Using Entrepreneurship Ecosystem to Promote

Economic Growth

Role of Entrepreneurship

in Economy

Promote Investment

Lead to Diversity in Products &

Services

Generate Employment Penetrate into

International Market

Contribute to Gross National Product

Globally, entrepreneurship is key in stimulating economic growth

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Business Dictionary Entrepreneurship is the capacity and willingness to develop, organize and manage a business venture along with any of its risks in order to make profit

Wikipedia Entrepreneurship is a process of identifying and starting a business venture, sourcing and organizing the required resources and taking both the risks and rewards associated with the venture.

Professor Howard Stevenson of Harvard Business School: Entrepreneurship is the pursuit of opportunity beyond resources controlled.

Prof. Kabeya Tshikuku Entrepreneurship involves a conscious content, a precise commitment and a definite practice. It involves a project, a framework for its implementation and a recurrent activity geared to the materialisation of the project

Economic Dictionary Entrepreneurship is the process of discovering new ways of combining resources. When the market value generated by this new combination of resources is greater than the market value these resources can generate elsewhere individually or in some other combination, the entrepreneur makes a profit.

There are many ways to define entrepreneurship

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Dynamism of entrepreneurship is reflected in the number of new business entry and exit

…easy to register or form a business entity

In Malaysia, registration of new firms have been strong, averaging about 42,780 per year in recent years

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Malaysia is ranked 13th in Starting a Business in the Doing Business Report 2015 by World Bank

East Asia & Pacific World Ranking

Source : World Bank

…From 189 countries around the world

Ranking is based on ‘Distance to Frontier’ (DTF). The ‘frontier’ represents the best theoretical score (i.e.100) observed on each of the Doing Business indicators. The DTF score shows the gap between an economy’s performance and the best performance on each indicator

A high ranking on the ease of doing business

index means the regulatory environment

is more conducive to the starting and

operation of a local firm

Economy Ranking New Zealand 1 Canada 2 Macedonia, FYR 3 Armenia 4 Georgia 5 Singapore 6 Australia 7 Hong Kong SAR, China 8 Kyrgyz Republic 9 Portugal 10 Lithuania 11 Azerbaijan 12 Malaysia 13 Belgium 14 Taiwan, China 15 Slovenia 15 Korea, Rep. 17 Burundi 18 Ireland 19 Jamaica 20

Economy Ranking Singapore 1 Hong Kong SAR, China 2 Malaysia 3 Taiwan, China 4 Samoa 5

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Entrepreneurship is often embedded in SME development ecosystem

Product development

Access to finance

Innovation

Technology Infrastructure Market access

Regulation

R&D

Business services

Human capital

Entrepreneurship

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97.3% (645,136) business establishments in the country are

SMEs

SMEs cut across all sectors of the economy

90%: Services

5.9%

3%

1%

0.1%

Manufacturing

Construction

Agriculture

Mining & Quarrying

GDP Employment Exports 35.9% 65.0% 17.8%

SMEs contribution to the economy

Source: Department of Statistics Malaysia and SME Corp. Malaysia

In Malaysia, SMEs are important economic agent

Micro: 77% Small:

20%

Medium: 3%

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Formulate policy & undertake

economic assessment

One Referral Centre

Secretariat to NSDC

Coordinate programmes &

policies

Ministries & Agencies

SMEs

Chambers & Industry

Associations

Malaysia has a comprehensive framework to oversee SME development…

• Set up in 2004

• Chair: Prime Minister of Malaysia

• Members: Ministers & Head of Key Agencies in SME development

National SME Development Council

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Holistic approach to SME development brought positive results… but still a long way to achieve a high income nation

• Outcome of policies by NSDC • Other supportive policies (improvement in government delivery, higher

domestic demand and tourism, focus on farmers and small contractors)

SME vs Overall GDP Growth

16%

39%

51%

36%

0%

10%

20%

30%

40%

50%

60%

Lowincome

countries

Middleincome

countries

Highincome

countries

Malaysia

Contribution of SMEs to GDP

Annual growth, %

Source: Department of Statistics Malaysia

Partly due to the redefinition of SMEs

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Approach

Puuuuuuuuuuuuu

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‘Live’ uuuu

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SME Masterplan takes a new approach in SME development…

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…through a new SME development framework for innovation-led and productivity-driven growth

Market Access

SME Development Framework

Goals

Increase business formation

Intensify

formalisation

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

Action Plan

Institutional Support

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SME Masterplan reveals 4 key findings…

Low productivity: compared to large firms in Malaysia & SMEs in developed

countries

Low business formation

compared to high income countries,

mainly sole proprietorships &

partnerships

Small no. of high growth firms

contribute most to economy

Material share of informal sector in

economy: 31% of GNI

Characteristics of SMEs in Malaysia

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Innovation & Technology • Access to national innovation

system • Low commercialisation & R&D • Poor technology uptake

Human Capital Development • Workforce lacks job readiness • Low utilisation of existing

training • Non-competitive rewards &

benefits

Access to Financing • Limited non-banking avenues • Poor creditworthiness • Lack of know-how and

resources

Focus will be on addressing key constraints to growth

Market Access • Procurement by Govt/LSIs • Information barrier to exports • Limited focus on marketing &

branding • Low bargaining power

Legal & Regulatory Environment • Licensing / permits • Complying to regulations • Legislations disincentivising

formation & growth

Infrastructure • Trade clearance and facilitation

system • Low and infrequent trade

volume

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Findings of GEM Report 2014 shows that Government policies have been effective in promoting entrepreneurship in Malaysia

• Trend in necessity-driven entrepreneurs has been declining, while improvement-driven opportunity entrepreneurs have been on the rise.

• Government policies played a role in reducing fear of failure, increasing perceived capabilities and increasing the perception of opportunities.

• A prevalent reason for business discontinuation is low profitability (45% of responses) and less of financial problems (10% of responses).

• Besides providing funds, initiatives by the Government are very much augmented and centred on up-scaling and up-skilling entrepreneurs.

* Denominator: age group 18-64 perceiving good opportunities to start a business ** Respondent expects to start a business within 3 years; denominator: age group 18-64 that is currently not involved in entrepreneurial activity

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Going forward, entrepreneurship continues to be a national priority under 11th Malaysia Plan towards Vision 2020

PRODUCTIVITY …through encouraging automation & mechanisation, technology adoption and improved skills

ENTREPRENEURSHIP …important to better cope with competition by building capacity and capability of SMEs

INNOVATION …raises productivity through new or improved processes, technologies & business model and create additional revenue

INCLUSIVENESS …a balances growth benefitting all segments of the population to ensure greater prosperity

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SME Masterplan

ETP

RTP

GTP

High-income nation

The ultimate goal of SME Masterplan is to enhance SMEs’ contribution to the economy to 41% by 2020

National policies

GDP

Employt

Exports

41%

62%

25%

GDP

Employment

Exports

33%

57%

17%

2013

2020

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“DOING THE SAME THING OVER AND OVER AGAIN AND

EXPECTING DIFFERENT RESULTS – THATS INSANITY” -

ALBERT EINSTEIN

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INNOVATIVE AND DIGITAL ECONOMY ECOSYSTEM:

Entrepreneurial

Ecosystem

Innovative (non-conventional)

Nurturing Business Culture Comprehensive / Inclusive (national, regional, global)

Conducive and Dynamic (Reliable, affordable) Implementable & Sustainable

DIGITAL ECONOMY ECOSYSTEM TO PROMOTE:

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INTEGRATION

TRANSPARENCY (TRACKING & VISIBILITY

SECURITY

COMPETENCIES

PROCESS

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e-DOCUMENTATION

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SHIPMENT COMPLEXITIES (APEC BAC STUDY)

27-30 DIFFERENT PARTIES INVOLVED IN THE GLOBAL SUPPLY CHAIN PROCESS 40 DOCUMENTS REQUIRED 200 DATA ELEMENTS WHERE 30% ARE

REPEATED AT LEAST 30 TIMES RE KEYING OF 60-70% OF DATA AT LEAST ONCE. (HIGHLY INEFFICIENT AND FRAGMENTED IN THE

MOVEMENT OF A SHIPMENT)

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UN ECE and UN ESCAP :

“THE EFFICIENCY OF INTERNATIONAL TRADE

TRANSACTIONS DEPEND ON THE AVAILABILITY, QUALITY

AND RELIABILITY OF INFORMATION ASSOCIATED WITH

THE MOVEMENT OF GOODS AND RELATED SERVICES

ACROSS THE BORDERS…A SINGLE WINDOW INITIATIVE, IF

SUCCESSFULLY IMPLEMENTED, MAKES A MAJOR

CONTRIBUTION TO THE NATIONAL CAPACITY TO EXPORT

TO THE WORLD”

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SINGLE WINDOW INITIATIVE

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A facility that allows parties in trade activities to lodge standardized info / data / document with a single entry point to fulfill all import, export and transit-relatedregulatory requirements. For electronic info / data to submit only once.

WHAT IS THE SINGLE WINDOW?

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OBJECTIVE OF SINGLE WINDOW INITIATIVE

Single point submission

Reduced cost , delays / errors

Faster clearance

Correct revenue yield

Improve trade compliance

Risk management (Control, enforce)

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MAIN FOUNDATION FOR SUCCESSFUL GSW

and monopolistic concerns

worldwide

s

GSW- Global Single Window

** PPP – Public Private Partnership

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HOW TO OFFSET GEOPOLITICAL AND MONOPOLISTIC CONCERNS?

4 Regional Councils (Americas, Europe,

Asia and MEA)

Public Private Partnership

Global B2B Connectivity (without

boundaries)

Equal Share of Benefits / Revenue

Equal Governance Planning & Execution

Authority

PPP –Public Private Partnership

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TRUSTED GLOBAL NETWORK FOR GSW

PRIVATE SECTOR NEEDS

PROFIT DRIVEN ROLE

PPP ROLE

GOVERNMENT ROLE

REVENUE SHARING ROLE

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VIDEO: CASE STUDY FOR MALAYSIA’s

SHIPMENT EFFICIENCY ANALYSIS:

CURRENT SITUATION

(TO PLAY VIDEO)

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GLOBAL SINGLE WINDOW:

FOUNDATION FOR THE FUTURE INTERDEPENDENCIES AND COMPLEXITIES OF

GLOBAL TRADE REQUIRE OPTIMUM EFFICIENCY

EFFICIENCY THROUGH AVAILABILITY, QUALITY AND RELIABILITY OF DATAs ON REAL-TIME 24/7

PROACTIVE VS PASSIVE DATAs MANAGEMENT AND USAGE

GLOBAL SINGLE WINDOW: FOUNDATION FOR THE FUTURE

REAL B2B BUSINESS CONNECTIVITY – COUNTRIES, REGION AND GLOBAL WITHOUT BOUNDARIES

TOOL FOR SHELF TO SHELF EFFICIENCY-INCREASE

PRODUCTIVITY, ENHANCE GLOBAL COMPETITIVENESS

INCLUSIVENESS OF SCOPE AND FUNCTIONALITY FOR

ALL PARTICIPANTS – NATIONAL, REGIONAL AND GLOBAL

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GLOBAL SINGLE WINDOW:

FOUNDATION FOR THE FUTURE

MONITORING AND GOVERNANCE MECHANISM TO ADDRESS GEOPOLITICAL AND MONOPOLISTICS CONCERNS

RAPID GLOBAL DEPLOYMENT AND ADOPTION –

VOLUNTARY, NO COST, NON-INTRUSIVE