1. Propelling Malaysian SMEs into a Higher Economic Contributor
by:
Dato’ Hafsah Hashim
CEO of SME Corporation Malaysia
Saudi International SMEs Forum 2013, 29th May 2013

2. < RM25 million (£5.42 million) < RM5 million (£1.08 million)
Definition of SMEs
Annual sales turnover
< RM25 million (£5.42 million) OR
Full time employees
<150
Manufacturing, Manufacturing Related Services and Agro-based Industry
Services, Primary Agriculture, Information and Communication Technology (ICT)
Annual sales turnover
< RM5 million (£1.08 million) OR
Full time employees
< 50

3. SMEs account for bulk of total businesses in Malaysia … 97.3%
97.3% of total establishments (645,136) versus 548,267 on 2003
Mainly (77%) microenterprises
Concentrated in services sector (90%)
Services
Distributive Trade and Repair of Motor Vehicles and Motorcycles (50%)
Restaurants (25%)
90.0%
Manufacturing
Textiles & Wearing Apparel (26.5%)
F&B Products (16%)
Construction
Non residential buildings (21.5%)
Civil Engineering (21.0%)
3.0%
Agriculture
Crops (70.4%)
Livestock (13.4%)
Mining & Quarrying
Stone Quarrying (83.6%)
Mineral Mining (16.4%)
0.1%
Source: Economic Census 2011

4. 59% 19% SMEs are the backbone of the economy 97% Total Establishments
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 for growth of new & existing sectors
Promote private sector-led growth
97%
Total Establishments
32%
GDP
19%
Exports
59%
Employment
Distribution (%) of SMEs by Sector
-Services 90%
-Manufacturing 5.9%
-Construction 3%
-Mining & Quarrying 0.1%
Distribution (%) of Total Employment of SMEs by Size and Sector
-Micro 36.5%
-Small 40.1%
-Medium 23.4%
Source: Economic Census 2011

5. SME Value Added and Overall GDP Growth…
SME growth outperformed overall GDP growth during 2004 – 2011:
NSDC was set up and SME development accorded national agenda
Other supportive policies (improvement in government delivery, higher domestic demand and tourism, focus on farmers and small contractors)
GDP & SME Growth
GDP & SME Growth (yoy change) %
Distribution (%) of SMEs by Sector
-Services 90%
-Manufacturing 5.9%
-Construction 3%
-Mining & Quarrying 0.1%
Distribution (%) of Total Employment of SMEs by Size and Sector
-Micro 36.5%
-Small 40.1%
-Medium 23.4%
Year
Source: DOSM and SME Corp. Malaysia

6. Moving forward, SME development to be innovation-led and productivity-driven through the SME Masterplan
“Unless we introduce a ‘game changer’, we will be caught in a middle-income trap, and no longer as competitive on cost...”
“… the Government would adopt a differentiated approach to accelerate the growth of SMEs and to provide the impetus for growth led by the private sector.”
“ … an innovation-led economy demands a new breed of SMEs that can help foster market and technology-driven innovation to create more high-skilled jobs in all economic sectors.”
Prime Minister of Malaysia /
Chairman of National SME Development Council

7. Approach Innovation and productivity-led Public-private partnership
SME Masterplan takes a new approach in
SME development
Approach
Public-private partnership
‘Live’ plan
Outcome-based
Innovation and
productivity-led

8. New SME Development Framework for
innovation-led and productivity-driven growth
Globally competitive SMEs across all sectors that enhance wealth creation and contribute to the social well-being
Vision
SME Development Framework
Increase business formation
Expand number of high growth and innovative firms
Raise productivity
Intensify
formalisation
Goals
Innovation & Technology Adoption
Human Capital Development
Access to Financing
Focus Areas
Market Access
Legal & Regulatory Environment
Infrastructure
Action Plan
Institutional Support
Reliable database
Monitoring & Evaluation
Effective Coordination
Effective Business Services 8

9. Result-based approach with monitoring & evaluation
Plan proposes 32 initiatives across all focus areas, of which 6 are High Impact Programmes
6 High Impact Programmes (HIPs)
Measures across 4 Themes
Resource pooling & shared services
Create demand for SME products
Reduce information asymmetry
Building capacity & knowledge
Integration of business registration & licensing to enhance ease of doing business
Technology Commercialisation Platform (TCP) to encourage innovation
SME Investment Programme (SIP) to provide early stage financing
Going Export (GoEx) Programme to expedite internationalisation of SMEs
Catalyst Programme to promote more homegrown champions
Inclusive Innovation to empower the bottom 40%
Measures for East Malaysia
Improve connectivity & basic amenities
Review restrictive laws & policies
Ease market access
Other Measures
Completion of Integrated trade clearance and facilitation system
(single window)
Bankruptcy Law to give entrepreneurs a second chance
Synchronise measures on productivity enhancement technologies with other relevant labour policies
Result-based approach with monitoring & evaluation 9

10. Economic Contribution in 2020:
Target is to increase contribution to GDP to
slightly over 40% by 2020
GDP Growth
CAGR (% change)
New SME growth path
Economic Contribution in 2020:
GDP
Employment
Exports
32%
41%
59%
62%
2010
2020
19%
25%
Quantum leap
(8.7%)
“Business as usual” growth
(6.5%)
Projections by SME Corp. Malaysia 10

11. Operating Mechanism Public – Private Collaboration
Malaysia Incorporated initiated in 1983 to recognise importance of private sector in economic growth
Concept: Nation is a corporate or business entity, jointly owned by both sectors and working together in pursuit of a common mission of nation
Deregulation of cumbersome bureaucratic rules & regulations
Improving delivery system
Institutionalising consultative machinery
Establishing smart partnership programmes in nation building efforts
Pursuing privatisation
Operating Mechanism

12. 3 structural mechanisms established to promote intersectoral consultation and cooperation
Establishment of consultative panels
Structure
Dialogue sessions at various levels in public sector
Promotion
Joint sponsorship of formal or informal activities
Funding

13. Public-private sector collaboration scaled new heights with establishment of PEMUDAH in February 2007
The Special Taskforce to Facilitate Business or PEMUDAH:
High-powered taskforce to address bureaucracy in business-government dealings
PEMUDAH
Ministries / Agencies
Industry Associations
Chamber of Commerce

14. Way Forward : SME development a shared responsibility... Facilitator
Government
Private Sector
Facilitator
Act as catalyst
Associations, chambers & NGOs to develop SMEs
Large firms to mentor SMEs
Participation in design & implementation of progs.

15. ..with private sector assuming a greater role
What needs to be done?
Strengthen industry associations
Increase range of services provided by associations
Build bridges between public and private sectors through shared services (funds, space)
Enhance capacity of private training and advisory provider
Encourage establishment of private finance providers
Develop capacity for private professional services for SMEs

16. “good database” “Good match” “Pre-evaluated companies” OBJECTIVES
Bling - Business Linkages
OBJECTIVES
“good database”
To develop competitive and innovative SMEs
“Pre-evaluated companies”
To widen the business opportunity of SMEs in supplying products and services to large companies and Multinational Companies (MNCs)
“Good match”
“It's efficient”
To encourage business networking between SMEs and MNCs & GLCs

17. Example of Radar Diagram for 3-Star company
SME COMPETITIVENESS RATING
FOR ENHANCEMENT (SCORE)
A diagnostic tool to rate and enhance competitiveness of SMEs based on their performances and capabilities.
Developed in August 2007.
What is SCORE?
Example of Radar Diagram for 3-Star company
Analysis:
Weak in financial capability
Assistance:
Requires training in financial management & improvement in quality management
Function
Identify strengths and weaknesses for improvements; and
Facilitate linkages.
7 Parameters
Business Performance
Financial Capability
Management Capability
Production Capability
Technical
capability
Quality System
Innovation
Characteristics
0 – : Very basic business operation
3 – : Competitive and export-ready
companies
Collaborators
PUNB
CIDB
MINDEF
TPM
MDEC
PSDC
SME Bank TM
MPC
HDC
NCIA
MTIB

18. To date, 115 companies have been certified
1-INNOCERT
Innovation Certification for Enterprise Rating and Transformation Programme
I. Innovation Ability
To identify and certify innovative SMEs and enterprises in Malaysia
Mission
To foster and support innovative SMEs and enterprises to be global innovative competitive players
Objective
II.
Commercialization
Ability
III.
Innovation
Management
IV.
Innovation
Outcome
To date, 115 companies have been certified

19. To date, 59 companies have been certified
NATIONAL MARK OF
MALAYSIAN BRAND
To enhance the visibility of Malaysian products and services in both local and international markets.
Operations Management
Management Commitment &
Capability
ASSESSMENT CRITERIA
Quality & Standards of
Products/Services
Financial Capability
Management Best Practices
Brand Management
& Marketing
Social Responsibility
To date, 59 companies have been certified

20. MOVING forward Thank you www.smeinfo.com.my www.smecorp.gov.my
SME Corp. Malaysia
SME Annual Report 2011/12
Physical
KL Sentral
MOVING forward
Thank you