAND THE ROLE AND COVERAGE OF “ENTREPRENEUR ONE STOP CENTRE”

STRATEGIC OBJECTIVE 17 : TO ESTABLISH A DEDICATED RESEARCH AGENCY ON ENTREPRENEURSHIP AT MED

At present, there is no dedicated research agency that looks into matters pertaining to entrepreneurship in the country. It is proposed that MED sets up a National Entrepreneurship Research Centre which will undertake to:

KEMENTERIAN PEMBANGUNAN USAHAWAN

MINISTRY OF ENTREPRENEUR DEVELOPMENT

PUSAT SEHENTI KEUSAHAWANAN

MED had launched the Entrepreneur Development One-Stop Centre that offers comprehensive and coordinated entrepreneur support services as one stop.

The one stop centre will also function as a mobile exhibition centre and facilitate efforts to develop entrepreneurs in Malaysia. This will help public in getting latest information on entrepreneurship programmes as well as financing offered by various agencies.

Analyze data gathered through the central database that is being developed

Provide reports on existing trends of entrepreneurship in the country

Other facilities to be available at the centre : Recommend actions or policy enhancements needed for MED to shape future entrepreneurs

Analyze available industry reports and match back to existing ecosystem and identify gaps or opportunities for improvements

STRATEGIC OBJECTIVE 18 : TO INCREASE PARTICIPATION OF NEW ANCHORS FROM GLCs/ MNCs/ PLCs/ VENDOR CHAMPIONS

STRATEGIC OBJECTIVE 19 : CREATING MULTIPLE TIERS AMONGST VENDORS

Presently, the majority of anchor companies that took part in Vendor Development Programme (VDP) are GLCs. The main reason for this is that the anchor perceives VDP as Corporate Social Responsibilities (CSR) initiatives. There is a need to find a win-win solution with all the parties involved in order to attract MNCs and PLCs as anchors through initiatives providing incentives and guaranteed supply chain.

To ensure successful execution of Vendor Development Programme (VDP), MED will increase participation of new anchors from GLCs, MNCs, PLCs and Vendor Champions. Their participation as anchor companies are needed to expand entrepreneurship sectors and develop more vendors. Thus, will increase and diversify business areas for vendors.

As to date, there are 21 anchor companies and 1,354 vendor companies involved in VDP. Subsequently, the increase in number of new anchors will generate good competition amongst anchors and vendors.

These companies will also participate in the Graduate Employability Programme.

MED aims to develop more SMEs and entrepreneurs including B40 to become competitive component supplier, manufacturer or service provider in collaboration with anchor companies. In regard to this objective, MED will create a more holistic ecosystem for local vendor companies through the Reach Out and Adopt (ROAD) Programme aims to groom entrepreneurs based on their potential to scale up their businesses.

To date, most anchors under the existing Vendor Development Programme (VDP) only have vendors at a single tier. There is a need to improve and perhaps emulate the vendor programmes in other countries such as Korea and Japan where vendors with multiple tiers are created until Tier 5 -7 so that it covers the B40 segment.

STRATEGIC OBJECTIVES 20 : VENDOR DEVELOPMENT TO FOCUS ON KEY POTENTIAL SECTORS

A study of the Vendor Development Programme (VDP) shows that some vendors face difficulties upon graduation from the system due to the highly competitive nature of the industry. These sectors such as construction are too competitive to allow graduating vendor to compete equally in the market. Following this, VDP will focus towards highly potential sectors that will allow newly graduating vendors to flourish in a healthy environment.

MED is exploring new potential and strategic sectors with high revenue for vendor development. For the time being, MED has identified a few strategic sectors to venture into, namely automotive, rail, aerospace, medical devices, biotechnology and renewable energy. Focus will be given as these sectors are amongst the world’s largest economic sectors by revenue. Vendors will be encouraged to enhance their capacity and capability to penetrate into these potential and strategic sectors.

The automotive industry is an integral sector, driving the growth of the Malaysian economy, particularly in terms of engineering and manufacturing. MED is focused on further upgrading the capacity and capability of local vendors through the new national car project, using local technology and competency in producing prototypes and designing engines.

STRATEGIC OBJECTIVE 21 : INTERNATIONALIZATION OF LOCAL ENTREPRENEURS

MED will elevate local entrepreneurs to think and act global, and at the same time encourage and support SMEs and high-growth innovative startups to explore the international markets and grab opportunities for exports.

MED’s key focus areas for internationalization will be:

Incorporating capacity building programmes that emphasise and boost the go-global ambition, competitive mindset, and internationalization strategies of local entrepreneurs.

Consolidating programmes that address technical barriers to trade, such as meeting internationally accepted standards and compliance requirements of foreign markets, obtaining certificates and licenses, and addressing branding, marketing, and packaging of products and services to tap other markets.

Broadening the range of instruments to support firms, such as financial assistance for participation in trade fairs and registration of Intellectual Property Rights (IPR), and also new digital platforms that enhance market access.

Establishing G2G partnerships including through specialized trade missions and memorandums of cooperation/understanding that target specific growth clusters such as halal, automotive, aerospace, digital economy, bamboo and wood carving sectors. MED has been mandated to sign a Memorandum of Cooperation (MOC) with Japan on halal. MED will be following up on the signing of the MoC in order to ensure halal products and services would be able to enter Japan market in time for the upcoming Olympic & Paralympic Games in 2020.

Providing market intelligence and advisory services on other markets. MED will leverage Malaysian agencies and foreign missions abroad, and also collaborate with international organizations such as ASEAN, APEC, OECD and ERIA.

Blok E4/5, Kompleks Kerajaan Parcel E, Pusat Pentadbiran Kerajaan Persekutuan,

62668 Putrajaya Malaysia.

Telephone No. : 03-8000 8000 Fax. : 03-8889 3712

Email : webmaster@med.gov.my