Promoting Business Incubation : Malaysia Experience presented by: Borhan Sidik Deputy CEO, SME Corporation Malaysia 7 th INTERNATIONAL CEO FORUM FOR CHIEF EXECUTIVES OF DEVELOPMENT FINANCE INSTITUTION (18 th November 2010)

Outline of Presentation 1.Malaysia in Brief 2.Roles & Functions of SME Corp. Malaysia 3.Profile of SMEs 4.Strategies & Policies on SME Development 5.General Information on Business Incubator 6.Business Incubator in Malaysia SIRIM Berhad MTDC Technology Centres Technology Park Malaysia (TPM) SME Bank Factory Complex 7.Success Story of Incubator 8.Closing Remark

Malaysia : Basic Statistic GENERAL INFORMATION Population Labour force Employment Unemployment rate Nominal GDP Nominal GNI Real GDP growth rate Per capita income Inflation Exchange rate (RM/USD) 27.9 million 12.1 million 11.6 million 3.7 % RM 680 billion RM 665 billion -1.7 % RM 23, % million 12.2 million 11.8 million 3.6 % RM billion RM billion 6.0 % RM 26, % 3.09 (1 st November 2010)

4 Development of competitive and resilient SMEs in all sectors Vision Mission The premier organisation for the development of progressive SMEs to enhance wealth creation and social well-being of the nation Promote the development of competitive, innovative and resilient SMEs through effective coordination and provision of business support SECRETARIAT TO THE NSDC CORDINATION OF POLICIES & PROGRAMMES ‘ONE REFERRAL CENTRE’ ON ADVISORY & INFORMATION MANAGEMENT OF DATA, DISSEMINATION OF INFORMATION & RESEARCH ON SMEs BUSINESS SUPPORT ROLES & FUNCTIONS OF SME CORP. MALAYSIA Role & Function of SME Corp. Malaysia

435,324 (78.7%) 100,333 (18.2%) 12,610 (2.3%) 4,537 (0.8%) Source: 2005 Census by Department of Statistics Malaysia Total establishments = 552,804 No. of SMEs = 548,267 (99.2%) MICRO SMALL MEDIUM LARGE Establishment of Enterprises Services (86.6 %) Agriculture (6.2 %) Manufacturing (7.2 %) SME Distribution by Sector Profile of SMEs 5

6 Strategies & Policies on SME Development 5 strategic thrusts for development of SMEs under IMP3 ( ): SME DEVELOPMENT Enhancing SME competitiveness Driving SME growth through technology, knowledge and innovation Capitalising outward investment opportunity Instituting more cohesive policy and supportive regulatory and institutional framework Enhancing growth & contribution of SMEs in services sector MEASURES 1.Adoption and application of leading technologies, including effective utilization of ICT; 2.Closer collaboration with specialized Government research institutes and universities; 3.Enhancement of human capital of SMEs; 4.Nurturing innovative and resilient SMEs; 5.Acculturation of entrepreneurship & innovation; 6.Creation of more conducive business environment, which stimulates vibrant and innovative entrepreneurial activities

What is Incubator? BUSINESS INCUBATION : “ Business incubation is an organization that helps entrepreneurs to develop their ideas in a framework that has been established to help them. It takes them systematically from inception through to launch and beyond. Incubators nurture young firms, helping them to survive and grow during the start-up period when they are most vulnerable.” TECHNOLOGY INCUBATION: “ A technology-incubating program is an innovative system designed to assist entrepreneurs in the development of new technology-based firms, both start-ups and fledglings. It seeks to effectively link talent, technology, capital and know-how to leverage entrepreneurial talent in order to accelerate development of new companies, and thus speed the commercialization of technology” Source: Ministry of Science, Technology and Innovation, Malaysia

Incubator Background COUNTRYNOS. OF INCUBATORS USA/Canada1300+ China600+ South Korea270+ Japan 200+ India110+ Taiwan97+ Malaysia106 + Uzbekistan20+ Europe900+ Source: National Incubation Network Association (NINA)

Incubator in Malaysia Source: National Incubation Network Association (NINA) INCUBATORSNO’S NINA Members (Tech-based Incubators) MARA (Indigenious/ Bumiputera) Banks State Economy Development Corp. MARDI (Agro-based) Handicraft Incubators Universities MECD Others TOTAL106+

EXAMPLE 1: SIRIM TECHNOLOGY INCUBATION

Established in 1975 under Ministry of Science, Technology & Innovation 16 th November 1995: Corporatized as a government-owned company under the Ministry of Finance Inc. SIRIM Berhad Research & Technology R&D Product Development Process Engineering Training & Consultancy Standards & Quality Measurement & Calibration Legal Metrology Services Standards Management Standards Development Broad range of services: Design & Engineering Product Development Engineering Services Plant Engineering Machinery & Equipment Technology Transfer Hub Intellectual Property Centre Commercialization and Business Incubation Centre

SIRIM Incubator Model Phase I: Entrepreneur Development Phase Phase II: Enterprise Creation Phase Phase III: Market Development Phase SIRIM Technology Incubator Program Skills Development Networking & Linkages Facilities & Services Technology Transfer & Consultancy Services Advisory Services After-Care Service

EXAMPLE 2: MTDC TECHNOLOGY CENTER Malaysian Technology Development Corporation

Initiative by Malaysian Technology Development Corporation (MTDC) Embodied under Government’s Technology Development Cluster (TDC) program Formal and operational links (collaborations) with universities or research institutions. MTDC Technology Centre Main function  Strengthen linkages between universities/research institutions and industries.  Activate and promote the acceleration of the commercialisation activities of both the local universities and research institutions. Approached method:  Develop technology incubation centres via JV collaboration with Universities

MTDC Technology Incubation Centres UPM (Universiti Putra Malaysia)-MTDC Technology Centre Centres are developed based on strength of respective universities through JV collaboration: UKM (Universiti Kebangsaan Malaysia)-MTDC Technology Centre UTM (Universiti Teknologi Malaysia)-MTDC Technology Centre ICT, multimedia, agri-bio Located at UPM - central of Malaysia Biotechnology Located at UKM - central of Malaysia Advanced engineering, life sciences Located at UTM - southern Malaysia

UPM-MTDC Technology Centre project Established 1996 JV project between Universiti Putra Malaysia(UPM) - MTDC The first MTDC technology incubation centres established within Malaysian universities' campus Second area awarded with Cybercity status after Cyberjaya FACILITIES Covering total acreage of 167 acres Equipped with high speed bandwidth communication network Other facilities:  Server Farm (15 acres)  International Technology Centre (50 acres)  MTDC Technology Centre (15 acres)  Data Centre  Computer Recovery Centre

UKM-MTDC Technology Centre project JV project between Universiti Kebangsaan Malaysia (UKM) - MTDC. Planned to attract companies mainly involved in biotechnology. FACILITIES Covering total acreage of 6 acres Able to accommodate tenants Conceptualized as ‘Pusat Teknologi Pintar’ :-  Formal and operational links with university or research institutes  To encourage growth of technology-based businesses that reside on site  Management functions which actively engaged in transfer of technology and business skills to industries

UTM-MTDC Technology Centre project Established in 2001 JV project between Universiti Teknologi Malaysia (UTM) – MTDC OBJECTIVE Mainly for companies involved in life sciences. Develop strong science and technology-based Increase capability to adopt, adapt and improve technologies through R&D Develop pool of skilled researchers capable of handling new and emerging applied technologies. FACILITIES Covering total acreage of 4.3 acre Located within university (UTM) vicinity

EXAMPLE 3: TECHNOLOGY PARK MALAYSIA (TECHNOLOGY & INNOVATION BUSINESS INCUBATION PROGRAM)

Technology Park Malaysia (TPM) TECHNOLOGY & INNOVATION BUSINESS INCUBATION PROGRAM Main function:  To spur development of innovative and knowledge-based companies Incubation program:  Caters specifically to fledgling technology and innovation-based enterprises.  Prospects vary from graduates, researchers, start-up SMEs, professional employees & subsidiary of MNC’s & GLC’s. SELECTIONASSESSMENT TOOLS INFRASTRUCTURE & SHARED SERVICES EXIT POLICY PROSPECTS 1.Graduates/ researchers 2.Start-up SME 3.Professionals/ workers 4.Subsidiary of big companies 5.Soft-landing HANDHOLDING Business coaching, consultancy and training MARKET LINKAGES TECHNOLOGY HELP DESK RESEARCHERS & EXPERTS INTEGRATED FINANCIAL ASSISTANCE Incubation model:

21 Network - Market linkages through incubation associations membership: National Incubation Network Association (NINA) Asian Association of Business Incubation (AABI) Asia Pacific Incubation Network (APIN) Association of University Research Parks (AURP) Facilities - Support from TPM and subsidiaries: TPM Engineering TPM IT TPM Biotech Financial Assistance – Access to funds by Government/commercial banks, venture capital and angels. Handholding – Integrated coaching, consultancy and training by panel of coaches, consultants & trainers. Technology Experts - Advisory from researchers and expert panel Spectrum of Services Cubicles Land/ building lease Office units

EXAMPLE 4: SME BANK FACTORY COMPLEX

Started in 1985 Full support from Government  Fund to build factories in each state in Malaysia. Initiated to encourage entrepreneurship in manufacturing and service sector Facilties:  24 factories with 419 lots nationwide SME BANK FACTORY COMPLEX KUALA LUMPUR

Participant selection by a Panel Project and concept development with advisory and approval from SME Bank Project is fulltime owned and run by participant Integrated financial assistance Incubation period 9 years SME BANK INCUBATION MODEL Financing facilities Factory space rental Entrepreneurship training Advisory Integrated entrepreneurship development approach:

SUCCESS INCUBATEES STORY REDtone International Berhad  Incubatee of TPM  Listed on MESDAQ (now known as ACE Market) in  MSC status company  Products:  High speed Internet services  Data solutions  VoIP services  Operating in Malaysia and China Green Packet Berhad  Incubatee of TPM  Listed on ACE Market in 2005  Transfered to Main Board in 2007  Products:  Personal Handy-Phone System  3G, WiFi and WiMAX space  Operating in USA, Malaysia, Singapore, Taiwan, China, Bahrain and Thailand.

SUCCESS INCUBATEES STORY (Cont’d) IRIS Corporation Berhad  Incubatee of TPM  Establsihed in 1994  Listed on ACE Market in 2002  Products: Digital conference system Radio frequency identity system (RFID) Automated electronic ticketing and fare collection Payment cards Loyalty management program solution Tricubes Berhad  Incubatee of TPM  Established in 1998  ICT company focusing in identity authentication and mobility solution  Listed on Ace Market in 2004  Products: Smartcard Biometrics verification devices

CLOSING REMARK

RECOMMENDATION FOR SUCCESS OF INCUBATOR 1.University involvement: Success of incubator depends on availability of graduates, access to R&D facilities, and environment of intellectual creativity 2. Collaboration & networking: Networking between industries, universities, research institutions and incubators provide mutual support & encouragement 3.Experienced incubator management: To render continuous support, coaching, mentoring and motivation to start-up companies 4.Conducive business environment: Incubators to function not as landlord but to create conducive business environment to incubatees 5.Linking business & technology: Constitute important channels for distribution of knowledge and tools for business success

SME Corporation Malaysia Level 20, West Wing, Menara MATRADE Jalan Khidmat Usaha, Off Jalan Duta Kuala Lumpur SME Corporation Malaysia Level 20, West Wing, Menara MATRADE Jalan Khidmat Usaha, Off Jalan Duta Kuala Lumpur R R I I M M T T E E K K S S A A A A H H I I