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SME DEVELOPMENT PROGRAMMES UNDER NEW ECONOMIC MODEL AND 10 TH MALAYSIA PLAN by Czarif Chai Abdullah Manager SME Corp. Malaysia 25 February 2011.

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Presentation on theme: "SME DEVELOPMENT PROGRAMMES UNDER NEW ECONOMIC MODEL AND 10 TH MALAYSIA PLAN by Czarif Chai Abdullah Manager SME Corp. Malaysia 25 February 2011."— Presentation transcript:

1 SME DEVELOPMENT PROGRAMMES UNDER NEW ECONOMIC MODEL AND 10 TH MALAYSIA PLAN by Czarif Chai Abdullah Manager SME Corp. Malaysia 25 February 2011

2 SMEs in Malaysia Targeted Approach in SME Development SMEs in NEM and RMK10 Initiative for 2011 Way Forward ORC / Business Counselors Contents 2

3 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 Important domestic source of growth Foundation & support in supply chain through forward & backward linkages Balanced growth Strengthen resilience of the nation's economy Provide support to growth of new & existing areas Promote private sector-led growth SMEs are the backbone of the economy 3 Source: Census of Establishments & Enterprises 2005

4 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 services sector

5 5 Performance of SMEs outpaced the overall economy 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: GDP31.2% Employment56.4% Exports19% GDP Annual Growth (2000 price) GDP & SME Growth

6 SMEs in the NEM & RMK10 SMEs are bedrock of high income economy Employment providers / talent source SMEs important for inclusive and sustainable growth Large firms cannot exists in isolation, require strong SME SMEs form critical mass to support innovation, creativity and growth Targeted SME intervention to lift bottom 40% Going forward, SMEs are important endogenous source of growth towards building a high income nation 6

7 Promoting balanced SME development 7 New Economic Model: Creation of a high-income nation Creating national champions that become regional / international players Reduction in income disparity through support for microenterprise Quantum leap in GDP via innovation & productivity- led growth

8 SRI4: Strengthening the public sector SRI7: Enhancing sources of growth SRI8: Ensuring sustainability of growth 8 SME policies to be aligned to the NEM

9 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 levy system 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

10 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-friendly affirmative action SRI6: Building knowledge base and infrastructure SRI7: Enhancing sources of growth SRI8: Ensuring sustainability of growth 10 Measures related to SMEs

11 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 Capital Guarantee 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 have penetrated 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 growth potential of SMEs Bumiputera Development Agenda: New Approach Areas of equity & property ownership, skills & entrepreneurship, A high-level Council

12 High value added natural resources downstream activities 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 with high multiplier effect that raise productivity levels AREAS TO VENTURE INTO: Natural endowment Sectors with comparative advantage Industries Malaysia has early mover advantage Locational concentration

13 13 Emphasis would be to promote areas with high growth potential under NKEAs ManufacturingServicesAgriculture Oil, Gas and Energy Palm Oil and related products Financial Services Wholesale and Retail Trade TourismCCI Education Services Electrical & Electronics Business Services Agriculture Greater KLHealthcare Innovation Skilled labour force Creativity

14 Wholesale & retail trade New areas in tourism Business & financial services ICT Private healthcare Private education Construction services 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 to the NKEA and Greater KL High value added activities along value chain of E&E sector Supporting industry to: 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 industrial cluster Development of new industrial cluster. e.g downstream activities in palm oil Large-scale production Good agriculture practices Agronomic management and mechanisation Swiflet farming, aquaculture, seaweed, sago, ornamental fish, herbs and spices, organic fruits, vegetables, mushroom and floriculture. Centralise procurement or bulk purchase of agriculture inputs to reduce input costs Collaborative R&D with established agriculture institutes Sectoral focus in creating an advantageous business ecosystem Services Manufacturing Agriculture Focus Initiatives Opportunities 14


16 Programmes to be implemented in 2011 SME Corp will continue to develop SMEs as the engine of growth & innovation… 16 Promote development of competitive and resilient SMEs in all sectors towards increasing SME 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 17 Programme-based Approach Programme-based approach BAPE² 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 18 Micro Enterprises of level 3(M-CORE) SMEs 2-star (SCORE) and above 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

19 Conclusion 19 SMEs are important source of economic growth and have potential SMEs are stabilisers of growth during economic shocks Shift towards outcome-based approach in monitoring programmes SME Masterplan requires bold measures for quantum leap in GDP and to reach developed nation by 2020 Towards producing national, regional and global champions Vision

20 One Referral Centre (ORC) 20

21 One Referral Centre (ORC) 21 Towards producing national, regional and global champions ONE REFERRAL CENTRE Business Advisory Info Centre Link of Ministries/ Agencies Pocket TalkResource CentreProduct GalleryVirtual ORC SME Registry Membership

22 One Referral Centre (ORC) 22 Towards producing national, regional and global champions BUSINESS ADVISORY - Business Counsellor - SEAP Experts INFO CENTRE Centralized Call Centre consists of : Info Line, Info Email, General Line LINK OF MINISTRIES & AGENCIES Referral Counter for Ministries, Agencies, Banks & DFIs RESOURCE CENTRE - Library - Business Centre : Photostat, printing, etc - Touch screen kiosk + Internet Kiosk

23 One Referral Centre (ORC) 23 Towards producing national, regional and global champions POCKET TALK - Talk from SME Corp. -Talk from other Ministries, Agencies, Banks, DFIs - Company presentation - Book Launch/ Review PRODUCT GALLERY Showcase of products by Industry/sector cluster - Thematic showcase - Events/ programme VIRTUAL ORC - SME Corp. Corporate Website - SME Info Portal SME REGISTRY MEMBERSHIP - Membership Card - Enjoy Benefits : current updates & Invitation for events & programmes

24 SME Business Counsellor 24 Provide business advisory & counselling to SMEs through effective coordination and business support, focusing on 5 areas BUSINESS COUNSELLORS Management Production Marketing Financial Human Resource DYNAMIC, COMPETITIVE & RESILIENT SMEs

25 SMECORP STATUS [Ref. No] SMECORP BORANG [alamat emeil] SME BUSINESS CENTRE Business Advisory Services (BAS) VIRTUAL SME INFORMATION CENTRE INFOLINE 1-300-88-1801 SMS for SMEs Info & Other Information Send to 15888 Find us on Facebook SME Corp. Malaysia THANK YOU

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