BC20403

IssuesofMalaysianEconomy: SMEDevelopment
ROZILEEASID

CategoriesofSMEinMalaysia
Mediumsizedcompanies Smallenterprises Microenterprises Itcanexistinmanufacturing,servicesand primaryagriculturesectorandICTsectors

ClassicaKonofSMEinMalaysia
SMEinthemanufacturingsectordenedas enterpriseswiththefollowingcharacterisKc
FullKmeemployeesnotexceeding150OR AnnualsalesturnovernotexceedingRM25million

SMEinservice,primaryagricultureandICT withthefollowingcharacterisKcs
FullKmeemployeesnotexceeding50OR AnnualsalesturnovernotexceedingRM5million

SMEcategoryinManufacturingsector
Category Mediumsizedcompanies Smallenterprises Microenterprises Deni/on AnnualsalesturnoverbetweenRM10mandRM25m Employeesbetween51and150 AnnualsalesturnoverbetweenRM250,000andRm10m Employeebetween5and50workers Annualsalesturnover<RM250,000 Employeenotmorethan5

SMEcategoryinService,agriculture andICT
Category Mediumsizedcompanies Smallenterprises Microenterprises Deni/on AnnualsalesturnoverbetweenRM1mandRM5m Employeesbetween20and50 AnnualsalesturnoverbetweenRM200,000andRm1m Employeebetween5and20workers Annualsalesturnover<RM200,000 Employeenotmorethan5

SMEcontribuKons
SMEaremainsupplierandprovidertoleading industriesandalsoproducersfornished products. ImplementaKonsofIMP2(19962005)had contributedsignicantlytowardstheSME developmentespeciallyinexpandingand ecientlysupplybasetolargecorporaKon ThecontribuKonofSMEtototaloutput,value added,employmentandexportsearningsare signicant.

SMEcontribuKon
Year 1996 2005 Totalmanufacturing RM51.5b(22.1%) RM82b(29.6%) Averageannualgrowth 5.3%

Year 1996 2005

ValueAdded RM10.1b(19.5%) RM16.6b(25.9%)

Averageannualgrowth 5.6%

Year 1996 2005

Employment 329,848(29.6%) 394,670(31.1%)

Averageannualgrowth 2%

Year 1996 2004

Exportedoutput 20.8% 25.6%

Averageannualgrowth 0.48%(percentagepoint)

 InMalaysia,thedevelopmentofSMEwere partlycontributedthroughconducivepolicy andinsKtuKonalsupport. Anumberofelectrical&electronic(E&E) industriesforexamplesprecisionplasKc components,stamping,toolingandmachining acKviKesevolvedtobecomeplayersin supplyinginputsforglobalMNCs.

InsKtuKonalSupportforSME
PolicyinstrumentsatthenaKonallevelplays vitalroleinstrengtheningtheSME development.
NaKonalSMEDevelopmentCouncil(June2004)
Majoreventduring8MPandIMP2topromoteSME development CoordinateinterMinistryandAgencyeortsonSME development,aswellasprovideapolicystrategicframework fortheindustrygoingforward

IniKaKvesmadebytheNSDC2004
ComprehensiveSMEframework SMEdatabases StandarddeniKonstoformulatemore eecKveprograminvarioussectors SourcesofnancingfrombankinginsKtuKons CoordinatetrainingthroughPembangunan SumbermanusiaBerhad(PSMB)

Technologyimprovements involvements
MinistryofScience,Technologyand InnovaKon SMIDEC NPCnaKonalProducKvityCorporaKon MTDCMalaysianTechnologyDevelopment CorporaKon MDeCMulKmediaDevelopmentCorporaKons
Upgradingproduct/process,enhancedproducKvity, nurturingskillsandcommercialisaKonofR&D

Product/servicesPromoKon
MarketDevelopmentGrant(MDG)
ParKcipateininternaKonaltradefair,trademissions EnablesSMEstomakeinroadsintotheexportsmarket

IndustrialLinkageProgramme(ILP)
AssistanceformarkeKngindomesKc ForginggreaterinterrmlinkagesamongSMEs BetweenSMEsandlargermandMNCs Benetedintermsofnetworking,technologytransfer, trainingandcorecompetencies

Bumiputeraenterpreneurs
EortstocreatecompeKKveBumiputera Commercial&IndustrialCommunity(BCIC)
AssistedfromgovernmentagenciesandGLCs Whoarethey?Anchorcompanies
PROTON PETRONAS TNB NumbersofMNCs

*CreaKngofbumiputeravendorcompaniesinrelated manufacturingacKviKes

 Inretailbusiness,SMEsassistedviaProjek UsahawanBumiputeraDalamBidang Peruncitan(PROSPERunderPerbadanan UsahawanNasionalBerhad)

FinancingassistancenamelyFranchiseinvestment, nancingscheme Promotepartnership MarkeKngassistance(FAMA&MalaysianFurniture PromoKonCouncil

FinancialSupportforSME
InordertospurSMEprogress,BankNegara hasestablishedspecialfundsthatavailable throughcommercialbanks,islamicbankand selectednancialinsKtuKons,namely
FundforSMI2 NewentrepreneurFund2 FundforFood

 TheBNMhasundertakenvariousiniKaKvesto enhanceaccesstonancingSMEs,including;
EstablishmentofBumiputeraDevelopmentUnit EstablishmentofSmallDebtResoluKonto restructurenonperformingloans(NPL) EstablishmentofDevelopmentFinancial InsKtuKonandDepartmentatBNM EstablishmentoftheSMEinfoPortal,an integratedonlineinformaKongatewayforSMEs

 TheSMEBankstartsitsoperaKonin2005, parKcularlyfocusesonSMEsnancialneeds andnonnancialneedssuchasadvisory services,technicalmanagement,markeKng andIT. WorkersandowneroperatorofSMEswere requiredtoupgradetheirskillsand competenciesbyenrollingtoprogrammes conductedbySMIDEC,MARAandetc.

WeaknessesofSMEinMalaysia
LimiteduKlisaKonoftechnology LimitedinvolvementofR&DacKviKes Lackoftechnicalprofessional&Mgmt experKseandentrepreneurialskills InabilitytoexploremarketopportuniKes

LowuKlisaKonoftech
MostofSMEsKllinvolvedinlabourintensive industries LowleveloftechnologyadopKon,mostof themsKlluseindigenoustechnology LowapplicaKonofICTinfrastructure

LowR&DacKvity
DuetolowinvestmentandinnovaKon LowlevelofIPawareness Lownewproductdevelopmentstrategy MostofSMEconcentratedonlyonprocess improvementratherthaninnovaKon

Lowskills
Shortageoftechnicalandprofessional experKse ThisinfactledtolimiteduKlisaKonof technologyandinvolvementinR&D AwarenessofbestbusinesspracKceisvery low Unabletocompeteinthemarket LackofentrepreneurialcapabiliKesin operaKngtheirbusiness

MarketpenetraKon
Unabletocompeteregionallyandglobally Duetolimitedtechnicalandnancial capabiliKes ThoughsomeoftheSMEventureinto overseasmarket,thenumberisverylimited Brandingstrategyneedtobeimproved

StrategiestouplikSME
EnhancingcompeKKveness Capitalisingonoutwardinvestment opportuniKes Drivegrowththroughtech,knowhowand innovaKon InsKtuKngcohesivepolicy,supporKve regulatoryandinsKtuKonalframework Enhancegrowthinservicesector

EnhancecompeKKveness
IntegraKonintoMNCsregionalandglobalsupply chain AdopKngICT SelectedhighvalueaddedacKviKesviaR&D, brandinganddesigning StrengtheninginterlinkagesbetweenSMEsand largerrmsandMNCs AdopKngbestbusinesspracKcesand benchmarking Transformingandrestructuring

OutwardopportuniKes
Targetedintoexportmarkets BilateralcooperaKonwithforeigncounterparts tofacilitatenetworking Acquiretheunderstandingofdierenttargeted market AdoptgreaterICTapplicaKon Skillsandknowledgedevelopment Marketintelligencetofacilitateentryintonew marketsthroughspecicmarketstudy

GreaterapplicaKonoftechnologyand innovaKon
ApplicaKonofICT EncourageR&DacKviKes CollaboraKonwithresearchinsKtutesand universiKes NurturinginnovaKveacKviKes AcculturaKonofentrepreneurshipand innovaKon Createconducivebusinessenvironment

Cohesivepolicy,regulatoryand insKtuKonalframework
NeedsystemaKcapproachtocatalyzeSME growth Financialsupportprogramstodierentneeds ofSME ProvideassistanceinIPregistraKon GreaterinteragencycoordinaKonthrough complementariKesandknowhow AdopKngperformanceappraisaland monitoringmechanismtoimproveeciency

Enhancegrowthinservicesector
TargetedtodistribuKvetrade Businessandprofessionalservices LogisKcservices ConstrucKon ICT

Thankyou NextWeek:IssuesofForeignDirectInvestment InMalaysia Pleasedosomereadingbeforeclass!