APEC SME Ministerial Meeting, Bali, Indonesia 7 September 2013 Empowering SMEs to expand to International Market (Malaysia's Experience)

Demographic highlights … 2 CHINA: 1.3 bn CHINA: INDIA: 1.2 bn INDIA: MALAYSIA: 29.7 million MALAYSIA: INDONESIA: 238 million INDONESIA: With a population of merely about 30 million, Malaysia can’t afford to rely on domestic consumption only to achieve high-income nation status by Internationalisation is crucial… USA: 314 million USA: UK: 63.2 million 63.2 millionUK:

Population: 2.7 bil Women: 1.4 bil (51.9%) Youth * : n.a. GDP: 40.3 tri Population: 2.7 bil Women: 1.4 bil (51.9%) Youth * : n.a. GDP: 40.3 tri Facts & Figures Population: 29.7 mil Women: mil (49.3%) Youth * : 11.5 mil (38.7%) GDP: 0.3 tri Population: 29.7 mil Women: mil (49.3%) Youth * : 11.5 mil (38.7%) GDP: 0.3 tri *Aged 15 – 24 years old (as defined by UNESCO) 3 Source:

SMEs are the backbone of the economy… Important domestic source of growth Foundation & support in supply chain through forward & backward linkages Balanced growth Strengthen resilience of the nation's economy Provide support for growth of new & existing sectors Promote private sector-led growth 1.Economic Census 2011, Malaysia 2.Office of Small & Medium Enterprises Promotion, Thailand (OSMEP) 3.Small Business & Entrepreneurship Council, USA 4 Total Establishments GDP Exports Employment Country Comparison 97% 32% 19% 59% 99% 37% 28% 75% Source: 99% 46% 34% 65%

5 Holistic approach to SME development brought positive results… SME growth outperformed overall GDP growth during 2004 – 2010: NSDC was set up and SME development accorded national agenda Other supportive policies (improvement in government delivery, higher domestic demand and tourism, focus on farmers and small contractors) Year Source: DOSM and SME Corp. Malaysia 32% share of GDP 28.6% share of GDP Year GDP & SME Growth (change) GDP & SME GROWTH

Chart direction until 2020 ETP RTP GTP High-income nation 4 Goals & 6 Focus Areas 6 High Impact Programmes (HIPs) GDP Employment Exports 41% 62% 25% GDP Employment Exports 32% 59% 19% Year 2020 SME Masterplan ETPETP RTPRTP GTPGTP National policies Year 2010 SME Masterplan to chart direction for SME development… 6

Market Access SME Development Framework Goals Increase business formation Intensify formalisation Intensify formalisation Expand number of high growth and innovative firms Raise productivity Reliable database Monitoring & Evaluation Effective Coordination Effective Business Services Innovation & Technology Adoption Human Capital Development Human Capital Development Legal & Regulatory Environment Access to Financing Infrastructure Globally competitive SMEs across all sectors that enhance wealth creation and contribute to the social well-being Vision Focus Areas Institutional Support Action Plan New SME Development Framework for innovation- led and productivity-driven growth 7

Innovation & Technology Limited participation in national innovation system Low product commercialisation and R&D spending Poor technology uptake Human Capital Development Workforce lacks job readiness Low utilisation of existing training Non-competitive rewards & benefits Access to Financing Early stage financing Poor creditworthiness Lack of know-how and resources Through interaction with stakeholders, 6 focus areas were identified where constraints need to be addressed Market Access Low bargaining power Information barrier for exports Limited focus on marketing & branding Legal & Regulatory Framework Ease of obtaining licenses Bankruptcy law limits entrepreneurs SME taxation Infrastructure & Security Low and infrequent trade volume Inefficient trade facilitation system Constraints to Growth 8

9 Plan proposes 32 initiatives across all focus areas, of which 6 are High Impact Programmes Result-based approach with monitoring & evaluation 6 High Impact Programmes (HIPs) Measures across 4 Themes Measures for East Malaysia Other Measures Integration of business registration & licensing to enhance ease of doing business Technology Commercialisation Platform (TCP) to encourage innovation SME Investment Programme (SIP) to provide early stage financing Going Export (GoEx) Programme to expedite internationalisation of SMEs Catalyst Programme to promote more homegrown champions Inclusive Innovation to empower the bottom 40% Resource pooling & shared services Create demand for SME products Reduce information asymmetry Building capacity & knowledge Improve connectivity & basic amenities Review restrictive laws & policies Ease market access Completion of Integrated trade clearance and facilitation system (single window) Bankruptcy Law to give entrepreneurs a second chance Synchronise measures on productivity enhancement technologies with other relevant labour policies

10 Going Export (GoEx) Programme to expedite internationalisation of SMEs Uncertainty on new market entry & high upfront cost for information access are biggest deterrents to expand overseas SMEs require assistance from market experts (private service providers) Required services Part payment for required services Customised assistance on steps to export Link to expertise to implement Link to buyers Emerging SME Exporters Programme Management Team (Pvt. Sector) Preparation & execution of Export Sales Plan Targets: -New Exporters -Existing Exporters (new product / market) Matching grant -Cost of Export Sales Plan (ESP) if needed -Other support in ESP after proof of export arrangement Market driven after initial success Context

Industrial Linkages 11  Facilitating access to market by integrating SMEs into the supply chain of the large companies  Concentration on high value-add portion of the supply chain…  Facilitating access to market by integrating SMEs into the supply chain of the large companies  Concentration on high value-add portion of the supply chain… RETAILRETAILMANUFACTURINGMANUFACTURING INTERNATIONALINTERNATIONAL LOCALLOCAL

Malaysia’s Experience … Opening Ceremony Officiated by PM of Malaysian 4 MoUs between SME Corp: Small & Medium Business, Korea; Small Ent. Dev. Fund, Yemen; Entrepreneurship Dev. Fund (DAMU), Kazakhstan & Touch N Go, Malaysia 90 companies recognised as 1-InnoCERT companies 6 Winners Potential Sales: US$98 mil with 165 sessions BAE Systems, Tesco, TM, HICOM, MDEX No. of Booth: 406 No. of Companies: 302 (247 local, 55 international) International Participation: Korea, Japan, Iran, Italy, Thailand, Papua New Guinea No. of Visitors: 8,706 12

13 4 th Global Entrepreneurship Summit 2013

14 11 – 12 October 2013 in Kuala Lumpur Convention Centre THEME: “EMPOWERING & CONNECTING ENTREPRENEURS”

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