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
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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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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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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