SME Development Programmes Under New Economic Model and 10MP

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SME DEVELOPMENTPROGRAMMES UNDER NEW

ECONOMIC MODELAND 10TH MALAYSIA PLAN

by

Czarif Chai Abdullah

ManagerSME Corp. Malaysia

25 February 2011



SMEs in Malaysia

Targeted Approach in SMEDevelopment

SMEs in NEM and RMK10

Initiative for 2011

Way Forward

Contents

2



• 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 are the backbone of theeconomy

3Source: Census of Establishments & Enterprises 2005



4

Services

(86.6 %)

Agriculture

(6.2 %)

Manufacturing

(7.2 %)

Source: Census of Establishments & Enterprises 2005

Wholesale & Retail (55.5%)

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%)

• 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 servicessector



5

Performance of SMEs outpaced the overalleconomy

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)



Going forward, SMEs are important endogenoussource of growth towards building a high incomenation

6



Promoting balanced SME development

7

New Economic

Model:

Creation of a

high-income

nation

Creating national

champions that

become

regional /

international

players

R e d u c t i o n

i n i n c o m e

d i s p a r i t y t h

r o u g h s u p p

o r t

f o r m i c r o e n

t e r p r i s e

Q u a n t u m l e a p i n G D P v i a i n n o v a t i o n & p r o d u c t i v i t y - l e d g r o w t h



SME policies to be aligned to the NEM



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

on foreign labour

• Upgrading of skills through education & training

• Reduce dependency on foreign labour through levysystem

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

9

Measures related to SMEs



• 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

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

SRI5: Transparent and

market-friendlyaffirmative action

SRI6: Building

knowledge base andinfrastructure

SRI7: Enhancing

sources of growth

SRI8: Ensuring

sustainability of growth

10

Measures related to SMEs



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 CapitalGuarantee 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

Green Lane for Procurement

• For SMEs that havepenetrated 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

11

… and RMK10 focuses on unlocking growthpotential of SMEs

Bumiputera Development

Agenda: New Approach• Areas of equity & property

ownership, skills &

entrepreneurship,• A high-level Council



• High value added natural

resources downstreamactivities• Development of indigenous

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

generation

• E&E (high value add

segments, shared

services, partnership)• Islamic Finance

• Commercial agriculture

• Integrated Tourism

12

SMEs to venture into untapped areas withhighmultiplier effect that raise productivity

levels



Emphasis would be to promote areas with highgrowth potential under NKEAs

Manufacturing Services Agriculture

Oil, Gas and

Energy

Palm Oil and

relatedproducts

Financial

Services

Wholesale and

Retail Trade

Tourism CCI

Education

Services

Electrical &

Electronics

Business

Services

Agriculture

Greater KL Healthcare

Innovation

Skilled labour force

Creativity



• Wholesale & retail

trade• New areas in

tourism• Business &

financial services• ICT• Private healthcare

• Private education• Constructionservices

• 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 tothe NKEA andGreater KL

• High value addedactivities alongvalue chain of E&E

sector• Supporting industryto:

−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 industrialcluster

• Development of new industrialcluster . e.gdownstreamactivities in palm oil

• Large-scaleroduction

Swiflet farming, aquaculture,seaweed, sa o, ornamental fish,

• Centraliserocurement or

Sectoral focus in creating an advantageousbusiness ecosystem

Services

Manufacturing

Agriculture

FocusInitiative

sOpportun

ities

14



INITIATIVES FOR 2011

15



Programmes to beimplemented in

2011

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

16

Promote

development

of competitive

and resilient

SMEs in all

sectors

towards

increasingSME

contribution to

the economy

• BAP* (for SMEs) and E² (for micro

enterprises) - Programme-based

approach to develop dynamic,

competitive & resilient SMEs

• SCORE – as tool to identify capable

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, channelled through MIDF

• Bridging Financing

* To be implemented in collaboration with SME Bank



17

Programme-based Approach

Programme-based approach

BAP E²

Reduced funding for grant & loan from average RM239 m / year

(RMK9) to RM125 m / year (RMK 10)

Large numbers and high expectations of SMEs & Stakeholders

Capacity building is still very much required

DYNAMIC, COMPETITIVE &

RESILIENT SMEs



18

BAP

E²

Programme-based approach (cont.)

Diagnose and identify

strengths & weaknesses of

SMEs

Business advisory and

recommend action plan to

SMEs

Capacity building

Provide and facilitate financial

support

In collaboration with SME Bank

In collaboration with Bank Rakyat



Conclusion

19

Towards producing national, regional and global champions

Vision



One Referral Centre (ORC)

20




21





22





23




SME Business Counsellor

24

Provide business advisory & counselling to SMEs through effective coordination

and business support, focusing on 5 areas

BUSINESS COUNSELLORS

M

an a g em ent

Pr o d u ct i on

M ar k et i n g

F i n an ci al

H um an

R e s o ur c e

DYNAMIC, COMPETITIVE & RESILIENT SMEs



SMECORP STATUS[Ref. No]

SMECORP BORANG[alamat emeil]

SME BUSINESS CENTRE

Business AdvisoryServices (BAS)

VIRTUAL SME

INFORMATION CENTREwww.smecorp.gov.my

INFOLINE

1-300-88-1801

SMS for SMEs Info

& Other Information

Send to 15888

Find us on Facebook

SME Corp. Malaysia

THANK YOU

Documents

SME Development Programmes Under New Economic Model and 10MP