TECHNOPRENEURSHIP

CHP 3: Building Start-Up Technology Venture

3. Small and Medium
01
1 Enterprises (SMEs)

Economic Transformation
02
3.2 Programme

02
Types of Business
3.3
03 Establishment in Malaysia

Companies Commission of
04
3.4 Malaysia
3.1 Small and The SME Masterplan 2012-2020 which was
launched in July 2012 will be the ‘game changer’ to

Medium accelerate the growth of SMEs to achieve high

income nation status by 2020.

Enterprises Successful implementation of the Masterplan will

(SMEs) result in raising the contribution of SMEs to the

economy by 2020.
Background on SME Definitions
Strengthen the
government’s Allow for the
efforts to identification of
create effective Make it easier SMEs in
policies and to provide various
support technical and categories and
programmes financial levels.
for specific assistance to
targets SMEs

The use of common definitions for SMEs

In Malaysia, various agencies adopt different definitions of SMEs
depending on their business interests.
However, 1 common definition is provided by the Small and
Medium Industries Development Corporation (SMIDEC) which
defines SMEs according to 2 main factors:

1. Annual sales turnover

2. Number of full time workers
Defining SMEs
The definitions will apply for the following
sectors:
Primary agriculture

1 2 Services (including
information and
communications technology)

Manufacturing-related
services (MRS)
4
3 Manufacturing (including
agro-based)
 Malaysian SMEs can be grouped into 3 categories: Micro, Small or Medium.
These groupings are decided based on either the number of people a business employs or the
total sales or revenue generated by a business in a year.
Characteristics of a Small Business
02 Resources
04 Flexibility of change
Limited resources.
More flexibility to adapt to
change in the environment
due to its size and informal
06 Annual revenue
Annual revenue of RM5
structure.
million can be used as the
proximity to characterize
the upper limit.

Organizational
01 Management 03 structure 05 Firm age
Managed and operated by The structure is often flat A new venture usually needs
the owner(s). and informal. an average of 8 years to
finally achieve profitability.
ADVANTAGES OF A SMALL BUSINESS

1 Can be st
ar ted at a ve
ry low cost a
nd on a p
art-time b
a
2
sis

5
Well-suited to In
te rnet marketing

3 Easier to respond to the m

ark etplace quickly

Advantages 4 Greater accountability and maturity

5 Independence
 Problem Faced by Small Businesses

Bankruptcy

Poor planning rather than Failure to provide the level of Many small business owners have
economic conditions funding for the company could leave put such low prices on their
the owner liable for all the products
company’s debts
SME CONTRIBUTIONS TO THE EC
 ETP which was launched on 25 September 2010,
was formulated as part of Malaysia’s National

3.2 Economic Transformation Programme. Its goal is to elevate

the country to developed-nation status by 2020,

Transformation targeting Gross National Income per capita of

US$15,000.

Programme ETP is driven by 2 components:

(ETP) 1) 12 National Key Economic Areas (NKEAs)

2) 6 Strategic Reform Initiatives (SRIs)
 National Key Economic Areas (NKEA) of the Economic
Transformation Programme

NKEA representing sectors where growth

will be focused on.

Each NKEA comprises Entry Point Projects

(EPPs), which explore new growth areas,
and Business Opportunities (BOs), which
enable the sectors to move further up the
value chain.
Strategic Reform Initiatives (SRIs) of the
Economic Transformation Programme
SRIs made up of supportive policies that will drive Malaysia’s global competitiveness. The main thrust of the SRIs is to create
an efficient, competitive and business-friendly environment in Malaysia that will allow world-class, local champions to
thrive and attract valuable foreign investment.
Competition, Standards & Human Capital Development
Liberalization 1 6

Public Finance Reform Government’s Role in

2 5 Business

Public Service Delivery Narrowing Disparities

3 4
 Business in Malaysia can be registered under any
one of the following Acts:

1) Business Registration Act 1956 (Amendment

3.3 Types of 1978) and Procedures of Business Registration

1957.

Business - 2 types of businesses

i. Sole proprietorship

Establishment in ii. Partnership

Malaysia 2) Company Act 1965.

- 3 types of companies
i. Private limited
ii. Public limited
iii. Unlimited
 Business Act 1956
(Amendment 1978)
Owned by 1
person
Liability is unlimited

Simplest business
structure Sole
Proprietor
ship

Small amount of
capital to start with
Examples: tailor shops,
beauty salons, restaurants,
launderettes and mini
markets
 Business Registration Act
1956 (Amendment 1978)

Partners carry out of

business, share the capital,
2 or more partners, profits, and losses
2 – 20 persons

Partnershi
p

Every partner is considered the

company’s representatives and
2 - 50 persons in professional acts on behalf of the company
businesses examples legal
firms, architectural and
accounting firms
 LIMITED
2 – 50 members COMPANY
Legal entity and its
identity is separated form
the identity of the
company’s members.
Cannot sell shares to Private
the public Limited
Company

The characteristics that

differentiate it from a sole
proprietorship and partnership.
Distinguished by the title
‘Sendirian Berhad’, or
shortened to ‘Sdn Bhd”.
Characteristics of a Private
Limited Company
It can acquire assets
under its own name.
A company can also Limited to the local
take a legal action shares contributed
and face legal action to the company’s
under its own name. capital.
1. Right and
2. Lifespan 3. Liabilities 4. Memberships
responsibility
A company can be -At least 2 members
dissolved when its who are of Malaysian
members are no nationality.
longer interested in -Can act as a director
continuing the and founder of the
business. company.
 LIMITED
COMPANY Can only offer shares to the public
if a prospectus which compiles
with the requirements of the
Companies Act 1965 has been
registered with the Registrar of
Companies.

2 to unlimited
members
Public
Limited
Company

Distinguished by the title Before a prospectus can be accepted

‘Berhad’, shortened to ‘Bhd’ for registration, the proposal for the
issue or offer of shares to the public
has to be submitted to the Securities
Commission for approval.
 No different from the sole
proprietorship and
partnership business
entities.

Only differences are that

they have a special article
Unlimited in association and are free
Company to return the capital to their
members.

Members or shareholders
are not liable for the
company’s debts beyond
the amount of share capital
they have subscribed.
 Limited Company by Guarantee

Often registered by non-profit organizations, public societies and clubs.

3.4 Companies Companies wishing to operate in Malaysia must
register with the Companies Commission of

Commission of Malaysia (Companies Division). There are different

procedures established for local companies and

Malaysia foreign companies.

 Must make an application to
1
the Companies Commission to Foreign
inquire if the intended name is
still available for registration. companies
Reservation period of 3 months
will be granted if the name is
2 available, during which time
the company must submit
copies of documents.
The Registrar of Companies will
bestow a certificate of
3 incorporation once registration
procedures are completed and
approved.
Must incorporate a local
company or register a
1 branch in Malaysia in order
Must also undergo the to conduct a business in this
2 same procedure as a local country.
company
The Registrar of Companies will bestow upon the
applying company the status of a foreign
Local 3 company operating in Malaysia once all
companies procedures are completed and approved.
Thank you