11
Mrs. V. VijayaledchumyDirector, Central Banking Services
Bank Negara Malaysia
Role of Government in Creating an Enabling Environment for SME and Microenterprise Development
FINANCIAL INCLUSION ADVISERS PROGRAMMEKampala, Uganda
26 April 2010
2 2
Establishment of National SME Development Council (NSDC) and SME Corp
Achievements of NSDC and SME Corp
√ Improved policy formulation
√ Improved statistical information
√ Strengthened capacity and capability
√ Comprehensive dissemination of information
√ Enhanced access to financing (covered in next session)
Conclusion
OUTLINE OF PRESENTATION
3
Weaknesses in the SME infrastructure prior to 2004 prompted the need to establish a holistic Government approach to develop SMEs, including micro
enterprises
Weaknesses prior to 2004
• Duplication of programmes and roles of Ministries
Fragmented development efforts
• Resulting in banks not lending to SMEs because SMEs were not viable
Lack of capacity building efforts for SMEs
• Difficult to collect data and formulate comprehensive policies
No standard definition of SMEs
Establishment of the National SME
Development Council (NSDC) to drive the SME
development agenda
4
The NSDC is the highest policymaking body to chart SME development
Strengthen Infrastructure
Build SME Capacity
Enhance Access to Financing
Enhance SMEs’
Contribution to GDP
NSDC’s3 Strategic Thrusts
Description
• Chaired by Prime Minister
• Members: 15 Ministers and 3 Heads of Agencies
• Secretariat: SME Corporation (Previously BNM)
Roles
• Formulate broad policies on SME development
• Oversee coordination of policy implementation
• Ensure effectiveness of policy implementation
5
Developing progressive and resilient Bumiputera SMEs and entrepreneurs
-
III.Enhancing access
to financing
I.Strengthening enabling
infrastructure
II.Building capacity and
capability
Str
ateg
ic T
hru
sts
Ob
ject
ives
Promote development of competitive and resilient SMEs in all sectors towards increasing SME contribution to the economy
Economic Socio Economic
Promoting development of SMEs in knowledge-based
industries
Enhancing viability of SMEs across all sectors
SME Development Framework 2006 - 2010
6
NSDC’s Achievements
Achievements of NSDC
Improved Statistical
Information
Improved Policy Formulation,
Monitoring and Assessment
Strengthened Capacity and
Capability
Comprehensive Dissemination of
Information
Enhanced Access to Financing
7
CoordinatePolicies
Disseminate Information
and Research
“One-Referral” Information
and Advisory
SME CORP. MALAYSIA
Secretariat to NSDC
MINISTRIES
AND
AGENCIES
SMEs
PRIVATE SECTOR
NSDC
Improved Policy Formulation, Monitoring and Assessment
7
8
To Coordinate Policies Formulation and Programmes
Implementation
• Formulate broad SME policies across all sectors
• Point of reference for Government Agencies on SME related issues
• Monitor and evaluate effectiveness of policies and programmes
To Disseminate Information and Research
• Liaise with domestic and international organisations to share best practices and relevant programmes on SMEs
• Manage National SME Database• Publish SME related publications and
statistics • Undertake research on SME
environment
FUNCTIONS OF SME CORP. MALAYSIA
8
To be ‘One-Stop’ Information To be ‘One-Stop’ Information and Advisory Servicesand Advisory Services
• Channel to obtain feedback on SME issues
• ‘One Referral Centre’ of reference for SMEs
Secretariat to National SME Development Council (NSDC)
• Provide support and administrative services to NSDC
• Ensure decisions from the NSDC are communicated to all relevant stakeholders
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ORGANISATION STRUCTURE OF SME CORP. MALAYSIA
NSDC
Internal Audit Unit
Members of the Corporation
CEO
MITI
Economic Division
Programme Coordination
Division
Deputy CEO I
Coordination & Development
Business Development Division
Deputy CEO IIImplementation
Information Technology
Division
Corporate Communication
Division12 State
Offices
Corporate Management
Division
Chief Operating
Officer
Financing and Monitoring Division
Strategic Planning Division
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1. Legal Unit2. Media and Public Relation Unit3. Secretariat
- Project Management Officer- Transformation Management Officer
10 10
STATE OFFICESSTATE OFFICES
11
NSDC’s Achievements
Achievements of NSDC
Improved Statistical
Information
Improved Policy Formulation,
Monitoring and Assessment
Strengthened Capacity and
Capability
Comprehensive Dissemination of
Information
Enhanced Access to Financing
12
CATEGORY MICRO SMALL MEDIUM
Manufacturing, Manufacturing-
related services & Agro-based Industries
sales turnover < RM250,000
OR full time
employees < 5
RM250,000 > sales turnover < RM10 mil.
OR 5 > full time
employees < 50
RM10 mil. > sales turnover < RM25 mil.
OR 51 > full time
employees < 150
Services, Primary Agriculture and Information &
Communication Technology (ICT)
sales turnover < RM200,000
OR full time
employees < 5
RM200,000 > sales turnover < RM1 mil.
OR 5 > full time
employees < 19
RM1 mil. > sales turnover < RM5 mil.
OR 20 > full time
employees < 50
DEFINITION OF MICRO, SMALL AND MEDIUM
DEFINITION OF MICRO, SMALL AND MEDIUM
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435,324 (78.7%)
100,333 (18.2%)
12,610 (2.3%)
4,537 (0.8%)
Source: Census of Establishments & Enterprises 2005 – Profile of SMEs
• Total establishments = 552,804
• No. of SMEs = 548,267 (99.2%)
• Total establishments = 552,804
• No. of SMEs = 548,267 (99.2%)
TOTAL ESTABLISHMENTS BY SIZE
TOTAL ESTABLISHMENTS BY SIZE
MICRO
SMALL
MEDIUM
LARGE
13
14
DISTRIBUTION OF SMEs BY SECTOR
DISTRIBUTION OF SMEs BY SECTOR
14
15
CONTRIBUTION OF SMEs TO GDP
CONTRIBUTION OF SMEs TO GDP
15
16
CONTRIBUTION OF SMEs TO EMPLOYMENT
CONTRIBUTION OF SMEs TO EMPLOYMENT
16
17
CONTRIBUTION OF SMEs TO TOTAL EXPORTS
CONTRIBUTION OF SMEs TO TOTAL EXPORTS
17
18
NSDC’s Achievements
Achievements of NSDC
Improved Statistical
Information
Improved Policy Formulation,
Monitoring and Assessment
Strengthened Capacity and
Capability
Comprehensive Dissemination of
Information
Enhanced Access to Financing
19 19
20
Development ProgrammesDevelopment ProgrammesDevelopment ProgrammesDevelopment Programmes
STRENGTHENING STRENGTHENING ENABLINGENABLINGINFRASTRUCTUREINFRASTRUCTURE
Involves developing and enhancing physical infrastructureand information management, as well as creating conducive regulations and operation requirements for SMEs.
STRENGTHENING STRENGTHENING ENABLINGENABLINGINFRASTRUCTUREINFRASTRUCTURE
Involves developing and enhancing physical infrastructureand information management, as well as creating conducive regulations and operation requirements for SMEs.
Programmes available:
• Soft Loan Scheme for Programmes available:Factory Relocation – MITI
• Furniture Promotion Centre – MPIC• Provision of Business Premises – MRRD• Incubation Centre – MOSTI• Urban Development and Growth Centre – MRRD• Upgrade basic amenities and relevant
infrastructure in kampungs – MOTOUR• Landscape Industry Resource Centre – MHLG• Halal Park Development – HDC• Provision of Marketing infrastructure; Product
Packaging Centre (PUSPRO); Distribution Centre; and Agricultural Marketing Centres - MOA
Programmes available:
• Soft Loan Scheme for Programmes available:Factory Relocation – MITI
• Furniture Promotion Centre – MPIC• Provision of Business Premises – MRRD• Incubation Centre – MOSTI• Urban Development and Growth Centre – MRRD• Upgrade basic amenities and relevant
infrastructure in kampungs – MOTOUR• Landscape Industry Resource Centre – MHLG• Halal Park Development – HDC• Provision of Marketing infrastructure; Product
Packaging Centre (PUSPRO); Distribution Centre; and Agricultural Marketing Centres - MOA
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Development ProgrammesDevelopment ProgrammesDevelopment ProgrammesDevelopment ProgrammesBUILDING BUILDING CAPACITY AND CAPACITY AND CAPABILITYCAPABILITY
Includes entrepreneurshipdevelopment, human capital development, marketing and promotion, advisory services, awareness and outreach, technology enhancement as well as product development.
BUILDING BUILDING CAPACITY AND CAPACITY AND CAPABILITYCAPABILITY
Includes entrepreneurshipdevelopment, human capital development, marketing and promotion, advisory services, awareness and outreach, technology enhancement as well as product development.
Programmes available:
•Matching Grant for Business Start-ups - MITI•Computer Application in Business – MOE•Train and Work Programme - MDTCC•Matching Grant for Product and Process Improvement - MITI•Quality Palm Oil Seeds Assistance Scheme for Smallholders in Sabah and Sarawak - MPIC•Production of Specialty Pepper Programme - MPIC•Produk Malaysia Citarasa Kita - MDTCC•SME Brand Development Programme - MITI•Training Programme for Budget Hotel Operators – MOTOUR•Train the Trainer Programme - MOHR•TUNAS (Tunjuk Nasihat Sawit) - MPIC•Skills Upgrading Programme - MITI•Biotechnology Entrepreneur Programme - MOSTI•Commercialisation of R&D Fund - MOSTI•Bumiputera Manufacturing Incubator - MRRD•Franchise Development Promotion Programme – MOF•Bumiputera Exporters Development Programme - MITI
Programmes available:
•Matching Grant for Business Start-ups - MITI•Computer Application in Business – MOE•Train and Work Programme - MDTCC•Matching Grant for Product and Process Improvement - MITI•Quality Palm Oil Seeds Assistance Scheme for Smallholders in Sabah and Sarawak - MPIC•Production of Specialty Pepper Programme - MPIC•Produk Malaysia Citarasa Kita - MDTCC•SME Brand Development Programme - MITI•Training Programme for Budget Hotel Operators – MOTOUR•Train the Trainer Programme - MOHR•TUNAS (Tunjuk Nasihat Sawit) - MPIC•Skills Upgrading Programme - MITI•Biotechnology Entrepreneur Programme - MOSTI•Commercialisation of R&D Fund - MOSTI•Bumiputera Manufacturing Incubator - MRRD•Franchise Development Promotion Programme – MOF•Bumiputera Exporters Development Programme - MITI
22
CAPACITY DEVELOPMENT PROGRAMMES BY SME CORP
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1.INDUSTRIAL LINKAGE PROGRAMME
2. SKILLS UPGRADING PROGRAMME
3. SME COMPETITIVE RATING FOR ENHANCEMENT (SCORE)
4. ENTERPRISE 50 AWARD PROGRAMME
5. NATIONAL WOMEN ENTREPRENEUR AWARD (NWEA)
23
SME DEVELOPMENT PROGRAMMES
23
6. BUMIPUTRA ENTREPRENEUR ENHANCEMENT PROGRAMME ( BEEP)
7. SME – UNIVERSITIY INTERNSHIP PROGRAMME
8. TECHNOLOGY AND INNOVATION PROGRAMME
9. SME EXPERT ADVISORY PANEL (SEAP)
10. OUTREACH PROGRAMMES
24 24
2525
REGIONAL COOPERATIONREGIONAL COOPERATION
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List of MoUs Signed1. Small Industries & Industrial Parks
Organization (ISIPO) 22 June 2006
2. Office of SMEs Promotion (OSMEP) of Thailand
12 July 2006
3. Small Business Corporation (SBC) of the Republic of Korea
16 July 2007
4. Organization for Small & Medium Enterprises and Regional Innovation, Japan (SMRJ)
18 July 2007
5. Syrian Enterprise and Business Center (SEBC)
7 January 2009
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International Computer Driving License
Preparing Effective Business Proposal
Cashflow Management
Accounting for SMEs
Halal Certification Procedure Malaysia
POPULAR COURSES
Sembilan Resources Management (M) Sdn. Bhd. Selangor Human Resource Development Centre (SHRDC) Institute Global Management (IGM) Sarawak Skills Development Centre (PPKS) Terengganu Advanced Technical Institute (TATI) Penang Skills Development Centre (PSDC)
SKILLS UPGRADING PROGRAMME (cont..)
BEST TRAINING
PROVIDERS
28 28
Total SCOREDTotal SCORED - 1,183 SMEs- 1,183 SMEs
SME COMPETITIVE RATING FOR ENHANCEMENT(SCORE)
29
• a comprehensive diagnostic tool to rate and enhance competitiveness of SMEs based on their performances and capabilities.
• developed in August 2007.
• identify strengths and weaknesses for improvements; and
• facilitate linkages.
• Business Performance• Financial Capability• Management Capability• Production Capability
• 0 – 2 Stars : Very basic business operation• 3 – 5 Stars : Some degree of sophistication
and can be groomed for export
• Retail & Distributive Trade (PUNB)
• Construction (CIDB)• ICT (MDeC)
Example of Radar Diagram for 3-Star company
Analysis: Weak in financial capability
Assistance: Require financial management training• Maintenance, Repair &
Overhaul (MINDEF)• Professional Services (PSDC)
• Technical capability• Quality System• Innovation
BACKGROUND OF SCOREBACKGROUND OF SCORE
29
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SMEsManagem
ent Capability
BusinessPerformance
FinancialCapability
Technical Capability
Quality System
InnovationProduction
Capacity• Corporate
Planning
• Technology & Innovation Management
• Human Capital Development
• IT Adoption
• Sales
• Average Growth
• Export
• Marketing
• Customer Satisfaction
• Current Assets
• Current Liabilities
• Gearing Ratio
• Profit
• No. of Trained Personnel
• MTS Ratio
• Types of Technology Utilised
• Capital Investment per Employee (CIPE)
• Factory Automation Level
• Machine Utilisation
• Intellectual Property Rights
• Product & Process Improvement
• Capability of Products & Process Improvement Activities
• Practice of Continuous Improvement
• Product Certification
• Certification (Basic & Advance Requirement)
• Awards
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SCORE PARAMETERS - MANUFACTURINGSCORE PARAMETERS - MANUFACTURING
31
Business Performance
Operation Management
Marketing Capability
Management Capability
• Business Planning / Strategy
• Human Capital Development
• Reward System
• Job Segregation / Management Structure
• Sales Turnover & Growth
• Profit Margin
• Customer Services
• Business Growth & Expansion
• Suitability of Location
• Accessibility
FinancialCapability
• Current Assets & Liabilities
• Liquidity & Gearing Ratio
• Creditor's Aging
• Profitability
• Qualification & Staffing
• Experience
• ICT Adoption & Utilisation
• Standard Operating Procedures
Stock Management
• Stock Policy
• Stock Management
• Sourcing Strategy
• Promotional Activities
• Customer Retention
• Business Value Proposition
Compliance to
Requirements• Premise
• Insurance
• Quality Standards
SMEs
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SCORE PARAMETERS - DISTRIBUTIVE TRADESCORE PARAMETERS - DISTRIBUTIVE TRADE
32
No Star Very basic operation, manual process and informal negative average growth;
Manual process, Minimal quality management system in place, negative average growth
Semi-automated process, Basic certification/ compliance, Minimal activities in product and process improvement, Minimal average growth
Extensive automation, Quality management system in place, Product and Process improvement carried, IPR registered, Moderately ready for export compliance certification
Fully automated, High potential for export, High investment in Product and Process Improvement, With certification for export e.g. CE Marking, GMP, HACCP
Have good branding, packaging, already exporting to other countries, Have compliance to exporting countries certification requirements
SCORE RATING - MANUFACTURINGSCORE RATING - MANUFACTURING
32
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No Star Very basic operation Financial record not well
documented, poor ICT utilisation, poor stock management, low management capability
Basic financial record and stock policy, basic level of operation management, minimal compliance to requirement, unstructured marketing activity
Adequate management ladder, good implementation of SOP, good stock policy, average utilisation of ICT and good customer relation.
Efficient management structure, good stock management, positive business expansion, good financial management and performance, comprehensive marketing plan, good utilisation of ICT
Visionary leadership, established brand presence, excellent integrated system, high capability in ICT adoption, excellent compliance to requirement, excellent stock management, outstanding CRM, high business value proposition, excellent marketing strategy and very strong financial capability.
33
SCORE RATING - DISTRIBUTIVE TRADESCORE RATING - DISTRIBUTIVE TRADE
34
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Current Situation
Recommendations Action Plan
• Company is semi automated, testing level at 23 bar.
• Result
Bottleneck at the end of production.
Product & Process Improvement•Enhance automation with conveyor.
•Improve testing through purchase of new water bath tester to 16 bar level.
• Assistance under Terengganu Enhancement Programme through Matching Grant for Product and Process Improvement.
• Company has no clear vision & mission.
• Company need to improve on management skills to acquire better knowledge in management.
• To take up courses under Skills Upgrading Programme under SMIDEC.
• Send SEAP expert.
• Company lack sufficient skilled staff such as QA, Maintenance Engineer, and OSH Officer.
•Company has to send their staff for courses or recruit.
•To take up courses under Skills Upgrading Programme under SMIDEC.
35
36 36
SME – UNIVERSITIY INTERNSHIP PROGRAMME
37
NATIONAL SME INNOVATION FOCAL
POINT UNDER IMP3
STRATEGIC THRUST 4 – SME /
TECHNOPRENEUR UNDER JTPIN
INNOVATION FOR SMEs
INITIATIVES TO DEVELOP INNOVATION-LEDTECHNOLOGY-DRIVEN SMES
37
TECHNOLOGY AND INNOVATION PROGRAMME
3838
TECHNOLOGY AND INNOVATION PROGRAMME (Cont)
39
- 270 technologies available for commercialisation - 18,413 researchers’ profile available
- Completed Roadmaps → Electrical & Electronics → ICT → Biotech industry
- Work In Progress → Automotive Sector → Plastics & Rubber
Wood and wood-based
-
TECHMARTin SMIDEC’s
Website
39
Technology Database(in collaboration with MASTIC)
Technology Roadmap
TECHNOLOGY AND INNOVATION PROGRAMME (Cont)
40 40
Total Experts : 62Total SMEs Participated : 59
SME EXPERT ADVISORY PANEL (SEAP)
41
NSDC’s Achievements
Achievements of NSDC
Improved Statistical
Information
Improved Policy Formulation,
Monitoring and Assessment
Strengthened Capacity and
Capability
Comprehensive Dissemination of
Information
Enhanced Access to Financing
42
Convention, Seminars/Workshops/ Technical Briefings
42
OUTREACH PROGRAMMES
43
Business Advisory Services
43
44
Note : • Officiated during SMIDEX 2003
Enquiries through E-mails
44
45
Note :•Officiated during SMIDEX 2003.
Toll Free Line / Info Line (1-300-18-1801)
45
46 46
Publications
47
THE THE NATIONAL NATIONAL MARK OF MARK OF MALAYSIAN MALAYSIAN BRANDBRAND
The Mark of QualityThe Mark of Quality
48
Development ProgrammesDevelopment ProgrammesDevelopment ProgrammesDevelopment Programmes
ENHANCING ENHANCING ACCESS TO ACCESS TO FINANCING FINANCING
Involves thedevelopment and strengthening of institutional arrangements tosupport SME financing needs.
ENHANCING ENHANCING ACCESS TO ACCESS TO FINANCING FINANCING
Involves thedevelopment and strengthening of institutional arrangements tosupport SME financing needs.
Financial assistance is provided based on three stages of business cycles: • early stage financing• business expansion financing• rehabilitation
Financial assistance is provided based on three stages of business cycles: • early stage financing• business expansion financing• rehabilitation
49
FINANCIAL FINANCIAL ASSISTANCE ASSISTANCE
FOR SMESFOR SMES
FINANCIAL FINANCIAL ASSISTANCE ASSISTANCE
FOR SMESFOR SMES
Financial Assistance for SMEsFinancial Assistance for SMEsFinancial Assistance for SMEsFinancial Assistance for SMEs
EARLY STAGE EARLY STAGE FINANCING FINANCING
BUSINESS BUSINESS EXPANSION EXPANSION FINANCING FINANCING
REHABILITATIONREHABILITATION
50
Financial Assistance (cont’…)Financial Assistance (cont’…)Financial Assistance (cont’…)Financial Assistance (cont’…)
Examples:
• Venture Capital Funds - MOSTI & MAVCAP
• Business Effort Group Economic (TEKUN) - MOA
• PROSPER, Retail and Graduate PROSPER - PUNB
• DAGS Start-up - CGC
51
Financial Assistance (cont’…)Financial Assistance (cont’…)Financial Assistance (cont’…)Financial Assistance (cont’…)
• Microfinance Scheme - BNM and participating Financial Institutions• Soft Loans for SMEs - MITI• Japan Bank for International Cooperation (JBIC) United Loan for ICT Fund - MOF• Special Fund for Tourism - MOTOUR• TNB Vendor Financing Programme - MEWC• Pemborong PROSPER - PUNB• Skim PKS - PUNB• Rural Economy Funding Scheme (SPED) - MRRD• Bank Rakyat Business Financing Scheme - MOF• PNS Franchise Financing Scheme - MOF• MARA Business Financing Scheme - MRRD• Co-operative Financing Fund - MDTCC• Rural Economic Assistance - MRRD• Overseas Project Fund – Exim Bank• Multi Currency Trade Finance (MCTF) and Indirect Exporter Financing Scheme (IEFS) – Exim Bank
52
Financial Assistance (cont’…)Financial Assistance (cont’…)Financial Assistance (cont’…)Financial Assistance (cont’…)
• Small Debt Resolution Scheme (SDRS) - BNM and
participating financial Institutions
53 53
The Government can play a vital and strategic role in supporting SMEs
The roles should focus on capacity and capability development in terms of providing good infrastructure, information, coordination and some financial support
The roles should complement private sector and be market friendly in its implementation
The Government’s intervention must involved all relevant stakeholders
The Government’s intervention can be permanent but must be flexible and responsive to new requirements of the business world
CONCLUSION
54 54
Thank You
Role of Government in Creating an Enabling Environment for SME and Microenterprise
Development
