sme development programmes under new economic model and 10 th malaysia plan by czarif chai abdullah...
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SME DEVELOPMENT PROGRAMMES UNDER NEW
ECONOMIC MODEL AND 10TH MALAYSIA PLAN
by
Czarif Chai AbdullahManager
SME Corp. Malaysia
25 February 2011
SMEs in Malaysia
Targeted Approach in SME Development
SMEs in NEM and RMK10
Initiative for 2011
Way Forward
ORC / Business Counselors
Contents
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• 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 the economy
3Source: Census of Establishments & Enterprises 2005
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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
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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:
GDP 31.2%
Employment 56.4%
Exports 19%
GDP Annual Growth (2000 price)
Going forward, SMEs are important endogenous source of growth towards building a high income nation
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Promoting balanced SME development
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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
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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 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 GST9
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-friendly
affirmative action
SRI6: Building knowledge base and
infrastructure
SRI7: Enhancing sources of growth
SRI8: Ensuring sustainability of growth
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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 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
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… 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
• 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
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SMEs to venture into untapped areas with highmultiplier effect that raise productivity levels
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Emphasis would be to promote areas with high growth potential under NKEAs
Manufacturing Services Agriculture
Oil, Gas and Energy
Palm Oil and related
products
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• 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
ServicesServices
ManufacturingManufacturing
AgricultureAgriculture
FocusFocus InitiativesInitiativesOpportunitiesOpportunities
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INITIATIVES FOR 2011
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Programmes to be implemented in 2011
SME Corp will continue to develop SMEs as the engine of growth & innovation…
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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
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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
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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
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Towards producing national, regional and global champions
Vision
One Referral Centre (ORC)
20
One Referral Centre (ORC)
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Towards producing national, regional and global champions
One Referral Centre (ORC)
22
Towards producing national, regional and global champions
One Referral Centre (ORC)
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Towards producing national, regional and global champions
SME Business Counsellor
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Provide business advisory & counselling to SMEs through effective coordination and business support, focusing on 5 areas
BUSINESS COUNSELLORS
Managem
ent
Production
Marketing
Financial
Hum
an Resource
DYNAMIC, COMPETITIVE & RESILIENT SMEs
SMECORP STATUS [Ref. No]
SMECORP BORANG [alamat emeil]
SME BUSINESS CENTRE
Business Advisory Services (BAS)
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www.smecorp.gov.my
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