SC3 – Small Medium Enterprises (SMEs)

SC3 – Small Medium Enterprises (SMEs) Lim SeiKee @ cK

@ Definition • @ Examples • @ Importance

SMEs • SME stands for Small to Medium Enterprise. • Different countries define SMEs differently. • SMALL-and medium-sized enterprises (SMEs) play an increasingly important role in the global economy, with a growing proportion now doing business internationally.

SMEs in Brunei[Source: Economic Census 2011] Distribution of Enterprise by Size, 2010. • Small 65% • Medium 33% • Big 2% Number of Enterprise by District, 2010. • Brunei Muara 4,127 • Belait 885 • Tutong 390 • Temburong 84

Distribution of Enterprise Agriculture, Forestry, and Fishery Mining and Quarrying Manufacturing Electricity, Gas, Water Supply and Other Industrial Activities Construction Whole and Retail Trade Accommodation and Food Service Activities

Distribution of Enterprise Transportation and Storage Information and Communication Financial and Insurance Activities Real Estate Activities Professional, Technical, Administrative and Support Services Education Human Health and Social Work Activities

Recognizing the significant role of SMEs, the primary role of the Brunei Government is to create a good business environment to strengthen the competitiveness of SMEs by providing: • Administrative Support • Investment and Trading Opportunities • Technical Assistance • Financial Assistance • Incentives

Administrative Support • The Resource Centre (MIPR) coordinates the programmes and activities of the government agencies and private sectors that are responsible for SMEs. • The one-stop agency under the Brunei Industrial Development Authority (BINA) provides administrative support in the implementation of the industrial development programme and trade requirement. • www.bina.gov.bn

Investment and Trading Opportunities • An investment / trading arm of the Government has been created with the objective of accelerating strategic industrial development in Brunei Darussalam through foreign direct investment. • Brunei Economic Development Board • www.bedb.com.bn

Technical Assistance • Assistance given are in the form of training services, incubation programmes, technical and business advisory services and infrastructure assistance. • Icentre • www.icentre.biz

Financial Assistance • Industrial Development Fund is given to SMEs to support their financial needs through the Enterprise Facilitation Scheme, Microcredit Facilitation Scheme, Export Re-Financing Scheme. • LEAP [Local Enterprise Applications and Products] • www.bedb.com.bn/leap

Incentives • To promote the development and expansion of SME activities, tax and investment incentives, including tax exemption for imported raw materials and machinery • Corporate tax relief of up to 5 years for companies that invest B$500,000 to B$2.5 million in approved ventures • An 11-year tax break if the venture is located in a high-tech industrial park (SPARK)

Based on Chart 2.4, answer the following questions. • 1. How many businesses are there in information and communication sector? • 2. How many large businesses are there in real estate activities? • 3. How many small businesses are there in manufacturing sector? • 4. In which sector(s) is there many more medium enterprises compared with small enterprises? • 5. How many businesses are there in Brunei as of 2010?

Based on Chart 2.5, answer the following questions. • 1. How many workers are there in small enterprises? • 2. How many workers in medium enterprise are working in financial and insurance activities? • 3. In total, how many workers are there in accommodation and food service activities? • 4. Which sector account for the most workers? • 5. Which sector account for the least workers?

Importance of SMEs • SMEs have a very high potential in contributing to the diversification of the economy. • SMEs are crucial to the economic growth process and play an important role in the country's overall production network. • SMEs have the potential to contribute substantially to the economy and can provide a strong foundation for the growth of new industries as well as strengthening existing ones.

Successful SMEs - characteristics  Highly innovative entrepreneurs  Well versed with up-to-date technologies  Able to take the advantage in strengthening their competitiveness

SME - Problems • Business viability as well as a lack of medium/long-term commitment. • A lack of technical knowledge, market knowledge, financial means to conduct research and innovation, human resources and finances to fund their growth. • Lack offinancial resources to meet with the opportunities of the wider market

SME - Financing • Often the hardest part of starting a business is raising the money to get going. • The entrepreneur might have a great idea and clear idea of how to turn it into a successful business. • However, if sufficient finance cannot be raised, it is unlikely that the business will get off the ground.

The finance needs of a start-up should take account of these key areas: • Set-up costs (the costs that are incurred before the business starts to trade) • Starting investment in capacity (the fixed assets that the business needs before it can begin to trade) • Working capital (the stocks needed by the business –e.g. r raw materials + allowance for amounts that will be owed by customers once sales begin) • Growth and development (e.g. extra investment in capacity

Discussion Qs • Where can SMEs get their financing from?

GROUP PRESENTATION@ MAY 21st, MAY 28th, JUNE 4th • 1. Define SME. • 2. Examples of SME in Brunei. • 3. Importance of SME. • 4. Problems of SME. • 5. Where can SMEs get their financing from?

Group Assignment • Work in a group of MAXIMUM 4 students. • Presentation title: “Small Medium Enterprises” • Presentation date: MAY 21st, MAY 28th, JUNE 4th ** MAX 2 GROUPS PER SESSION ** Submit your presentation slides and report (softcopy) before/on 11th JUNE 2014 • Points to remember: • Show up early, Proper Introduction, Clear and Concise Points, Enhance your graphics, Conclude the presentation. • Time: 15 – 20 minutes.

For next week, • Read up any one of them and present to the class: • SPARK (Sungai Liang Industrial Park) • BEDB (Brunei Economic Development Board) • iCentre • YEAB (Young Entrepreneurs Association Brunei) • LiveWire Brunei

SC3 – Small Medium Enterprises (SMEs)