propelling malaysian smes into a higher economic contributor
DESCRIPTION
Propelling Malaysian SMEs into a Higher Economic Contributor. b y:. Dato’ Hafsah Hashim. Saudi International SMEs Forum 2013, 29 th May 2013. CEO of SME Corporation Malaysia. Definition of SMEs. Annual sales turnover < RM25 million ( £5.42 million ) OR Full time employeesTRANSCRIPT
Propelling Malaysian SMEs into a Higher Economic Contributor
Saudi International SMEs Forum 2013, 29th May 2013
by:
Dato’ Hafsah HashimCEO of SME Corporation Malaysia
Definition of SMEs
Annual sales turnover
< RM25 million(£5.42 million)
OR Full time employees
<150
Annual sales turnover
< RM5 million (£1.08 million)
OR Full time employees
< 50
Manufacturing,Manufacturing Related Services and Agro-based Industry
Services, Primary Agriculture, Information and Communication Technology (ICT)
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Total:645,136 SMEs
MicroSmallMedium
3%
77%
20%
5.9%
1.0%
SMEs account for bulk of total businesses in Malaysia … 97.3%
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%)
Manufacturing• Textiles & Wearing Apparel
(26.5%)• F&B Products (16%)
Construction• Non residential buildings
(21.5%)• Civil Engineering (21.0%)
Agriculture• Crops (70.4%)• Livestock (13.4%)
Mining & Quarrying• Stone Quarrying (83.6%)• Mineral Mining (16.4%)
90.0%
3.0%
0.1%
Source: Economic Census 2011
SMEs are the backbone of the economy
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
Source: Economic Census 2011 4
97% Total Establishments
32% GDP
19% Exports
59% Employment
SME Value Added and Overall GDP Growth…
5
GDP & SME 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)
SME: 5.5 - 6%
GDP: 5-5.5%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011e
GDP Growth SME Growth
%
Year
Source: DOSM and SME Corp. Malaysia
GDP & SME Growth (yoy change)
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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
Approach
Public-private partnership
‘Live’ plan
Outcome-based
Innovation and
productivity-led
SME Masterplan takes a new approach in SME development
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New SME Development Framework for innovation-led and productivity-driven growth
Market Access
SME Development Framework
GoalsIncrease business formation
Intensifyformalisation
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
Institutional Support
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Action Plan
Plan proposes 32 initiatives across all focus areas, of which 6 are High Impact Programmes
Result-based approach with monitoring & evaluation
6 High Impact Programmes (HIPs)
Measures across 4 Themes
Measures for East Malaysia
Other Measures
• 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%
• Resource pooling & shared services• Create demand for SME products• Reduce information asymmetry • Building capacity & knowledge
• Improve connectivity & basic amenities• Review restrictive laws & policies• Ease market access
• 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
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Target is to increase contribution to GDP to slightly over 40% by 2020
Projections by SME Corp. Malaysia
Economic Contribution in 2020:
GDP
Employment
Exports
32% 41%
59% 62%
2010 2020
19% 25%3
4
5
6
7
8
9
2000 - 05 2006 - 10 2011 - 20
GDP Growth
Quantum leap
“Business as usual” growth
New SME growth path
CAGR (% change)
(6.5%)
(8.7%)
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Public – Private Collaboration
Malaysia Incorporated initiated in 1983 to recognise importance of private sector in economic growth
Deregulation of cumbersome bureaucratic rules & regulations
Improving delivery system
Institutionalising consultative machinery
Establishing smart partnership programmes in nation building efforts
Pursuing privatisation
Concept: Nation is a corporate or business entity, jointly owned by both sectors and working together in pursuit of a common mission of nation
Operating Mechanism
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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 activitiesFunding
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Public-private sector collaboration scaled new heights with establishment of PEMUDAH in February 2007
PEMUDAH
Ministries / Agencies
Industry Associations
Chamber of Commerce
The Special Taskforce to Facilitate Business or PEMUDAH: High-powered taskforce to address bureaucracy in business-government
dealings
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SME development a shared responsibility...
Government
Private Sector
• Facilitator• Act as catalyst
• Associations, chambers & NGOs to develop SMEs• Large firms to mentor SMEs • Participation in design & implementation of progs.
Way Forward :
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..with private sector assuming a greater role
What needs to be done?
Strengthen industry
associationsIncrease 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
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Bling - Business Linkages
To develop competitive and innovative SMEs
To widen the business opportunity of SMEs in supplying products and services to large companies and
Multinational Companies (MNCs)
To encourage business networking between SMEs and MNCs & GLCs
OBJECTIVES
“It's efficient”
“good database”“Pre-evaluated
companies”“Good match”
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SME COMPETITIVENESS RATING FOR ENHANCEMENT (SCORE)
• PUNB• CIDB• MINDEF• TPM
• MDEC• PSDC• SME Bank• TM
• MPC• HDC• NCIA• MTIB
• A diagnostic tool to rate and enhance competitiveness of SMEs based on their performances and capabilities.
• Developed in August 2007.
What is SCORE?
• Identify strengths and weaknesses for improvements; and
• Facilitate linkages.Function
• Business Performance• Financial Capability• Management Capability• Production Capability
7 Parameters
• 0 – 2 : Very basic business operation• 3 – 5 : Competitive and export-ready companies
Characteristics
Collaborators
Example of Radar Diagram for 3-Star company
Analysis: Weak in financial capability
Assistance: Requires training in financial management & improvement in quality management
• Technical capability• Quality System• Innovation
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1-INNOCERT
IV. InnovationOutcome
III. Innovation
Management
II. Commercialization
Ability
I. Innovation
Ability• To identify and certify innovative
SMEs and enterprises in MalaysiaMission
• To foster and support innovative SMEs and enterprises to be global innovative competitive players
Objective
To date, 115 companies have been certified
Innovation Certification for Enterprise Rating and Transformation Programme
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NATIONAL MARK OF MALAYSIAN BRAND
To enhance the visibility of Malaysian products and services in both local and
international markets.
To date, 59 companies have been certified
ASSESSMENT CRITERIA
Management Commitment & Capability
Financial Capability
Brand Management & Marketing
Operations Management
Quality & Standards of Products/Services
Management Best Practices
Social Responsibility
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SME Corp. Malaysia
www.smeinfo.com.my
www.smecorp.gov.my
1-300-30-6000
SME Annual Report 2011/12
Physical KL Sentral
MOVING FORWARD
Thank you