ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIP

BUSINESS REGULATIONS & SUPPORT SYSTEM

Chapter 6

BUSINESS
REGULATIONS &
SUPPORT SYSTEM

Dr. Azizan Abdullah

Azlin Shafinaz Mohamad Arshad
Siti Zahrah Buyong
Zarina Abdul Munir
 Introduction

Business support system refers to the assistance

and services given by the government or
private agencies to help entrepreneurs to start a
new business or to develop an existing one.

There are a lot of business support system

provided to the entrepreneur in term of monetary
and non-monetary facilities.
APPROVAL & LICENSING
Entrepreneurs are required to have APPROVAL
and LICENSING from relevant government
agencies in setting up manufacturing businesses.
Manufacturing License
►The Malaysian Government under The
Industrial Coordination Act (ICA)1975 requires
person(s) engaging in any manufacturing
activity to obtain a license.
►This regulation only apply to the manufacturing
companies with shareholders’ fund of 2.5m and
above or engaging 75 or more full-time
employees.
► Manufacturing activity is defined as the
making, altering, blending, ornamenting,
finishing or any other related activities.

(1) Applications of manufacturing license

should be made to Malaysian Industrial
Development Authority (MIDA).
(2) No-Objection Letter for the Location of
Projects

►No-objection letter from the respective

State Government is require for approval of
the project location.

► This letter needs to be submitted to MIDA

for the issuance of the manufacturing
license.
(3) Approval for Planning Permission
► Application for planning permission is require under
Town and Country Planning Act, 1976 (Act 1972).
► Planning permission need for a development and use of
all lands and building.
► Planning permission should be made to the local
authority such as City Council of Shah Alam (MBSA),
Municipal Council of Kota Star (MPKS) etc.

(4) Approval for Building Plan

►The Street, Drainage and Building Act 1974 (Act 133)
require construction of buildings can only be
undertaken with the written approval for the local
authority.
► Every plan, drawing or calculation in which related to
The building must be submitted by qualified person
such as architect, draughtsman or engineer.
(5) Approval for Certificate of Fitness for
Occupation

► All completed building need to be certified as being

fit for occupation by the local authority.

► This requirement has been spell-out under the

Uniform Building by Laws 1984.
(6) Approval for Business Related Licenses
► The licenses related to factory premises, advertising
signage, storage and canteen.
► This licenses should be apply through the local
authority.

(7) Approval for Environmental Control

► Environment Quality Act, 1974 requires the
manufacturers to control industrial activities that may
result in a new source of effluent or discharge.
►The installation of incinerator, fuel burning
equipment and chimney also need approval.
►The environmental control and approval are under
the responsibility of Department of Environment.
(8) Approval for Safety and Health

► Factories and Machinery Act 1967 require

manufacturers to obtain design approval of
certificate machinery and certificate of fitness.

► The application of approval should be send to

Department of Occupational Safety and Health.
(9) Excise License and Sales Tax License
► Excise duties are require for a factory that
manufactured goods which prescribe under
Excise Act, 1976.
► Excise license also need for products under
this category and should be obtained from
Royal Customs Malaysia.
► Customs Department will levied a sales tax on
imported and locally manufactured goods.
► A sales tax license should be apply under
Sales Tax Act, 1972
Infrastructure Facilities
(1) Industrial Estates

► Industrial estates has been developed by State

Economic Development Corporations (SEDCs),
Regional Development Authorities (RDAs), Port
Authorities and Municipalities.

► Currently there were over 200 industrial estates

were developed by those agencies and the new
ones are continuously planned to meet the
demand of industrial land.
(2) Free Industrial Zones (FIZs)

► Established for manufacturing companies that

produce or assemble products mainly for export
purposes.

► The manufacturing companies in FIZs enjoy

minimal customs formalities and duty free import
of raw materials, component parts, machinery
and equipment.

► They also have a minimal formalities for export

their finished products.
(3) Licensed Manufacturing Warehouses
(LMWs)

► The purpose of LMWs is to encourage the

dispersal of industries and to enable companies
to enjoy FIZ facilities in areas where it is neither
practical nor desirable to establish FIZs.
►In order to get an approval for LMWs the
companies should have at least 80% of their
production meant for export and raw materials
or components are mainly imported.
(4) Electricity and Water Supply

► Electricity for Peninsular Malaysia supply by

Tenaga Nasional Berhad (TNB) while for Sabah
and Sarawak are Sabah Electricity Sdn. Bhd.
(SESB) and Sarawak Supply Corporation
(SESCO) respectively.
► In term of water, it has been treated according to
the World Health Organisation (WHO) standards
for drinking and supply by state water department
and water supply companies.
► Water costs are low and vary from state to state.
(5) Telecommunication Services

► Provided by Telekom Malaysia Berhad and other

network service providers.
► There are six internet service providers which
include TMNet, Jaring and MAXIS Net whose help
the government to promote information based
industry.
► Malaysia’s also entry into space age
communication through the launching of MEASAT-1
and 2 and Tiungsat-1 in 1996 and 2000
respectively.
(6) Sea Ports, Cargo Transportation,
Highway and Railway Services

► Sea ports has modern facilities and equipment to

facilitates full range of cargo handling.
► Cargo transportation provide comprehensive
containerised cargo transportation services.
► The Malaysian Highway Authority (LLM) provided
latest design of expressways which link to all major
townships and potential development area.
► Railway services operates by Keretapi Tanah
Melayu Berhad (KTMB) with the capacity to
transport goods ranging from grain to machinery.
(7) Multimedia Super Corridor (MSC)

► MSC was established with the aims to

revolutionise how Malaysians and others in the
region conduct commerce in the digital age.
► MSC governed by groundbreaking Cyberlaws,
policies and practices that enable operating
companies to harness the full potential of
Information Communications Technology and
Multimedia.
► The ultimate aim of MSC is to attract multimedia
companies locally and internationally to become
world class over time.
Financial Assistance
Financial Assistance for Entrepreneurs

FINANCING is needed by
entrepreneur for sustainability and
development of business.
 Purpose of Financing

1. Strengthening skills of workforce

2. Entrepreneur Development
3. Marketing & Promotion
4. Product Development & Quality Accreditation
5. Technology Development
6. Debt Restructuring
7. General
 Types of Financing

1. Soft Loan
2. Grants
3. Equity Financing
4. Venture Capital
5. Guarantee Scheme
6. Tax Incentives
Who Provide the Financial Assistance?

Two main providers for financial assistance are

ministry and agencies:

Ministry
1. Ministry of Entrepreneur and Co-operative
Development (MECD)
2. Ministry of Science, Technology and
Innovation (MOSTI)

Agencies
26 agencies
Ministry of Entrepreneur and Co-operative
Development (MECD)

Financing Scheme under MECD:

1. ASEAN -Japan Development Fund
2. Equity Financing
3. Franchise Development
4. Skim Pembiayaan Pusat Negeri (SPPN)
 Ministry of Science, Technology
and Innovation (MOSTI)
Financing Scheme under MOSTI:
Enterprise Innovation Fund (EIF)
Objective :
To increase the participation of SMEs, micro businesses and
individual/sole-proprietors in innovative activities through the
development of new or improved products, processes or
services with element of innovation for commercialization.
Eligibility Criteria :
Malaysian business enterprises or individual with project or
product proposal that has elements of technological innovation
for commercialization.
 Financial Assistance
from Government Agencies

There are twenty six (26) agencies that provide financial

assistance for entrepreneur. Examples are :
1. Banks such as Bank Kerjasama Rakyat Malaysia
Berhad, Bank Negara Malaysia, Bank Perusahaan
Kecil & Sederhana Berhad, and Bank Pertanian
Malaysia Berhad (now known as AgroBank).
2. Non-banks such as Perbadanan Nasional Berhad
(PNS), Small and Medium Industries Development
Corporation (SMECorp), Multimedia Development
Corporation (Mdec).
Bank Kerjasama Rakyat Malaysia Berhad
Youth Business Scheme
Objective
To assist youth to venture into business on full time basis.
Eligibility Criteria
Individual Malaysian citizen aged between 18-40 years old
Must register online as an applicant through the Portal of ‘Majlis
Penggalakan Ekonomi Belia (MPEB)’ - www.mpeb.gov.my
Pass the screening test conducted by Ministry of Youth and Sport
No adverse record with financial institutions
Purpose of Financing
Expansion in productive capacity
Working capital
 Bank Negara Malaysia
New Entrepreneurs Fund 2
Objective
To promote the growth of small and medium-sized Bumiputera
enterprises by ensuring that they have access to financing at
reasonable cost.
Eligibility Criteria
Business enterprise based on the definition of SMEs [Link]
www.smeinfo.com.my
Maximum shareholders' funds not exceeding RM2 million;
Shareholding by Public Listed Companies or Government-Link
Companies (if any) should not exceed 20%;
Purpose of Financing
Expansion in productive capacity
 SME Bank
Graduate Entrepreneurs Fund
Objective
To encourage graduates to participate and venture into businesses in the
selected industry.
Eligibility Criteria
Graduate holds majority equity in a company registered with the Companies
Commission of Malaysia under the Companies Act 1965
Has a diploma/degree/doctorate qualification
Must be below 40 years old and has successfully completed training
programmers, placement and practical training under the Ministry of
Entrepreneur and Co-operative Development (MECD) or its agencies
Purpose of Financing
Working capital
Financing fixed assets or both
 Agro Bank Malaysia
Agriculture Entrepreneurs Scheme for Graduates

Objective
To encourage graduate to embark in the commercial agriculture
sector as an alternative career development.

Eligibility criteria
Unemployed graduates with keen interest to develop a full time
career in agriculture sector

Purpose of financing
Working capital and expansion in productive capacity e.g.
purchase of fixed asset
 Perbadanan Nasional Berhad
Youth Franchise
Objective
To encourage Bumiputera youth to venture into franchise business by
providing start-up financing

Eligibility Criteria
- A wholly-owned Bumiputera private limited company
- Bumiputera age between 21 to 40 years old
- Contribute at least 10% of the total project cost

Application Procedure
Application to be submitted to PNS
Perbadanan Usahawan Nasional Berhad
(PUNB)
A. Bumiputera Entrepreneurs Retail Project Fund
(PROSPER)
Objective
To enhance and upgrade Bumiputera entrepreneurs' participation in the
retail business.

Eligibility Criteria
1. Entrepreneur
- Bumiputera above 18 years old
- Possess the necessary entrepreneurial skills.
2. Business
- Retail business wholly owned by Bumiputera.
- Viable project costing not exceeding RM 1 million.
 Perbadanan Usahawan Nasional
Berhad (PUNB)
B. PROSPER Siswazah Entrepreneurial Scheme
Objective
To assist Bumiputera graduates to embark or venture into retail and
distribution business industry through the systematic and structured
PUNB's programmes

Eligibility Criteria
1. Young Bumiputera Graduate
- Less than 30 years old with at least diploma qualification from
institution recognized by the government.;
- Able to source own capital amounting RM500 for each project

2. Businesses
- Wholly-owned and managed by Bumiputera ;
- New business or business at the stage of expansion
 Small and Medium Industries
Development Corporation (SMECorp)
Matching Grant for Business Start-ups
Objective
- To provide assistance in the form of matching grant to start
up a business in the following sectors:
- Manufacturing and Manufacturing related services; and
- Services (excluding insurance and financial services)

Eligibility criteria
- Business enterprise based on the definition of SMEs.
- At least 60% of equity are held by Malaysian and
- Possess valid premise license
Multimedia Development Corporation
MSC Malaysia Research and Development Grant Scheme
(MGS)
Objective
To provide reimbursable R&D grant to assist Multimedia Super Corridor
(MSC) Malaysia-Status Companies to develop innovative multimedia
technologies and applications.
Eligibility Criteria
Possess a valid MSC Malaysia-status certification
Malaysian shareholding of at least 51%
Past or current recipients of any Government R&D grant are NOT eligible
under the scheme
Purpose of Financing
To provide financing for research and development projects for the
development of new products and services across the multimedia value
chain and Flagship Applications
Employment Policies
&
Legislations
 EMPLOYMENT
POLICIES & LEGISLATION

1. EMPLOYMENT ACT 1955

2. EMPLOYER PROVIDENT FUND
3. SOCIAL SECURITY ORGANIZATION
4. OCCUPATIONAL SAFETY AND HEALTH
 1. EMPLOYMENT ACT 1955

• Stipulates the minimum conditions of employment such as

Besides, the Act is to provide minimum standards on
working hours and overtime, weekly rest day, public
holidays, annual and sick leaves, maternity benefits,
termination and lay off benefits etc
• Applies to all employees in Peninsular Malaysia and the
Federal Territory of Labuan whose monthly wages do not
exceed RM1,500 and all manual workers irrespective of
their wages.
• Employees who earn between RM1,500 to RM5,000 a
month can still seek redress from the Labor Department
with regard to wages and any other payments in cash as
stipulated in their contract of service.
 2. EMPLOYER PROVIDENT FUND

• A social security institution formed according to the Laws

of Malaysia, Employees Provident Fund Act 1991 (Act
452) which provides retirement benefits for members
through management of their savings in an efficient and
reliable manner.
• All employers must register their employees with EPF
immediately upon employment.
• Provides a convenient framework for employers to meet
their statutory and moral obligations to their employees.
 Cont’d.….Employer Provident Fund
• The Act stipulates a compulsory contribution for employees. A
contribution constitutes the amount of money credited to
members' individual accounts in the EPF. The amount is
calculated based on the monthly wages of an employee. The
current rate of contribution is 23% of the employee's wages of
which 11% is from the employee's monthly wage while 12% is
contributed by the employer.
• Under this Act, all employers and employees except foreign
workers, expatriates and those who are listed under the First
Schedule must contribute to the Employees provident Fund
(EPF). However, they can choose to contribute at the rate of
RM5.00 (employer’s share) per employee per month and 11% of
monthly wages by the employee.
 3. SOCIAL SECURITY ORGANIZATION

• Administers the Employment Injury Insurance Scheme

and Invalidity Pension Scheme provided under the
Employees’ Social Security Act 1969.
• The scheme is compulsory and employer must cover all
employees under SOCSO even if they are covered under
other insurance policies.
• A monthly contribution must be made for each eligible
employee according to rates specified under the Act
(about 2.5% of basic employee’s salary).
• Covers only Malaysian workers and permanent
residents. All establishments, including factories,
employing workers earning wages not exceeding
RM3,000 a month.
4. OCCUPATIONAL SAFETY AND HEALTH

• The Department of Occupational Safety and Health (DOSH) is

a department under the Ministry of Human Resource. The
Department of Occupational Safety and Health (DOSH) is
responsible for enforcing compliance of the law with OSHA
1994. DOSH also enforces compliance with the Factories and
Machinery Act 1967.
• The OSHA 1994 provides legislative framework to promote,
stimulate and encourage high standards of safety and health
at work. The aim is to promote safety and health awareness,
establish effective safety organization and performance
through self-regulation schemes designed to suit the
particular industry or organization. This Act also defines the
responsibilities of employers, manufacturer, employees, self-
employed workers, designers, importers and vendors.
Cont’d… OCCUPATIONAL SAFETY AND HEALTH

• As for Factories and Machinery Act 1967, it provide for

the control of factories on matters relating to the safety,
health and welfare of persons, and the registration and
inspection of machinery. Some high risk machinery must
be certified and inspected by DOSH.
• All factories and general machinery must be registered
with DOSH for the purpose of registration before they
can be installed and operated in Malaysia.
Manpower Development
&
Training Facilities
 MANPOWER DEVELOPMENT
& TRAINING FACILITIES

1. NATIONAL VACATIONAL TRAINING COUNCIL

2. MINISTRY OF HUMAN RESOURCE
3. HUMAN RESOURCE DEVELOPMENT FUND
4. MALAYSIA PRODUCTIVITY FUND
5. MALAYSIAN ENTREPRENEURSHIP DEVELOPMENT
CENTRE (MEDEC)
6. PERBADANAN USAHAWAN NASIONAL BERHAD
7. MAJLIS AMANAH RAKYAT (MARA)
 1. NATIONAL VACATIONAL TRAINING
COUNCIL

• The Department of Skills Development, formerly known

as The National Vocational Training Council, is one of
the agencies under the Human Resource Ministry.
• Responsible for the co-ordination and control of skills
training as well as career development in skills training in
line with the implementation of the National Skills
Development Act, 652 (2006) on September 1, 2006.
 Cont’d… National Vocational Training Council
• The objective is to generate and coordinate the development of skilled
workforce by:
❑ Developing Competency Standard, of a developed country level,
for skilled workforce,
❑ Recognizing the competency and skills of workforce and industry
experts, and
❑ Coordinating skills training systems and Malaysia Skills Certificate
systems.
❑ Function of this council is to :
❑ Assess training requirements,
❑ Develop, approve and revise the National Skills Standard,
❑ Implement the national training certification programmes,
❑ Promote skills training systems,
❑ Assist and enhance skills proficiency of individuals, and
❑ Guide learning/research programmes related to skills training.
 2. MINISTRY OF HUMAN RESOURCE

• Currently runs 14 industrial training institutes (ITIs) which

offer industrial skills training programmes at basic,
intermediate and advanced levels for pre-employment or
job entry level. These include apprenticeships in
mechanical, electrical, building and printing trades as
well as programmes to upgrade skills and to train
instructors.
• The Ministry also operates the Centre for Instructors and
Advanced Skills Training (CIAST), Industrial Training
Institute Japan-Malaysia Technical Institute (JMTI) and
Advanced Technology Centers (ADTEC).
3. HUMAN RESOURCE DEVELOPMENT
FUND

• Aimed at encouraging direct private sector participation

in skills development was launched in 1993 with a grant
form government.
• Functions of HRDF are :
❑ to assess and determine the types and extent of
employee training and retraining in keeping with the
human resources need of industries
❑ to promote and stimulate manpower training
❑ to determine the terms and conditions under which
any financial assistance or other benefits are to be
given
Contribution Guidelines for Employers:

(i) Companies that employ 50 or more Malaysian 1% of employees’

workers monthly wages
(ii) Companies that employ less than 50 to a 1% of employees’
minimum of 10 employees, with a paid up monthly wages
capital of RM2.5 million or more

(iii) Companies that employ less than 50 to a Option of registering

minimum of 10 of employees, with a paid-up with the HRDF and
capital of less than RM 2.5 million paying a levy of 0.5%
of the employees’
monthly wages
(Note : For this category, the Government contributes RM2.00 for every RM1.00 spent.
4. MALAYSIA PRODUCTIVITY CORPORATION

• Formally known as the National Productivity Corporation was

established in 1962 as a joint project between the United Nations
Special Fund and the Federal Government, with the International
Labor Organization acting as its executing agency.
• Function of MPC are :
❑ To generate local expertise in the field of productivity, quality,
management and entrepreneurship;
❑ To enhance the development of human resource both at the
supervisory and management levels in the country;
❑ To assess and certify supervisory and management training
programmes, entrepreneurship programmes and productivity
and quality management programmes conducted by the private
sector for the public;
❑ To conduct training or other programmes relating to productivity,
quality, management and entrepreneurship;
5. MALAYSIAN ENTREPRENEURSHIP
DEVELOPMENT CENTRE (MEDEC)

• Established within MARA University of Technology (UiTM) in

1975.
• The mission was to facilitate the growth of Bumiputera
entrepreneurs in Malaysia.
• Specifically, it was set up for the purpose of planning and
implementing entrepreneurship development programs such
as training, education, research and consultancy.
• Activities and Programmes offered are :
❑ Entrepreneur Development Program
❑ Entrepreneur Development Program for Civil Service
❑ Entrepreneur Development Program for Corporate and
Government Agencies
6. PERBADANAN USAHAWAN NASIONAL BERHAD

• Focus is on developing Bumiputera entrepreneurs in

strategic and high potential businesses and also to
provide opportunities to Bumiputera entrepreneurs to
achieve business success; through the provision of
financial and corporate support.
• Business operations are focused on providing integrated
entrepreneur development packages to assist
Bumiputera entrepreneurs in Retail and Small and
Medium sized Enterprise (SME) sectors. These
development packages are designed to help Bumiputera
entrepreneurs develop business acumen, maintain a
profitable venture, and shape their enterprise; par
excellence.
7. MAJIS AMANAH RAKYAT

• Incorporated as a statutory body on March 1, 1966 under an Act

Of Parliament, No. 20, 1966.
• Entrusted with the responsibility to promote, stimulate, facilitate
and undertake economic and social development of the people
particularly in the rural areas thereof.
• It is also to encourage, guide, train and assist Bumiputera to
enable them to participate actively and progressively in small and
medium scale commercial and industrial enterprises towards
creating a strong and viable Bumiputera Commercial and
Industrial Community (MPPB).
• In order to create, increase and improve the level of Bumiputera
entrepreneurship and business, MARA have provided activities
such as in entrepreneurship, manufacturing incubator,
consultancy service, marketing promotion and technopreneur
programme.
Other Business Support System
Other Support Facilities in Malaysia

ENTREPRENEUR

Technical Advisory
Assistance Assistance

Marketing
Services
 (1) Technical Assistance

Malaysian Agricultural Research and

Development Institute (MARDI)

The main objective of MARDI is to develop

indigenous science and technology capabilities in
support of the development and modernization of
the national food and agriculture sector.
 Malaysian Palm Oil Board (MPOB)

The Malaysian Palm Oil Board (MPOB) is the premier

government agency that is responsible for promoting,
developing and advancing the country’s palm oil
industry. It is also responsible for providing scientific and
technological leadership to support the development of
the palm oil industry.
 Fisheries Research Institute (FRI)

The Fisheries Research Institute (FRI)

conducts studies in various fields of aquatic
organism such as fish, mollusk and shrimp.
 MIMOS Berhad

MIMOS Berhad is a technology R&D organization

that functions as an advisor to the Malaysian
government on technologies, policies and strategies
relating technology development.
 SIRIM Berhad

SIRIM Berhad, a government-owned company, is a

leader in industrial research and development. Its role is
to spearhead industrial research and development and
to pioneer standardization activities and the provision of
technical and consultancy services aimed at enhancing
the competitiveness of Malaysian industries.
 (2) Marketing Services

The purpose of marketing assistance is to help

entrepreneurs distribute and market their products locally
and internationally.
There are a number of agencies involved such as MITI,
MATRADE, FAMA and GUTHRIE.
 (3) Advisory Assistance

• Advisory services are very important for entrepreneurs

in managing their business.
• There are many agencies providing these services with
certain charges depending on the area and scope of
the services.
• However, rebate or tax reduction is given to certain
services acquired under the training scheme
recognized by the Ministry of Human Resources.
END OF MODULE 6