Mrs. V. Vijayaledchumy Director, Central Banking Services Bank Negara Malaysia

1. FINANCIAL INCLUSION ADVISERS PROGRAMME Kampala, Uganda 26 April 2010 Role of Government in Creating an Enabling Environment for SME and Microenterprise Development Mrs. V. Vijayaledchumy Director, Central Banking Services Bank Negara Malaysia

2. OUTLINE OF PRESENTATION • 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

3. Weaknesses in the SME infrastructure prior to 2004 prompted the need to establish a holistic Government approach to develop SMEs, including micro enterprises Establishment of the National SME Development Council (NSDC) to drive the SME development agenda Fragmented development efforts Lack of capacity building efforts for SMEs No standard definition of SMEs Weaknesses prior to 2004 • Duplication of programmes and roles of Ministries • Resulting in banks not lending to SMEs because SMEs were not viable • Difficult to collect data and formulate comprehensive policies

4. The NSDC is the highest policymaking body to chart SME development • 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 NSDC’s 3 Strategic Thrusts Enhance SMEs’ Contribution to GDP Strengthen Infrastructure Build SME Capacity Enhance Access to Financing

5. SME Development Framework 2006 - 2010 Promote development of competitive and resilient SMEs in all sectors towards increasing SME contribution to the economy Economic Economic Socio Developing progressive and resilient Bumiputera SMEs and entrepreneurs Promoting development of SMEs in knowledge-based industries Enhancing viability of SMEs across all sectors Objectives - II. Building capacity and capability I. Strengthening enabling infrastructure III. Enhancing access to financing Strategic Thrusts

6. NSDC’s Achievements Improved Policy Formulation, Monitoring and Assessment Enhanced Access to Financing Improved Statistical Information Achievements of NSDC Strengthened Capacity and Capability Comprehensive Dissemination of Information

7. Improved Policy Formulation, Monitoring and Assessment SME CORP. MALAYSIA MINISTRIES AND AGENCIES NSDC Coordinate Policies SMEs Disseminate Information and Research “One-Referral” Information and Advisory PRIVATE SECTOR Secretariat to NSDC 7

8. FUNCTIONS OF SME CORP. MALAYSIA 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 be ‘One-Stop’ Information and Advisory Services • Channel to obtain feedback on SME issues • ‘One Referral Centre’ of reference for SMEs 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 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 8

9. ORGANISATION STRUCTURE OF SME CORP. MALAYSIA NSDC MITI • Legal Unit • Media and Public Relation Unit • Secretariat • - Project Management Officer • - Transformation Management Officer Members of the Corporation Internal Audit Unit CEO Deputy CEO II Implementation Deputy CEO I Coordination & Development Chief Operating Officer Strategic Planning Division Programme Coordination Division Business Development Division Corporate Communication Division 12 State Offices Financing and Monitoring Division Economic Division Information Technology Division Corporate Management Division 9

10. STATE OFFICES 10

11. NSDC’s Achievements Improved Policy Formulation, Monitoring and Assessment Enhanced Access to Financing Improved Statistical Information Achievements of NSDC Strengthened Capacity and Capability Comprehensive Dissemination of Information

12. DEFINITION OF MICRO, SMALL AND MEDIUM

13. 4,537 (0.8%) TOTAL ESTABLISHMENTS BY SIZE 12,610 (2.3%) 100,333 (18.2%) • Total establishments = 552,804 • No. of SMEs = 548,267 (99.2%) LARGE 435,324 (78.7%) MEDIUM SMALL MICRO Source: Census of Establishments & Enterprises 2005 – Profile of SMEs

14. DISTRIBUTION OF SMEs BY SECTOR

15. CONTRIBUTION OF SMEs TO GDP

16. CONTRIBUTION OF SMEs TO EMPLOYMENT

17. CONTRIBUTION OF SMEs TO TOTAL EXPORTS

18. NSDC’s Achievements Improved Policy Formulation, Monitoring and Assessment Enhanced Access to Financing Improved Statistical Information Achievements of NSDC Strengthened Capacity and Capability Comprehensive Dissemination of Information

19. PERFORMANCE OF SME DEVELOPMENT PROGRAMMES

20. Development Programmes STRENGTHENING ENABLING INFRASTRUCTURE Involves developing and enhancing physical infrastructure and information management, as well as creating conducive regulations and operation requirements for SMEs. • Programmes available: • Soft Loan Scheme for Programmesavailable: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

21. Development Programmes • 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 (TunjukNasihatSawit) - 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 BUILDING CAPACITY AND CAPABILITY Includes entrepreneurship development, human capital development, marketing and promotion, advisory services, awareness and outreach, technology enhancement as well as product development.

22. CAPACITY DEVELOPMENT PROGRAMMES BY SME CORP • 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 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

25. REGIONAL COOPERATION 25

27. SKILLS UPGRADING PROGRAMME (cont..) BEST TRAINING PROVIDERS • 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) • International Computer Driving License • Preparing Effective Business Proposal • Cashflow Management • Accounting for SMEs • Halal Certification Procedure Malaysia POPULAR COURSES

28. SME COMPETITIVE RATING FOR ENHANCEMENT (SCORE) • Total SCORED - 1,183 SMEs

29. What is SCORE? BACKGROUND OF SCORE • a comprehensive diagnostic tool to rate and enhance competitiveness of SMEs based on their performances and capabilities. • developed in August 2007. Example of Radar Diagram for 3-Star company Function • identify strengths and weaknesses for improvements; and • facilitate linkages. Parameter • Business Performance • Financial Capability • Management Capability • Production Capability • Technical capability • Quality System • Innovation Characteristics • 0 – 2 Stars : Very basic business operation • 3 – 5 Stars : Some degree of sophistication and can be groomed for export Implementation Channel (Existing Collaborators) • Retail & Distributive Trade (PUNB) • Construction (CIDB) • ICT (MDeC) Analysis: Weak in financial capability Assistance: Require financial management training • Maintenance, Repair & Overhaul (MINDEF) • Professional Services • (PSDC) 29

30. SMEs SCORE PARAMETERS - MANUFACTURING Management Capability Financial Capability Technical Capability Quality System Business Performance Production Capacity Innovation • Capital Investment per Employee (CIPE) • Factory Automation Level • Machine Utilisation • Intellectual Property Rights • Product & Process Improvement • Capability of Products & Process Improvement Activities • 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 • Practice of Continuous Improvement • Product Certification • Certification (Basic & Advance Requirement) • Awards

31. SCORE PARAMETERS - DISTRIBUTIVE TRADE SMEs Management Capability Financial Capability Marketing Capability Business Performance Compliance to Requirements Stock Management Operation Management • 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 • Current Assets & Liabilities • Liquidity & Gearing Ratio • Creditor's Aging • Profitability • Stock Policy • Stock Management • Sourcing Strategy • Premise • Insurance • Quality Standards • Qualification & Staffing • Experience • ICT Adoption & Utilisation • Standard Operating Procedures • Promotional Activities • Customer Retention • Business Value Proposition

32. SCORE RATING - MANUFACTURING

33. SCORE RATING - DISTRIBUTIVE TRADE

34. SCORE – 2 STAR FIRM SCORE – 3 STAR FIRM

35. RECOMMENDATIONS AND ACTION PLAN

36. SME – UNIVERSITIY INTERNSHIP PROGRAMME 36

37. TECHNOLOGY AND INNOVATION PROGRAMME INITIATIVES TO DEVELOP INNOVATION-LED TECHNOLOGY-DRIVEN SMEs NATIONAL SME INNOVATION FOCAL POINT UNDER IMP3 INNOVATION FOR SMEs STRATEGIC THRUST 4 – SME / TECHNOPRENEUR UNDER JTPIN 37

38. TECHNOLOGY AND INNOVATION PROGRAMME (Cont) MEMBERS OF THE INNOVATION FOR SME COMMITTEE

39. TECHNOLOGY AND INNOVATION PROGRAMME (Cont) Technology Database (in collaboration with MASTIC) TECHMART in SMIDEC’s Website - 270 technologies available for commercialisation - 18,413 researchers’ profile available Technology Roadmap • - Completed Roadmaps → Electrical & Electronics • → ICT • → Biotech industry • - Work In Progress → Automotive Sector • → Plastics & Rubber • Wood and wood-based

40. SME EXPERT ADVISORY PANEL (SEAP) Total Experts : 62 Total SMEs Participated : 59 40

41. NSDC’s Achievements Improved Policy Formulation, Monitoring and Assessment Enhanced Access to Financing Improved Statistical Information Achievements of NSDC Strengthened Capacity and Capability Comprehensive Dissemination of Information

42. OUTREACH PROGRAMMES Convention, Seminars/Workshops/ Technical Briefings 42

43. Business Advisory Services 43

44. Enquiries through E-mails • Note : • Officiated during SMIDEX 2003 44

45. Toll Free Line / Info Line (1-300-18-1801) • Note : • Officiated during SMIDEX 2003. 45

46. Publications 46

47. THE NATIONAL MARK OF MALAYSIAN BRAND The Mark of Quality

48. Development Programmes ENHANCING ACCESS TO FINANCING Involves the development and strengthening of institutional arrangements to support SME financing needs. • Financial assistance is provided based on three stages of business cycles: • early stage financing • business expansion financing • rehabilitation

49. Financial Assistance for SMEs EARLY STAGE FINANCING FINANCIAL ASSISTANCE FOR SMES BUSINESS EXPANSION FINANCING REHABILITATION

50. Financial Assistance (cont’…) EARLY STAGE FINANCING Examples: • Venture Capital Funds - MOSTI & MAVCAP • Business Effort Group Economic (TEKUN) - MOA • PROSPER, Retail and Graduate PROSPER - PUNB • DAGS Start-up - CGC