Business for Engineers

1. Business for Engineers Introduction to the concept of doing business as legal entity prepared by: Siti Rashidah Mohd Nasir

2. Introduction to Business prepared by: Siti Rashidah Mohd Nasir

3. Planning your business Before setting up your business, you need to know about Malaysia economy and basic information • Find out business registration requirement • Get loans • Find market information • Find competitor and supplier • Prepare a Business Plan • Decide of a Business Structure prepared by: Siti Rashidah Mohd Nasir

4. Malaysia Economy An overview prepared by: Siti Rashidah Mohd Nasir

5. The GDP is expected to register a smaller overall decline of 3.0% for 2009 and to grow between 2.0% - 3.0% in 2010 prepared by: Siti Rashidah Mohd Nasir

6. The construction sector is projected to grow by 3.2% in 2010 (2009: 3.5%) • The services sector is anticipated to expand by 3.6% in (2009: 2.1%) • Services sector such as :communication, finance and insurance, wholesale and retail trade as well as real estate and business services sub-sectors. • Several niche growth areas in the services sector has been identified – Islamic finance, healthcare travel, education tourism and ICT prepared by: Siti Rashidah Mohd Nasir

7. Business Registration Requirement prepared by: Siti Rashidah Mohd Nasir

8. Suruhanjaya Syarikat Malaysia (SSM)www.ssm.com.my • It is also called as Companies Commission of Malaysia (CCM) • SSM, established on 16 April 2002, serves as an agency to incorporate companies and register businesses. • SSM also ensures compliance with business and corporate legislations through comprehensive enforcement and monitoring activities. • SSM offers efficient and fast service for the incorporation of companies, registration of businesses and lodgement of statutory documents. • SSM has nationwide presence through its headquarters located in Kuala Lumpur as well as branch offices in all the states in Malaysia. • SSM also serves as a depository and custodian of corporate and business information. Such information is vital to enable the business community to make informed business decisions and to enable members of the public to carry out verifications. prepared by: Siti Rashidah Mohd Nasir

9. SSM is responsible for the administration and enforcement of the following legislation: • Companies Act 1965 (Act 125); • Registration of Businesses Act 1956 (Act 197); • Trust Companies Act 1949 (Act 100); • Kootu Funds (Prohibition) Act 1971 (Act 28); • any subsidiary legislation made under the Acts specified above such as: • Companies Regulations 1966; and • Registration of Businesses Rules 1957. prepared by: Siti Rashidah Mohd Nasir

10. Some statistics • There are more than 600,000 registered companies in Malaysia and approximately 4000 foreign companies, majority of them are companies limited by shares. (Source: Data obtained from the Companies Commission of Malaysia) • These companies range from small family business where the directors and shareholders are family members, SMEs as well as large businesses with high business volumes and assets. • There are over 1,000 companies listed on Bursa Malaysia Securities Berhad. The companies are publicly traded and public investors can buy and sell shares on the Malaysia stock exchange. prepared by: Siti Rashidah Mohd Nasir

11. Loans Financial instituition prepared by: Siti Rashidah Mohd Nasir

12. Commercial banks • There are nine licensed commercial banks operating in Malaysia. • There are also thirteen foreign banks that have established representative offices in Malaysia, but they are not permitted to conduct normal banking business. • Commercial banks are also authorised to deal in foreign exchange and are the only financial institutions allowed to provide current account facilities. • In addition to offering normal banking services, commercial banks may accept deposits denominated in foreign currencies from non-residents, loan foreign currencies to residents or syndicate such loans for productive purposes or for the purchase of Malaysian assets owned by non-residents. prepared by: Siti Rashidah Mohd Nasir

13. Example of Commercial banks Local Foreign • RHB Bank Berhad • Public Bank Berhad • Malayan Banking Berhad • Hong Leong Bank Berhad • EON Bank Berhad • CIMB Bank Berhad • AmBank (M) Berhad • Alliance Bank Malaysia Berhad • Affin Bank Berhad • United Overseas Bank (Malaysia) Bhd. • J.P. Morgan Chase Bank Berhad • The Bank of Nova Scotia Berhad •  Standard Chartered Bank Malaysia Berhad • OCBC Bank (Malaysia) Berhad • HSBC Bank Malaysia Berhad • Deutsche Bank (Malaysia) Berhad • Citibank Berhad • Bank of Tokyo-Mitsubishi UFJ (Malaysia) Berhad • Bank of China (Malaysia) Berhad • Bangkok Bank Berhad • The Royal Bank of Scotland Berhad prepared by: Siti Rashidah Mohd Nasir

14. Investment Banks (Ibs) • Investment banks differ from commercial banks, which mainly take deposits and make commercial and retail loans. • Investment banks engage mainly in public and private market transactions for corporations, governments and investors. • These transactions include mergers and acquisitions (M & A), investitures and issuance of equity and debt securities. • Investment banks also advise and assist clients with specialised industry expertise (such as technology and real estate). • They also do securities businesses such as trading, securitisation, financial engineering, merchant banking, funding, investment, management and securities services. prepared by: Siti Rashidah Mohd Nasir

15. Example of Investment Banks (Local) • Affin Investment Bank Berhad • Alliance Investment Bank Berhad • AmInvestment Bank Berhad • CIMB Investment Bank Berhad • ECM Libra Investment Bank Berhad • Hong Leong Investment Bank Berhad • Hwang-DBS Investment Bank Berhad • KAF Investment Bank Berhad • Kenanga Investment Bank Berhad • Maybank Investment Bank Berhad • MIDF Amanah Investment Bank Berhad • MIMB Investment Bank Berhad • OSK Investment Bank Berhad • Public Investment Bank Berhad • RHB Investment Bank Berhad prepared by: Siti Rashidah Mohd Nasir

16. Development Financial Institutions The development financial institutions are government agencies specialising in the provision of medium and long-term loans to finance capital investments of new industries as well as entrepreneurs in the industrial sector. The six Development Financial Institutions are: • Bank Pembangunan Malaysia • Bank Perusahaan Kecil & Sederhana Malaysia (SME bank) • Export – Import Bank of Malaysia Berhad • Bank Kerjasama Rakyat Malaysia • Bank SimpananNasional • Agrobank (formerly known as Bank Pertanian Malaysia) prepared by: Siti Rashidah Mohd Nasir

17. Development Financial Institutions (con’t) Other Development Financial Institutions: • Malaysian Industrial Development Finance Berhad (MIDF) • Credit Guarantee Corporation Malaysia Berhad (CGC) • LembagaTabungHaji • Sabah Development Bank Berhad • Sabah Credit Corporation Berhad • MIDF was formed as a joint venture between the government and the private sector to provide medium and long-term finance for the manufacturing industry. • The other development banks provide loans to meet the credit needs of the industrial and the agriculture sectors respectively. prepared by: Siti Rashidah Mohd Nasir

18. Market Analysis &Market Strategy prepared by: Siti Rashidah Mohd Nasir

19. Market Analysis (example: Contractor company) prepared by: Siti Rashidah Mohd Nasir

20. Market Analysis (cont’) • Target Market Segment Strategy • What you plan to accommodate your clients • Example : a well established and expeditious permitting program, strict cost accounting and supply management, and intensive and comprehensive project management • Business Analysis • Business growth for the past years • The Advantage to your company • current contractor companies in your proposed area • Why the proposed area still in need of your company • Competition and Buying Patterns • Identify competitors in the proposed area • Supply and demand in the proposed area prepared by: Siti Rashidah Mohd Nasir

21. Business Structure/Company Ownership prepared by: Siti Rashidah Mohd Nasir

22. Business Structure In Malaysia, the most common types of businesses are: • Sole proprietorships • Partnerships • Companies prepared by: Siti Rashidah Mohd Nasir

23. Sole proprietorships (under companies act 1965) • usually have just one business owner, and only Malaysian citizens or permanent residents can register. • Personal names or trade names can be used as business names, and the Application of Business Name form must be filled in before a business can be registered. prepared by: Siti Rashidah Mohd Nasir

24. Partnerships (under companies act 1965) • comprise two or more business partners pooling their resources in a business with a view to profit. • Like sole proprietorships, only Malaysian citizens or permanent residents can register partnerships. • A partnership agreement is usually drawn up by legal counsel, which outlines the responsibilities of each partner, conditions of termination and means of resolving intra-partner disputes. prepared by: Siti Rashidah Mohd Nasir

25. Companies (under companies act 1965) • The most common type of company in Malaysia is a company limited by shares (public limited and private limited companies). • Private limited companies cannot sell shares to the public, and are distinguished by the appellation "SendirianBerhad", shortened to "SdnBhd" or "S/B". • Public limited companies source their capital by selling shares to the public, and are distinguished by the appellation "Berhad", shortened to "Bhd". • Most common company structure in Malaysia is (Sdn. Bhd). prepared by: Siti Rashidah Mohd Nasir

26. Companies (cont’) • a private limited company is limited to 50 members (public limited companies have no member limit). • This form of company can have foreign directors but at least 2 of the directors need to be principally residing in Malaysia; and it can be 100% foreign owned for industries such as the manufacturing, trading, and information technology sector. • A minimum paid-up capital of only RM2 is needed to start a private limited company, while public limited companies need a paid-up capital of not less than RM60mil (if it seeks to be listed on the Kuala Lumpur Stock Exchange Main Board) or not less than RM40mil (if it seeks to be listed on the KLSE Second Board). prepared by: Siti Rashidah Mohd Nasir

27. Government Agencies to assist Entreprenuer Various Development programme prepared by: Siti Rashidah Mohd Nasir

28. Government Agencies for Entreprenuer To assist and guide new and existing entrepreneurs in planning their business, the following Government agencies have established various development programmes: • Malaysian Entrepreneurship Development Centre (MEDEC) • Small-and-Medium Enterprises (SME) Development Programme by SMIDEC • MSC Technopreneur Development • BahagianLatihanKeusahawanan, Kementerian Pembangunan UsahawandanKoperasi • MARA Entrepreneurial Development • Bahagian Pembangunan Usahawan, KementerianKerja Raya • Pejabat MARA Negeri • PusatBimbinganUsahawan prepared by: Siti Rashidah Mohd Nasir

29. Business Plan prepared by: Siti Rashidah Mohd Nasir

30. Introduction to Business Plan • A Business Plan is a document that underlines in details the important elements of a business that cover initial plan, market study, capital needs, marketing strategies, sales and profit projection and so on. • Apart from recording all the key information in one place for future reference, a business plan is also needed when an entrepreneur plans to obtain financial help from financial institutions when the need to expand the business arises. prepared by: Siti Rashidah Mohd Nasir

31. Business Plan – the purpose • the use of a business plan, are: • To allow the entrepreneur evaluate and assess his or her business viability from various aspects, especially the technical and financial parts • To become a blueprint, or guide after the business is successfully launched • To study the market condition, trend and competition, and conclude if the business will have a good prospect to prosper, or otherwise • To be used during negotiation with financial bodies, in order to obtain loan or expansion capital prepared by: Siti Rashidah Mohd Nasir

32. What you need to have in your Business Plan 1. Content page • Outline the topics and segments of your Business Plan so that you (or the reader) will have an easy access to different scopes of the Business Plan. • Each topic in the Business Plan must be written in such a way that the reader can skip any part of the earlier section and come back to it later. 2. Executive summary/synopsis & introduction • Explain, in summary, about the business you are planning to venture, and what are the important elements the reader can discover from reading your business plan. • Name the company, type of business, products/services offered concisely. prepared by: Siti Rashidah Mohd Nasir

33. Content in Business Plan 3. The purpose of the business plan • State clearly the purpose of the business plan writing. • Is it a submission for financial loan from specific institution? • Is it a plan for a start up operation, or an expansion plan for an existing business? • Is it a blueprint or a plan for the entrepreneur’s future reference? Or • Is there any other objectives? 4. Company (owner) profile/background • This is where the details of the company profile and background are discussed. • Where is the business based on and operating? • Who is the contact person and where are the other contact/corresponding details? • How long has the company been operating? • Is the company a sole propriety, partnership or a limited liability (SdnBhd)? • Take note that there are differences in those 3 types of business/company structure. • What is the company’s registration number? • What is the total paid capital? • List down the shareholders/owners of the company, including the details covering full name, telephone number, academic qualification and experience prepared by: Siti Rashidah Mohd Nasir

34. Content in Business Plan 5. Management and organizational structure • What is the company’s vision and mission? • Who are in the management team and what are the qualification and credentials? • How is the organizational structure of the company? • List down the key person who will be handling different scope of work e.g. operation, marketing, finance, sales and so on. • State the salary and remuneration package for each employee involved, if any. prepared by: Siti Rashidah Mohd Nasir

35. Content in Business Plan 6. Marketing plans and strategies • A very important aspect of a Business Plan. • In fact, many loans are rejected due to lack of effective marketing plans and strategies in the Business plan. • Embark on a very detailed analysis of the market condition so that you will be able to make accurate and sensible sales projection. • A good Business Plan will take account the aspects of products/services to be offered – prospects and customers, benefits and advantages, ease of availability, location, advertising & promotion and competition. • How does your product differ from what is currently being offered in the market? • Is it the same? • Are you selling your product at a competitive price, lower price, or higher price? • What about the distribution and supply chain element? • Are you appointing authorized dealers and agents, or you will be selling directly to the customers? • What are the medium of advertising & promotion you will be using – distributing flyers, internet, newspaper, radio, television and so on (do not overlook the cost associated with each of the promotional method)? prepared by: Siti Rashidah Mohd Nasir

36. Content in Business Plan • 7. Operation/production plan • If your business is product-based, how many quantities you will be producing in, let’s say, 1 month? • If the product will undergo a manufacturing cycle, draw a clear flow diagram or chart of the complete process for the readers to see. • How does the inventory works? • How is the maintenance of the machinery is carried out? • 8. Financial plan • Also another critical aspect of a Business Plan, as to ensure that the figures and numbers of your cost, sales, revenue, profit and others are realistic. The financial plan consist of the following aspect: • Cost and capital expenditure • Financial sources e.g. your own contribution, bank loan, hire purchase etc • Cash flow analysis – monthly, yearly, 3 years and so on • Income statement – yearly, 3 years and so on • Break even analysis – how long your business will be operating before covering all the cost incurred during the start up • Click here for sample of business plan prepared by: Siti Rashidah Mohd Nasir

37. Starting your Bussiness Regulatory Agencies concerned with business operation Business location and site regulatory and record keeping requirement (taxation) book keeping and accounting system prepared by: Siti Rashidah Mohd Nasir

38. Regulatory Agencies concerned with business operation MITI(Matrade, MIDA, smidec) Securities Commission Local Government Authorities Factories and Machinery Department Ministry of Science, Technology and Innovation prepared by: Siti Rashidah Mohd Nasir

39. Ministry of International Trade and Industry (MITI) • MITI deals with foreign investments and promotion thereof and has overall responsibility for all aspects of foreign trade and industrial development. • MITI acts through MATRADE, MIDA and SMIDEC i. Malaysian External Trade Development Corporation (MATRADE) • MATRADE was established since March 1, 1993 as the external trade promotion arm of Malaysia’s MITI. • MATRADE functions as a focal point for Malaysian exporters and foreign importers to source for trade related information. prepared by: Siti Rashidah Mohd Nasir

40. MITI (continue) ii. Malaysian Industrial Development Authority (MIDA) • MIDA controls the promotion and co-ordination of all industrial activities. • It advises MITI on the formulation and implementation of various industrial development policies, strategies and incentives for industry and on other matters concerning accelerated industrial development. • MIDA issues manufacturing licences, which are required under ICA and gives approval on various incentives. iii. Small and Medium Industries Development Corporation (SMIDEC) • SMIDEC was established on May 2, 1996. • The establishment of SMIDEC was in recognition of the need for a specialised agency to further promote the development of Small and Medium Industries (SMIs) in the manufacturing sector. prepared by: Siti Rashidah Mohd Nasir

41. Securities Commission (SC) • This is a statutory body, set up under the Securities Commission Act 1993 to ensure the orderly and efficient development of the Malaysian securities market for the purpose of national economic development. • SC's primary role is to advise the Minister of Finance on all matters relating to the securities and futures contract industries. • It is also to safeguard the public's and minorities' interest, as well as to maintain market integrity and efficiency. prepared by: Siti Rashidah Mohd Nasir

42. Local Government Authorities • These authorities are responsible for local by-laws that affect business operations. • Such laws relate mainly to buildings and structures (business premises), health, public safety and security, and displays (signboards, advertisement hoarding (i.e., billboards), etc.) prepared by: Siti Rashidah Mohd Nasir

43. Local Government - Licenses and Permits • Business licenses and permits are issued by the relevant ministries and local authorities. • Licence and Permit By Local Authorities (Majlis Daerah, Majlis Perbandaran etc) • Komposit Perniagaan, Permohonan Lesen Anjing, Permohonan Lesen Hiburan Dan Tempat hiburan, Permohonan Lesen Hiburan Video / Snooker ,Permohonan Lesen Iklan Sementara, Permohonan Lesen Penjaja, Permohonan Lesen Perniagaan, Sementara Permohonan Tukar Milik Lesen prepared by: Siti Rashidah Mohd Nasir

44. Factories and Machinery Department • Approval from this department is required before manufacturing operations may begin prepared by: Siti Rashidah Mohd Nasir

45. Ministry of Science, Technology and Innovation (MOSTI) • This Ministry has responsibility for the administration of the Environmental Quality Act and ensures that factories are equipped with appropriate anti-pollution controls. prepared by: Siti Rashidah Mohd Nasir

46. Other Government Agencies • Various other government agencies regulate specific industries, such as • Inland revenue malaysia (LHDN) • finance and banking, • insurance, • real estate, • petroleum, etc. prepared by: Siti Rashidah Mohd Nasir

47. Malaysian Law and Legislation concerned with Business Employment law prepared by: Siti Rashidah Mohd Nasir

48. Employment Law - Rights and Liabilities The main body of employment is Malaysia is found in three principal legislation and subsidiary legislation. They are :- • Employment Act, 1955 • Industrial Relations Act, 1967 • Trade Unions Act, 1959 The employers in Malaysia also need to bear in mind the relevant legislations :- • Employees Provident Fund Act, 1991 • Employees Social Security Act, 1969 • Worksmen’s Compensation Act, 1952 • Worker’s Minimum Standards of Housing and Amenities Act, 1990 • Wages Council Act, 1947 • Children and Young Persons (Employment) Act, 1966 • Occupational Safety and Health Act, 1994 • Human Resources Development Act, 1992 prepared by: Siti Rashidah Mohd Nasir

49. Employment Act 1955 The Employment Act 1955 is the legislation regulating the terms and conditions of employment of any person, irrespective of his occupation, who has entered into a contract of service with an employer under which such person's wages do not exceed RM1,500 a month. Among other things it sets out the minimum conditions of employment which include: • A contract of service engaging a person may be written or oral, expressed or implied, specifying the period of notice required to terminate it; • Wages earned must be paid not later than the seventh day after the last day of any wage period; prepared by: Siti Rashidah Mohd Nasir

50. Employment Act 1955 • Female workers are not permitted to work in any industrial or agricultural undertakings between the hours of ten in the evening and five in the morning. An application can however be made to waive the restriction; • Ten paid gazetted public holidays in any one calendar year; • Eight days of paid annual leave for employees with less than two years of service, twelve days of paid annual leave for those employees with two or more years of service but less than five years of service, and sixteen days for those with over five years of service; prepared by: Siti Rashidah Mohd Nasir