SME Development

Profile of SMEs

Issues and Challenges

About SMIDEC

SME Development Programmes

OUTLINE OF PRESENTATION

Financial Assistance Programmes

Services, Primary Agriculture, Information

And Communication Technology (ICT)

Companies with annual sales turnover not

exceeding RM5 million OR full time employees

not exceeding 50

Manufacturing, Manufacturing Related

Services and Agro -based Industry

Companies with annual sales turnover not

exceeding RM25 million OR full time employees

not exceeding 150

PROFILE OF SMEs

Preliminary Statistics by DOS - Dec 2005

PROFILE OF SMEs

MICRO

SMALL

MEDIUM

LARGE

411,849(78.7%)

95,490(18.3%)

11,657(2.2%)

4,136(0.8%)

TOTAL ESTABLISHMENT : 523,132

TOTAL SMEs : 518,996

37,866(7.3%)

32,126(6.2%)

449,004(86.5%)

Services

ManufacturingAgriculture


PROFILE OF SMEs

360,912 (80%)78,917(18%)

9,175(2%)

20,952(56%)

14,955(39%)

1,959(5%)

29,985(93%)

1,618 (5%)

523(2%)

0 100,000 200,000 300,000 400,000

Services

Manufacturing

Agriculture

Micro MediumSmall


Total Services : 449,004

Total Manufacturing : 37,866Total Agriculture : 32,216

PROFILE OF SMEs

0

10

20

30

40

50

60

70

80

90

100

Year

RM

bil

lio

n

-40

-30

-20

-10

0

10

20

30

40

Per

cen

t

Output Contribution

Output 51.5 55.8 49.4 58.5 59.7 60.9 62.8 68.5 75.2 82

Contribution 22.1 22.8 19.7 20.8 25.4 29.2 29.1 29.2 29.3 29.6

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

NPC Calculated Survey 1996 - 2005

CONTRIBUTION OF SMEsOutput in the manufacturing sector (1996 – 2005)

PROFILE OF SMEs

0

4

8

12

16

20

Year

RM

bil

lio

n

-40

-30

-20

-10

0

10

20

30

40

Per

cen

t

Value added Contribution

Value added 10.1 11.8 10.9 11.5 12 12.4 12.7 13.9 15.2 16.6

Contribution 19.5 22.6 19.8 20.6 23.6 26.9 25.8 25.7 25.7 25.9

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

CONTRIBUTION OF SMEsValue added in the manufacturing sector (1996 – 2005)

PROFILE OF SMEs


CONTRIBUTION OF SMEsEmployment in the manufacturing sector (1996 – 2005)

PROFILE OF SMEs


0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

Year

No

of

Wo

rkers

-25

-15

-5

5

15

25

35

Per

cen

t

Employment Contribution

Employment 329,84 347,94 314,768325,156 351,271363,77 362,34 374,64 384,93 394,67

Contribution 29.6 30.7 28.2 29.3 30.2 30.5 31.6 31.3 31 31.1

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Established under Parliamentary Act, 539 on 2nd May 1996

Focal point for the overall development of SMEs in the country

Provides capacity building programmes and assistance through fiscal and non-fiscal incentives

VISION MISSION

FUNCTIONS

ABOUT SMIDEC

ORGANISATIONALSTRUCTURE

To be the Leading Organisation in Developing SMEs that Contribute to the

Economic Growth and Enhanced Competitiveness of

Malaysia

To Transform SMEs to be Vibrant, Competitive and Resilient and to

be Fully Integrated into the Manufacturing and Services

Sectors

ORGANISATIONAL STRUCTURE

Corporate Communications

MEMBERS OF CORPORATION

CHIEF EXECUTIVE OFFICER

MINISTER

OF INTERNATIONAL TRADE AND INDUSTRY Management

Services

Financial Assistance & Monitoring

Strategic Planning

ManagementInformation System

Enterprise & Entrepreneurship Development

Promote, Coordinate and Implement Programmes for the Development of SMEs

FUNCTIONS

Forge Industrial Linkages Between SMEs and Large Companies/Multinational Corporations (MNCs)

Provide Technical and Advisory Support Services

Implement, Coordinate and Monitor Financial Assistance Schemes

Collaborate with Other Local and International SME-related Agencies

PROMOTE, COORDINATE AND IMPLEMENT

PROGRAMMES FOR THE DEVELOPMENT OF SMEs

PROMOTE, COORDINATE AND IMPLEMENT

PROGRAMMES FOR THE DEVELOPMENT OF SMEs

Enterprise 50 Award ProgrammePromotional

Activities

RelatedStudies

SMIDEC Annual Showcase

SMEConvention

SMIDEC NEWSLINK

FUNCTIONS

FORGE INDUSTRIAL LINKAGES BETWEEN SMEs AND MNCs

GLOBALSUPPLIER

PROGRAMME

INDUSTRIAL LINKAGEPROGRAMME

FUNCTIONS

IMPLEMENT, COORDINATE AND MONITOR FINANCIAL ASSISTANCE SCHEMES PROVIDED

TO SMEs

GrantsSoft Loans

FUNCTIONS

Enhancement Programme

SME Expert Advisory Panel (SEAP)

Star Rating

SME Information & Advisory Centre

PROVIDE TECHNICAL

AND ADVISORY SUPPORT SERVICES

FUNCTIONS

COLLABORATE WITH OTHER LOCAL AND INTERNATIONAL SME RELATED AGENCIES TO DEVELOP SMEs

Participation in international & regional cooperation programmes

Placement of foreign experts in selected SMEs

Attachment Programme

Skills Upgrading Programme

FUNCTIONS

Impact of increased globalisation and liberalisation

increasing competition

changes in structure of industries require adjustments

Constant upgrading of processes and product innovation to remain competitive

ISSUES AND CHALLENGES

Competition from emerging economies

Greater outsourcing strategies by MNCs

Changing the mindset and inculcating the positive business values

Nurturing high growth and innovative SMEs:

organic growthinorganic growth (consolidation, mergers strategic alliance)

ISSUES AND CHALLENGES

ASSISTANCE PROGRAMMES IN LINE WITH GROWTH OF ENTERPRISE

1. Start-up Stage

2. Growth

3. Expansion

4. Maturity Stage

GLOBALLY COMPETITIVE

GLOBALLY COMPETITIVE

Time

Low

High

Basic Requirements / Concerns

1. Start-up Stage

* R&D incubator

* Adequate workforce

* Market knowledge

* Adequate raw material supply

* Adequate

infrastructure

2. Growth

* Certification/

Standard

* Technical assistance

* Automated Process

* Tax benefit

* Market Development

3. Expansion

* Technological capability

* Management capability

* ICT capability

* Brand development

* Venture Capital

* Outsourcing

* Distribution channels

4. Maturity

* Design capability

* Brand name promotion

* Industry upgrading

* Investment abroad

Tech

nolo

gy

Leve

l

DEVELOPMENT OF SMEs IN MALAYSIA

LACK ENTREPRENEURSHIP CAPABILITIES

LOW TECHNOLOGY UTILISATION

LOW INVOLVEMENT IN R & D ACTIVITIES

EMPLOYEES OF SMEs LACK SOFT AND TECHNICAL SKILLS

Business and Market Development

Technology and ICT Adoption

Skills Development

Special Assistance Scheme for Women Entrepreneurs

Financial Assistance

Outreach and Advisory Services

DEVELOPMENT OF SMEs IN MALAYSIA

BUSINESS AND MARKET DEVELOPMENT

INDUSTRIAL LINKAGE PROGRAMME (ILP)

Integrating SMEs into the supply chain of the MNCs and LSIs

Facilitating access to market

Providing opportunities to increase domestic value-added

Promoting competitive and capable smes to become suppliers to MNCs/LSIs

ENHANCEMENT PROGRAMMEFOR SMEs

Support SMEs through comprehensive programmes to enhance their capabilities and capacity

Assist SMEs to meet quality standards, regulations and technical specification

Focus approach & group project

BUSINESS ANDMARKET DEVELOPMENT

Create opportunities to be potential supplier/JV

Provides platform to exhibit products and services

Activities : exhibition, convention and business matching


As outsourcing exchange

Platform for SMEs to exhibit products and services

Opportunities for companies to be potential supplier

Activities : exhibition and business matching

REGIONAL TRADE EXPOSITIONS

29-30 June 2006 Pulau Pinang

24-25 July 2006 Kuching, Sarawak

4-5 September 2006 Kota Kinabalu, Sabah


Provide Opportunities to Benchmark Against Their Peers

Prestigious Award Recognise the Achievement of Top 50 Enterprising Home Grown Companies

ENTERPRISE 50 AWARD PROGRAMME

1996 - 2005

TOTAL NOMINATION : 1029

TOTAL ALUMNI : 370

LISTED ON MALAYSIAN BOURSE : 40

LISTED ON MESDAQ : 1


ASSIST SMEs TO UPGRADE THEIR TECHNOLOGICAL CAPABILITY, ACHIEVE EFFICIENCY AND INCREASE PRODUCTIVITY

EMPLACEMENT OF INDUSTRIAL EXPERTS AT SMEs’ PREMISES TO SOLVE SPECIFIC PROBLEMS

SME EXPERT ADVISORY PANEL

29 INDUSTRY EXPERTS APPOINTED

AREAS :ICTFINANCIALENGINEERINGMANAGEMENT


TECHNOLOGY ANDICT ADOPTION

Grant for Product and Process Improvement

Soft Loan for ICT Adoption

Grant for Productivity and Quality Improvement and Certification

Grant for Enhancing Product Packaging, Design and Labelling Capabilities of SMEs

Grant for RosettaNet Standard Implementation

SMEs ARE ENCOURAGED TO ADOPT ICT AND UTILISE REQUISITE TECHNOLOGY IN THEIR BUSINESS PROCESSES


SKILLS DEVELOPMENT

SKILLSUPGRADING PROGRAMME

GRANT FOR ENHANCING MARKETING

SKILLS OF SMEs

SKILLS UPGRADING

50% gra

nt on

train

ing fe

es

21 SKILLS DEVELOPMENT CENTRES APPOINTED

ENHANCING MARKETING SKILLS OF SMEs

Assist SMEs to enhance their employees’ marketing skills through short-term coursesTraining in areas such as marketing strategies and planning, pricing, distribution, development of brand, merchandising and customer services 50% g

rant o

n train

ing fe

es

GRANTS

SOFT LOANS

FINANCIAL ASSISTANCE

Matching Grant for Business Start-ups

Matching Grant for Product & Process Improvement

Matching Grant for Certification and Quality Management Systems

Matching Grant for Market Development

Matching Grant for Development and Promotion of Halal Product

Matching Grant for Enhancing Product Packaging

RosettaNet Standard Implementation

40,000

500,000

250,000

100,000

150,000200,000

100,000

QUALIFYING CRITERIA

Companies incorporated under the Companies Act

1965 OR enterprises incorporated under the

Registration of Business Ordinance 1956

Fulfill definition of SMEs

At least 60% equity held by Malaysian

Possess valid premise license

SECTOR COVERAGE

Manufacturing

Services (Except Financial Services)

Provides grant to assist SMEs in:Preparation of Business PlanningRelated Feasibility StudiesRental of incubators and business premises up to 24 monthsRental of equipment and machineriesDevelopment of prototype Product sample and testing

Eligible Expenses :Cost of consultation

Cost of acquiring skills and technology through training and acquisition of relevant information

MATCHING GRANT FOR BUSINESS START-UP

Provides grant to SMEs for improvement and upgrading of existing:

MATCHING GRANT FOR PRODUCT AND PROCESS IMPROVEMENT

Technology Feasibility StudiesFees for technology transfer (e.g. technical licensing/ disclosure / agreement/ acquisition and blueprint/ drawing)Development of prototypes and system designProduct testing Product registrationMarking and labelling (e.g. Bar-coding)Machine & equipment testing and calibration

Development & designing of equipment and machinery (including jigs, moulds and dies as well as ICT-related activities)Purchase of machinery and equipment subject to maximum matching grant RM100,000 per applicationInitial patent registration/patent search/ IP Protection Specific Project Mission (e.g. Mould & Die)Cleaner Production and Waste Treatment Project including Energy Efficiency Audit

Eligible Expenses :Cost of technical expertiseCost of acquiring technology and skillsCost for testing and calibrationCost of designing and prototypingSurvey cost for related schemes including registrationCost of material used in designing prototypes

MATCHING GRANT FOR PRODUCTIVITY AND QUALITY IMPROVEMENT AND CERTIFICATION

ISO 13485, ISO 14000, ISO 22000

Product certification

Hazard Analysis Critical Control Point (HACCP)

Halal certification & MS1500:2004

TS 16949

Quality Improvement Practice e.g. 5S, Six-Sigma and Productivity Audit

Good Manufacturing Practice (GMP)

Provides grant to assist SMEs in obtaining quality and product certification such as:

Occupational, safety and health management system (OSHA)

Restriction of Hazardous Substance (RoHS)

Good Agriculture Practice (GAP)

Good Hygiene Practice (GHP)

Regulatory Impact Assessment (RIA)

British Retailers’ Consortium (BRC)

Other related costs to comply to requirements of standards and certification

Provides grant to assist SMEs in undertaking activities for the development of export markets. The activities include:

Participation in Trade and Investment missions, Specialized Marketing missions and In-store Promotion

Export market study up to a maximum matching grant of RM30,000

Industry related conferences

Participation in local and international trade fairs

Participation in meetings related to negotiations on Mutual Recognition Agreements (MRA), Free Trade Agreement (FTA), ASEAN, World Trade Organization (WTO) and other market access negotiations by representatives of Trade and Industry and Professional Services Associations

Preparation of Promotional items up to a maximum matching grant of RM15,000

Setting up of sales promotion office overseas up to a maximum matching grant of RM50,000

For women-owned enterprises:

Participation in Malaysia Export Exhibition Centre (MEEC)

Participation in local export training seminars and workshops.

MATCHING GRANT FOR MARKET DEVELOPMENT

Provides assistance to local companies in:Product development & Product Formulation.

Sample testing.

Acquisition of machinery and equipment related to the approved project subject to maximum matching grant RM100,000.

Renovation expenditure for compliance to certification requirement subject to maximum of RM100,000.Promotional activities.

Other related costs for compliance to requirements of Halal certification.

MATCHING GRANT FOR DEVELOPMENT AND PROMOTION OF HALAL PRODUCT

“Oh mankind! Eat of that which is halal and tayyib on the earth, and follow not the footsteps of Shaytaan.”

Verse 168 of Surah Al-Baqarah

Designing and improving product packaging and labeling through appropriate packaging technology

Eligible Expenses Related costs and services for designing, packaging, marking and labellingTrade mark and patent registrationPurchase of machinery and equipment subject to maximum matching grant of RM100,000

MATCHING GRANT FOR ENHANCING PRODUCT PACKAGING, DESIGN

AND LABELLING CAPABILITIES OF SMEs

GRANT FOR ROSETTANET STANDARD IMPLEMENTATION

RosettaNet Direct Model

Assistance to local companies to implement the complete RosettaNet Standard

Enable companies to implement and host their own RosettaNet Gateway infrastructure

50% grant on approved project cost

Maximum grant per company is RM100,000

RosettaNet ASP Model

Provides partial grant to assist local companies to implement the RosettaNet Standard through subscription to hosted services offered by Application Service Providers (ASPs). Form of assistance:

- For SMEs - 70% grant on approved project cost

- For large companies - 50% grant on approved project cost

Maximum grant per company is RM30,000

HOW TO APPLY?

On-line application:

www.smidec.gov.my

By mail:

701D, Level 7, Tower D, Uptown 5

No. 5, Jalan SS 21/39, Damansara Utama

47400 Petaling Jaya

Selangor Darul Ehsan

By fax:

603-7660 1919

SOFT LOANS

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

Project FinancingFixed Asset FinancingWorking Capital Financing

Assistance to SMEs to relocate their factories to designated industrial sites

The loan is provided to fund :Purchase of ready-made factoriesPurchase of factory lot and construction of

factories including related infrastructureCosts to purchase related machinery and

equipment due to relocationCosts incurred for initial store renovation

and upgrade of store display for retail trade

SOFT LOAN FOR FACTORY RELOCATION

SOFT LOAN FOR SMEs (SLSMEs)

SOFT LOAN FOR ICT ADOPTION

Upgrading Engineering Design Capabilities

Purchase of design software or subscription fee/license fee for on - line engineering design servicesPurchase of computer hardware and related equipmentTraining costEnterprise Resource Planning (ERP) Software

Purchase of ERP software or subscription to on-line ERP system, or other similar software Implementation cost including system study, customisation and trainingPurchase of server & related networking equipment

SOFT LOAN FOR FACTORY RELOCATION

SOFT LOAN FOR SMEs (SLSMEs)

Project Financing RM5 milllion

Fixed Asset Financing RM2.5 milllion 4%15 years

Working Capital Financing RM1 milllion

RM1 milllion 4% 12 years

SOFT LOAN FOR ICT ADOPTION

Maximum LoanInterestRate

PaymentPeriod

RM250,000 3% 5 years

IMPLEMENTED BY :

SOFT LOANS

Seminars and Workshops

Provide information on related topics to SMEs such as financial assistance and management, marketing and P & Q

OUTREACH PROGRAMMES AND ADVISORY SERVICES

Outreach Programme

85 Seminars / Workshops organised

Participated as speaker in 77 Seminar / Workshops

Total participants : 33,057

2005

Advisory ServicesProvides advisory services and consultation to SMEs through :

Business Advisory Services

Virtual SMEInformation Centre

Toll Free Line :1-800-18-1801

OUTREACH PROGRAMMES AND ADVISORY SERVICES

Investor Relations

SME Development