Small and Medium Enterprise (SMEs) BUSINESS SMALL MEDIUM LARGE

Small and Medium Enterprise (SMEs)

BUSINESS

SMALLMEDIUM

LARGE


‘A small and medium enterprise (SME) is defined as a company that has fixed assets not exceeding $5 million book value and/or has a maximum of 100 employees’

BRUNEI-‘SME can be defined as those enterprises having 1-100

employees’

-‘SME are companies that have fixed assets not exceeding BND 5 million and /or have a maximum of 100 employees’


• Small and medium enterprises or SMEs are companies whose headcount or turnover falls below certain limits

• In Europe and USA, current definition categorizes companies with fewer than 50 employees as "small", and those with fewer than 250 as "medium“

In Asia,


SMALL BUSINESS SMALL and MEDIUM ENTERPRISE

1. Number of employees Less than 20 people Maximum of 250 people

2. Place of business Small shop/home Own building/premise

3. Financial resources -Own savings as capital-Loan from bank-Loans from relatives, friends, etc-Credit from suppliers of goods-Profit of business

-Money contributed by shareholders-Profit of the business-Sales of assets-Sales of shares-Loan and grants (eg banks)

4. Profitability Just to survive in business and to make a reasonable living

As a firm grows larger, it increases its turnover and adds to its profits

5. Market size Small Big



-The government has recognised the strategic role that small and medium enterprises (SME) play in the overall economic growth of the country

-The Brunei government expects that the SMEs will continue to play a key role in the country's economic development in this new millennium

-SMEs have also been identified as the major players in the industrial development in Brunei Darussalam and have the potential in contributing towards the diversification of the economy

-The development of small and medium enterprises will be enhanced through provision of financial and infrastructure assistance, entrepreneurship training, industrial incentive, technology improvement and other services and facilities

-Hence, the government has been encouraging economic diversification through business services, financial services, hospitality and tourism, transport/logistics, agro food and halal industries


-In 2008, there were at least 9,150 registered SMEs, which counted as 98.37% of the total establishments

-Most SMEs were in the wholesaling and trading businesses, followed by construction sector, mining, quarrying and manufacturing sector, community, social and personal sector, agricultural, forestry and fishing.

-Brunei's SMEs also provides at least 70% of employment in the private sector. In the service and manufacturing sectors, the contribution of SMEs is estimated at 38 - 40%


The Government of His Majesty has recognised the significant role that SMEs play in the economic development of the nation. It is therefore creating a good business environment to strengthen the competitiveness of SMEs by providing administrative support; investment and trading opportunities, technical assistance. It is also currently exploring possibilities of financial assistance schemes for SMEs.

The Resource Centre of the Ministry of Industry and Primary Resources was established on 2 May 1996 to provide facilities and expertise for facilitating the growth and development of SMEs. Its scope of activities is therefore in technical and entrepreneurial assistance. These covers training and technology transfer services, incubation program, technical and entrepreneurial advisory services and providing relevant information to SMEs.


-In Brunei, 98% of registered companies are considered to be small and medium enterprise (SMEs)

-These businesses have between 0-100 employees

Distribution of SMEs in Brunei

microsmallmediumlarge

43.8%

2.23% 1.63%

52.3%

-As in other countries, SMEs in Brunei has a great contribution to the economy

-In 1994, SMEs contributed around 66.2 % to the nation's GDP


SMEs Contribution to Brunei's Economy (GDP)

1994-1995Large BusinessesSMEs

32%

68%


The importance of SMEs for economic development

-For developing and transitional economies (particularly in Asia), SME has a function to become a key component of wider economic development and lessening of poverty

- SME can also acts as a major and sustainable generator of employment and income

-SME can also serve as a useful bridge between the informal economy of family enterprise and the formalized corporate sector

-SME may also be a source of foreign exchange earnings


The importance of SMEs for economic development

-SME helps promote competition and a culture of entrepreneurship, which are conducive for economic growth

-SME are more willing to innovate than large enterprises and conglomerates, hence, more business opportunities are being exploited

-Size of SME sector in an economy appear to be positively associated with Gross Domestic Product (GDP) per capita growth in many countries

-SME creates job opportunities, which is a key dimension of the development process of a country


-SMEs have a favourable impact on income distribution, because more entrepreneurs with limited financial resources and technical skills can get entry into the industrial sector through small enterprise operations

- SMEs can be regarded as training places for acquiring practical experience in making economically sound decisions on technological and commercial matters

- If SMEs handle and process locally available raw materials, this lessens the weight and volume of the original raw materials to be imported and makes it cheaper to produce. Sawn and pre-processed wood may be an example


- SMEs promote competition where entrepreneurs can compete and provide quality products and this could prevent the emergence of the evils of monopoly

- Brunei imports a variety of goods, some of which maybe produced within the country. The development of SMEs may help the process of import substitution

- Large firms may be able to get supply of components at a cheaper price from the SMEs. The sub-contracts given to SMEs by large firms may reduce their production costs


TYPES OF SMALL BUSINESS

Manufacturing

Service

Wholesaling

Retailing

Construction firm


Manufacturing

‘A manufacturing business is one involved in using different raw materials to make a

product/s needed by the society’

Examples: manufacturer of furniture, sweets, shampoo, fish ball etc



Service Business

‘Those that provide services in one way or another’

Examples: Dress shop, barber shop, tutoring services, etc


Wholesaling

‘Activities of those persons or establishments who buy in bulk and sell to retailers and other

merchants, and or to individual, institutional and commercial users but do not sell to final

customers’

Examples: Wholesaler of soft drinks, mineral water, cloth materials, etc




Retailing

‘Covers all of the activities involved in the sale of goods and/or services to the final

consumers’

Examples: Retail pharmacy, fast food chains, appliance shop, grocery store, etc



Construction firms

‘Those engaged in the construction of buildings whether for private individuals or

for government’

Many of them perform sub-contracting jobs for bigger contractors such as installing

electrical appliances and sewerage


Documents

Small and Medium Enterprise (SMEs) BUSINESS SMALL MEDIUM LARGE