Putrajaya, 23 November - The National SME Development Council (NSDC) which is the highest policy making authority on Small and Medium Enterprise (SME) development in the country endorsed the second phase of the SME Masterplan (2012 - 2020) today.
Prime Minister, Y.A.B. Dato’ Sri Mohd Najib Tun Haji Abdul Razak chaired the 12th Council meeting with Ministers from the relevant ministries and heads of key agencies, revealed the details of the Plan that would create an ecosystem to accelerate the growth of SMEs towards achieving a high income economy. In line with this, the Government will ensure that the implementation of the Plan will be a part of the Rural Transformation Programme (RTP), which the main objective is to modernise the rural area, increase the infrastructure, income level and the rural population economy. As a result of this implementation, rural area integration with the economic main stream, rural entrepreneur involvement in the global supply chain and economic activities that directly involve in inclusive innovation can be achieved.
The SME Masterplan is an inclusive plan for all SMEs, across sectors, regions (i.e. East Malaysia and rural) and strategic areas (i.e. Bumiputera and women). The Plan proposes bold measures not only to develop champions but also to develop microenterprises to ensure balanced growth.
SME Masterplan (2012 - 2020)
At the last meeting in April 2011, the Council had endorsed the First Phase of the Plan which comprised the new SME development Framework and the broad policies and strategies. Today, the discussion was on translating the policies and strategies into 32 key initiatives, including the six high impact programmes (HIPs) that would contribute significantly to achieving the targeted goals. The details are as follows:
HIP 1: Integration of registration and licensing of business establishments aims to create a single registration point through interfacing of the current National Business Registration System (MyCOID) and the National Business Licensing System (BLESS). The initiative is to simplify procedures to reduce the lag time and costs involved in starting a new business. The initiative will also enhance formalisation as registration will be mandated as pre-requisite to licensing;
HIP 2: Technology Commercialisation Platform (TCP) is to provide a national network of privately-managed platform to promote innovative ideas right through from proof of concept (POC) to the commercialisation stage. TCP will be designed to remove market barriers to innovation by providing linkage to a range of services including infrastructure support, financing, technical assistance, market information and capacity building;
HIP 3: SME Investment Programme (SIP) is to provide early stage financing through the development of investment companies which would invest in potential SMEs in the form debt, equity or a hybrid of both. This will expedite the growth of the venture capital industry in the country that can support innovative SMEs and start-ups;
HIP 4: Going Export (GoEx) Programme offers customised assistance to new exporters and SMEs venturing into new markets. Export-ready firms can avail to comprehensive support which among others include linkage to market expertise and buyers, and compliance to standards to expedite internationalisation of services and products;
HIP 5: Catalyst Programme is to create homegrown champions through a targeted approach with support in the area of financing, market access and human capital development. Participants of the Programme will be selected through a transparent selection criteria and exit mechanism; and
HIP 6: Inclusive Innovation is specifically designed to empower the bottom 40% of the income group to leverage on innovation to promote transformation of communities including microenterprise in the rural areas through handholding and technical and management support.
On this matter, the Chairman has emphasized that the SMEs have to step up the usage of online system to generate higher income.
He said, “We have to promote inclusive innovation, especially when it increases the output.”
The Plan will build on existing initiatives which resulted in SMEs outperforming the overall economy in terms of value added, employment and productivity growth. In the period 2004-2010, value added growth of SMEs had consistently exceeded that of the overall economy to average at 6.8% versus 4.9% for overall GDP.
These six programmes reinforced by other key initiatives including creating demand for SME products through Government procurement; resource pooling to overcome scale disadvantages; reducing information asymmetry; building capacity of SMEs and specific measures for East Malaysia will set the pace to achieve the following goals during the period 2012 - 2020:
- To increase business formation to facilitate a constant stream of new entrants into the market (target of 6% per year increase in registration of new companies);
- To expand the number of high growth and innovative firms (10% per year) as they generate bulk of employment and output in the country;
- To raise labour productivity of SMEs from RM47,000 per worker in 2010 to RM91,000 per worker in 2020; and
- To intensify formalisation to promote growth and fair competition (informal sector reduced from 31% of GNI to 15% in 2020).
Achieving the SME development goals will contribute towards meeting the macro targets set in the Plan, namely:
- To increase the contribution of SMEs to GDP from 32% in 2010 to 41% in 2020;
- To increase the employment share from 59% to 62%; and
- To increase the export share from 19% to 25%.
The vision is to create globally competitive SMEs that enhance wealth creation and contribute to the social well-being of the nation.
Y.A.B. Prime Minister agreed that the implementation of the Masterplan to be coordinated by SME Corporation Malaysia with other Ministries and Agencies to provide the cooperation and support in order to ensure the success of the Plan.
The Masterplan would require some restructuring of the current mechanism to enhance coordination and for greater optimisation of resources to achieve the desired results.
Other Decisions and Update
Besides the SME Masterplan, other decisions that were made by the Council included the following:
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Establishment of a National Steering Committee for Incubation Programmes
An inter-ministry Committee which would be led by the Ministry of Science, Technology and Innovation (MOSTI) will look into development programmes to ensure the effectiveness of existing incubation centres, including proper maintenance and increased utilisation of facilities. This programme supports initiatives in the Masterplan to promote innovation and high growth companies.
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Annual “SME Week”
Every year beginning 2012, the fourth week of June will be declared as the “SME Week” during which all related Ministries and agencies will have a nationwide outreach campaign to promote SME development initiatives. The activities will include competition, exhibitions, awareness sessions and business linkages for entrepreneurs.
The Council also noted the initiatives carried out by the Focus Group on Business Process Re-engineering under the Special Task Force for Service Delivery (PEMUDAH) to reduce and facilitate compliance for business licences saw further progress. From March to November 2011, a total of 405 licences under 23 Ministries have been reduced. This contributed towards reducing compliance costs by the business community which is estimated at around RM729.2 million.
The Department of Statistics Malaysia (DOSM) reported the smooth implementation of the Census which began in May 2011. Thus far 82% of the data compilation has been completed covering around 943,000 business establishments. The report will include statistics on SMEs and is expected to be completed by June 2012.
SMEs in the country continuously have access to financing. As at the end of September 2011, the total outstanding financing amount by financial institutions amounted to RM158 billion and benefit some 559,000 SMEs. Financing to green technology projects are also on the rise with 24 companies approved under the Green Technology Financing Scheme amounting to RM350.6 million.
Secretariat
National SME Development Council
23 November 2011
