SMEs have long been an integral part of Malaysia’s economic development, particularly in fostering growth, employment and income. Going forward, SMEs are expected to assume a greater role, not only as an enabler but also as a key driver of growth.
SME Corporation Malaysia: Promoting the development of competitive, innovative and resilient SMEs
SME Corporation Malaysia (SME Corp. Malaysia) as the central coordinating agency (CCA) that formulates overall policies and strategies for small and medium enterprises (SMEs) and coordinates the overall implementation of SME development initiatives in Malaysia introduced the SME Masterplan (2012-2020) in July 2012; comprising six (6) High Impact Programmes (HIP) to address the specific requirements for MSME development which include business registration, technology commercialisation, investment, export facilitation, financial assistance, as well as innovation.
Four key characteristics of MSMEs in Malaysia that was revealed in the development of the SME Masterplan include low productivity, low business formation, small number of firms; are being addressed via the four strategic goals of the Masterplan:
- Increase business formation;
- Expand number of high growth and innovative firms;
- Raise productivity; and
- Intensify formalisation.
High Growth and Innovative Firms
In expanding the number of high growth and innovative firms, the Malaysian Government have introduced two High Impact Programmes, namely HIP 2: Technology Commercialisation Platform (TCP) and HIP 6: Inclusive Innovation Programme. Innovation is crucial not only in addressing the low productivity issue faced by the Malaysian SMEs, but also in achieving the quantum leap growth required to enhance the contribution of SMEs to the economy.
TCP is a programme designed for Malaysian SMEs to help them seamlessly move their innovations along the complex stages of the commercialisation process, by providing end-to-end facilitation. The model addresses the innovation gaps through a holistic and ‘market-driven’ approach in supporting innovation and industrial competitiveness. It is designed to remove market and financing barriers to innovation. Among the major benefits of this innovative commercialisation model include the mitigation of risks involved for SMEs to develop products and services, with lower costs and faster time-to-market, leveraging on trusted technologies from across Malaysia and abroad via technology transfer and commercialisation support to further develop innovations. TCP has been initiated to increase the number of high growth and innovative firms in the country, promote higher survival rate of firms and enhance recognition of innovative firms as being ‘good deals’ to venture capitalists.
While TCP links innovation with the competitiveness of MSMEs, the Inclusive Innovation Programme (HIP 6) draws a link between innovation and shared prosperity. It aims to improve the lives of the bottom 40 percent of the population (measured in terms of household income) in two ways, namely by scaling up innovative ideas that can promote the advancement of entrepreneurs; and enabling SMEs to adopt, acquire, use and create technology. The programme offers technical and management advisory assistance, access to finance, promotional support, and other assistance to innovators. However, the specific support differs depending on the HIP 6 business model, which can be categorised into three models. The first of these, the ‘innovator-entrepreneur model’, is distinguished from the ‘licensing model’ by the former’s desire to be an entrepreneur. While, the third ‘community-enabled model’ focuses on grassroots innovators.
For Nik Juzailah binti Juhairi, taking her herbal potions business, Sireh Emas Marketing Sdn. Bhd. to the international market is her next vision. The University of Malaya business studies graduate has successfully steered her once failing small business into a diversified manufacturer of 48 skin and body care products, with a total of 38 workers.
She received financial assistance of about RM200,000 under SME Corp. Malaysia’s Business Accelerator Programme (BAP) for packaging and advertising. Meanwhile, the Going Export (GoEx) Programme (HIP 4) is tailored to aid entrepreneurs like Nik Juzailah unlock their next achievement. “We have already received orders from Cambodia and we are eyeing to enter Myanmar and Indonesia, which is known for its huge population,” she said.
The Malaysia Extenal Trade Development Corporation (MATRADE) is the appointed implementing agency to nurture local SMEs under GoEx. It aims to assist SMEs overcome the high upfront costs upon entering new markets, as well as to attain valuable insight about the new markets and competitors. Export ready companies such as Nik Juzailah’s Sireh Emas Marketing and even high potential exporting companies of all sectors are eligible to apply for the programme.
Under GoEx, entrepreneurs will receive customised advice and marketing assistance by appointed market advisors and market linkers that will significantly boost an SME’s performance. These HIPs are in line with the SME Masterplan target outlined for Malaysian SMEs to achieve 41 percent contribution to the national gross domestic product (GDP) by the year 2020.