Smidec Presentation

‘SMI : Face to Face Funding Solutions’

BY

ISMAIL HASHIMDIRECTOR SMIDEC

NORTHERN REGION OFFICE

To formulate policy and implement programmes for the development of SMEs in Malaysia;

To provide technical and advisory support services in collaboration with other related agencies involved in SMEs development;

To forge industrial linkages between SMEs and large companies/ Multinational Corporations (MNCs);

To implement, coordinate and monitor financial assistance schemes provided to SMEs;

To collaborate with other local and international SME related agencies to develop SMEs .

FUNCTIONSFUNCTIONS

SMEs AS A DYNAMIC AND

INTEGRAL PART OF THE

MALAYSIAN INDUSTRIAL

COMMUNITY LINKED TO THE

INTERNATIONAL SUPPLY

CHAIN

TO ENHANCE THE

COMPETITIVENESS,

EFFICIENCY AND

PRODUCTIVITY OF

SMEs

Promotion andPublication

EnterpriseDevelopment

Corporate FinancialAssistance

AdvisoryServices

StrategicPlanning

Chief ExecutiveOfficer

Members of theCorporation

Minister ofInternational Trade

and Industry

General administration and corporate functions of the Corporation and matters pertaining to relation with the government

Formulation of policies and guidelines for the financial assistance programmes.

Responsible for the formulation, implementation and management of promotional policies and strategies on SME assistance programmes

Developing and nurturing SMEs

to become reliable

and competitive manufacturers

and suppliers to

leading industries.

Management of the SME Information & Advisory Centre so as to disseminate updated and real-time information to SMEs

Formulation of policies, programmes and incentives for the development of Malaysian SMEs

SMIDEC: ORGANISATIONAL STRUCTURE

DEFINITION OF SMEs

“Companies in the Manufacturing and Manufacturing related services sectors with annual sales turnover not exceeding RM25 million and full time employees not exceeding 150”

OUR CLIENT

•SMEs in the manufacturing sector;

•SMEs in the manufacturing related services sector; and

•Recently, the scope has been expanded to include SMEs in the Services sector

NEW SECTORS UNDER PURVIEW

LOGISTIC

PROFESIONAL MANAGEMENT

(ACCOUNTANT, LAWYER ETC.)

DISTRIBUTIVE TRADE (RETAIL / WHOLESALE)

Recently, the scope has been expanded

to include SMEs in the Services sector

SMEs by size24%

76%Medium

Small

• 44,185 manufacturing companies registered with Companies Commission of Malaysia.

• 20,455 are active establishments.

• 18,271 or 89.8 are SMEs.

PROFILE OF SMEsPROFILE OF SMEs

MALAYSIA : SME’s CONTRIBUTION IN THE MANUFACTURING SECTOR

MALAYSIA : SME’s CONTRIBUTION IN THE MANUFACTURING SECTOR

2003 2002

Output 29.1 28.5

Employment 32.5 26.5

Value added 26.2 30.7

13%4% 4% 3%4%

7%

7%

7%9% 9%

10%

13%

10%

General Manufacturing

Wood and Wood products

Food, Beverages and Tobacco

Paper and Paper Products

Machinery and Equipments

Textile, Apparel and Leathers

Rubber and Plastic

Electrical and Electronics

Chemical, Petroleum Coal

Metal

Non Metallic Mineral Products

MARKET SHARE:EXPORT - 20%DOMESTIC - 80%

MARKET SHARE:EXPORT - 20%DOMESTIC - 80%

Transport Equipment

General manufacturing (i.e. jewelry,sporting goods

DISTRIBUTION BY SECTORSDISTRIBUTION BY SECTORS

BASIC PROBLEMS FACED BY SMEs

• Access to market

• Access to finance • Low level of technology

• Lack of labour and skilled manpower

• Operating on non- designated zones

CHALLENGES CONFRONTING SMES

• Increasing global competition resulting from trade liberalisation measures; AFTA, WTO, Bilateral FTAs

• Emergence of new technologies and the lack of capacity to absorb new technologies in the manufacturing and management processes

• Development in ICT, internet and e-commerce and the impact on global production system

• Increase in factor costs and the impact of the entrant of new economies with surplus labour into the market system

SME DEVELOPMEN

T PROGRAMMES

SME DEVELOPMEN

T PROGRAMMES

BROAD BASED PROGRAMMES

• Market development• Financing• Technology and ICT adoption• Innovation and R&D• Skills development• Infrastructure development

MARKET DEVELOPMENT

• INDUSTRIAL LINKAGE PROGRAMME (ILP)

• business matching

• link SME companies to large companies as suppliers of part and components

• MARKET DEVELOPMENT SCHEME (through MATRADE)

• identify potential market

• undertake export market promotion, development of brand names.

• participate in international trade fairs and missions

• SMIDEC ANNUAL SHOWCASE (SMIDEX 2004)

• ENTERPRISE 50 PROGRAMME

FINANCING

SOFT LOAN

SOFT LOAN PACKAGE FOR SMEs

SOFT LOAN SCHEME FOR FACTORY RELOCATION

SOFT LOAN FOR ICT ADOPTION

GRANT

INDUSTRIAL TECHNICAL ASSISTANCE FUND (ITAF)

• Technology Acquisition Fund - MTDC

• Soft Loan for ICT Application

• Grant for RossettaNet Standard Implementation

• Technology Acquisition Fund - MTDC

• Soft Loan for ICT Application

• Grant for RossettaNet Standard Implementation

ADOPTION OF TECHNOLOGY AND UTILISATION OF ICT

INNOVATION AND R&D

GRANT FOR PRODUCT AND PROCESS IMPROVEMENT (ITAF 2)

COMMERCIALISATION RESEARCH AND DEVELOPMENT FUND (CRDF) – MTDC

INDUSTRIAL GRANT SCHEME (IGS) - MOSTE

SKILLS DEVELOPMENTUpgrading of skills for employees of SMEs through 19 Skills Development Centres:

- PUSPATRI - TATI - NSSDC

- GMI - MFI - MISDC

- KISMEC - PSDC (Penang) - SIRIM

- PESDC - PSDC (Pahang) - NIOSH

- SHRDC - PPKS - TPM

- SSTC - MINT - IKRAM

- NPC

50% Grant on training fees – SMIDEC

Focus on Hardskill

INFRASTRUCTURE DEVELOPMENT

Development of industrial sites for SMEs (integrated concept)

Development of common facilities for waste disposal, warehousing, employees’ accommodation, etc.

Infrastructure costs through grant provided by SMIDEC

Factory building affordable to SMEs

Global Supplier Programme (GSP)

The GSP involves training in critical skills and also linkage to MNCs and large companies. The training initiative is implemented in collaboration with local Skills Development Centres

Through the linkage initiative of the GSP, SMEs are developed to be competitive suppliers of parts and components, not only to MNCs in Malaysia, but also their worldwide operations through the mentoring activities.

SME EXPERT ADVISORY PANEL (SEAP)

SEAP is a programme initiated by Small and Medium Industries Development Corporation (SMIDEC) through the emplacement of retired experts at the factory sites of SMEs to solve SME’s specific problems.

The programme is to assist SMEs to upgrade their technological capability, to achieve efficiency and to increase productivity.

Form of AssistanceA maximum of RM18,000.00 or 60 man days per project.

GRANTGRANT SOFT LOANSOFT LOAN

• SOFT LOAN SCHEME FOR

SMEs

• SOFT LOAN SCHEME FOR FACTORY RELOCATION

• SOFT LOAN FOR ICT ADOPTION

• INDUSTRIAL TECHNICAL ASSISTANCE FUND (ITAF)

• FACTORY AUDITING

•ROSETTANET

PROGRAMMESPROGRAMMES

SUMMARY SUMMARY FINANCIAL ASSISTANCE FINANCIAL ASSISTANCE PROGRAMMES FOR SMEsPROGRAMMES FOR SMEs

(a) ITAF 1BUSINESS PLANNING & DEVELOPMENT SCHEME

(b) ITAF 2PRODUCT AND PROCESS IMPROVEMENT SCHEME

(d) ITAF 4MARKET DEVELOPMENT SCHEME

S C H E M E

(c) ITAF 3PRODUCTIVITY AND QUALITY IMPROVEMENT AND CERTIFICATION SCHEME

ITAF 1 ITAF 2 ITAF 3 ITAF 4

RM 60,000RM 40,000

RM250,000RM500,000

Provides Grant to Assist SMEs in:

Market feasibility studies Technology feasibility studies Business planning studies Domestic and export market strategy studies

Form of Assistance: Matching grant not exceeding RM40,000 per

company or 50% of approved project cost, whichever is lower.


Product; Product design; Process




Productivity and Quality Improvement Productivity and Quality Improvement based on

customer's requirement Development of Productivity and Quality Improvement Productivity and Quality System Certification Quality Development Systems (5S), Quality Control

Circles(QCC), , Total Preventive Maintenance TPM) Occupational and safety measures Quality Series : ISO 14000, ISO 18000 HACCP, HALAL and other product quality certifications

Maximum grant allocated per company is RM250,000

(matching grant of 50% of approved project cost)

Objectives of the Scheme are:

To undertake a diagnostic audit on SMEs that have potential to be linked to theMulti National Corporations (MNC)/large scale companies;

To assist SMEs in identifiying thier strengths and weaknesses in order to help them undertake remedial measures to enhance thier capabilities



The Scheme provides assistance to local Electrical and Electronic (E&E) companies:

• To implement RosettaNet , an internet based common messaging standard for global supply chain management;

• Enables companies in the supply chain to communicate and conduct business electronically through common codes sourcing of parts and components;

• Acquisition of RosettaNet Middleware which include software, hardware and licensing fee to embrace global supply chain management system.

• Matching grant for large companies – Max.RM 100,000

• SMEs – ASP Model – 70% Grant, Max. RM 30,000

[ICT APPLICATION] – GRANT FORROSETTANET STANDARD IMPLEMENTATION

SOFT LOAN SCHEME FOR SOFT LOAN SCHEME FOR SMEsSMEs

• Offers assistance to SMEs in modernising and automating their manufacturing operations

• Working Capital Financing

• Fixed Asset Financing

• Project Financing• Pre-operational expenses• Fixed asset financing

• Working capital

• Both existing as well as start-up companies are eligible for:

• Project Financing

FLEXIBLE AND ATTRACTIVE TERMS OF SLSMELoan Size

Project Financing - maximum of RM 5 mil.

Fixed Asset Financing-maximum of RM 2.5 mil.

Working Capital Financing - Maximum of RM 1 mil.

Minimum Loan - RM50,000.00

Refinancing is not allowed

Interest Rate

4.0% p.a

Repayment Period

5-15 years

Grace period – 2 years

SOFT LOAN SCHEME FOR SOFT LOAN SCHEME FOR ICT ADOPTION ICT ADOPTION ENGINEERING DESIGN CAPABILITIES

• To purchase of design software (CAD, CAM, CAE) or subscription fee/license fee for on-line engineering design services;

• Purchase of computer hardware and related equipment;

• Training cost.

ENTERPRISE RESOURCE PLANNING (ERP) SORFTWARE

• Purchase of ERP software or first year subscription to on-line ERP system, or other similar software (CIM, ERM, MRP, SCM, CRM);

• Implementation cost including system study, customisation and training;

• Purchase of server and related networking equipment.

Loan Size

Max. Loan - RM250,000

Min. Loan – RM20,000.00

Interest Rate

3.0% p.a

Repayment Period

5 years

FLEXIBLE AND ATTRACTIVE TERMS OF SOFT LOAN FOR ICT

SOFT LOAN SCHEME FOR SOFT LOAN SCHEME FOR FACTORY RELOCATION FACTORY RELOCATION

• Assistance to SMEs to relocate their factories to approved industrial sites

• The loan is provided to fund:

- Purchase of ready-made factories;

- Purchase of factory lot and construction of factories

including related infrastructure; and

- Costs to purchase related machinery and equipment due to relocation

- Max. loan RM 1 mil.

- Terms – similar to SLSME

•To integrate more companies / enterprises owned and run by women into the mainstream of manufacturing through inter and intra industry linkage

•To enhance the global competitiveness of

companies / enterprises owned and run by women

•To upgrade the technological capabilities and technical skills and expertise of companies / enterprises owned and run by women

To allow greater access to financing for women entrepreneurs

The sector coverage of this Scheme has been expanded to include other activities

Specifically packaged to be more flexible and accessible to women entrepreneurs

OB

JEC

TIV

ES

OB

JEC

TIV

ES

SPECIAL ASSISTANCE SCHEME FOR WOMEN ENTREPRENEURSSPECIAL ASSISTANCE SCHEME FOR WOMEN ENTREPRENEURS

SECTOR COVERAGESECTOR COVERAGE

• MANUFACTURING ACTIVITIES As per in the Promoted Products / Activities list of PIA, 1986

• RELATED SERVICES:

i) IT and IT Related Services

ii) Education Services

iii) Software Development

iv) Designing And Packaging

v) Research And Development (R&D)

vi) Marketing

vii) Tourism

viii) Other Business Services

OUTREACH PROGRAMME

Undertakes various promotional programmes to reach out to the SMEs through seminars, workshop, business clinics and exhibitions.

SME Information & Advisory CentreSME Information & Advisory Centre Aims to disseminate up-to-date and real-time Aims to disseminate up-to-date and real-time information to SMEs. The centre comprises: information to SMEs. The centre comprises:

Virtual SME Info Centre SMIDEC Regional Offices

Tol free line : 1-800-18-1801

SMEs are critical component of industrial economic development

Linkages with large companies providing critical supporting services and assisting in cluster development

High contribution in increasing local content and domestic participation in the manufacturing sector

CONCLUSIONCONCLUSIONCONCLUSIONCONCLUSION

SMEs need to be nurtured and develop to increase their contribution to output, value added and employment. Current contribution is still small compared to develop countries.

Need to enhance and speed up intergration of SMEs with the mainstream domestic manufacturing sector and the global supply chain.

SMIDECNORTHERN REGION OFFICE

LORONG PERUSAHAAN BUKIT MINYAK 2TAMAN PERUSAHAAN BUKIT MINYAK

14100 SEBERANG JAYAPULAU PINANG

Tel: 04-5024207 Fax: 04-5024205E-mail: [email protected]

http : //www.smidec.gov.myToll Free Line : 1-800-18-1801