FINANCIAL INCLUSION ADVISERS PROGRAMME
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FINANCIAL INCLUSION ADVISERS PROGRAMME Kampala, Uganda 26 April 2010. Role of Government in Creating an Enabling Environment for SME and Microenterprise Development. Mrs. V. Vijayaledchumy Director, Central Banking Services Bank Negara Malaysia. OUTLINE OF PRESENTATION.

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Mrs v vijayaledchumy director central banking services bank negara malaysia

FINANCIAL INCLUSION ADVISERS PROGRAMME

Kampala, Uganda

26 April 2010

Role of Government in Creating an Enabling

Environment for SME and Microenterprise Development

Mrs. V. Vijayaledchumy

Director, Central Banking Services

Bank Negara Malaysia


Mrs v vijayaledchumy director central banking services bank negara malaysia

OUTLINE OF PRESENTATION

  • Establishment of National SME Development Council (NSDC) and SME Corp

  • Achievements of NSDC and SME Corp

    • Improved policy formulation

    • Improved statistical information

    • Strengthened capacity and capability

    • Comprehensive dissemination of information

    • Enhanced access to financing (covered in next session)

  • Conclusion


Mrs v vijayaledchumy director central banking services bank negara malaysia

Weaknesses in the SME infrastructure prior to 2004 prompted the need to establish a holistic Government approach to develop SMEs, including micro enterprises

Establishment of the National SME Development Council (NSDC) to drive the SME development agenda

Fragmented development efforts

Lack of capacity building efforts for SMEs

No standard definition of SMEs

Weaknesses prior to 2004

  • Duplication of programmes and roles of Ministries

  • Resulting in banks not lending to SMEs because SMEs were not viable

  • Difficult to collect data and formulate comprehensive policies


The nsdc is the highest policymaking body to chart sme development

The NSDC is the highest policymaking body to chart SME development

  • Description

    • Chaired by Prime Minister

    • Members: 15 Ministers and 3 Heads of Agencies

    • Secretariat: SME Corporation

    • (Previously BNM)

  • Roles

    • Formulate broad policies on SME development

    • Oversee coordination of policy implementation

    • Ensure effectiveness of policy implementation

NSDC’s

3 Strategic Thrusts

Enhance SMEs’ Contribution to GDP

Strengthen Infrastructure

Build SME Capacity

Enhance Access to Financing


Mrs v vijayaledchumy director central banking services bank negara malaysia

SME Development Framework 2006 - 2010

Promote development of competitive and resilient SMEs in all sectors

towards increasing SME contribution to the economy

Economic

Economic

Socio

Developing progressive and resilient Bumiputera SMEs and entrepreneurs

Promoting development of SMEs in knowledge-based industries

Enhancing viability of SMEs across all sectors

Objectives

-

II.

Building capacity and

capability

I.

Strengthening enabling

infrastructure

III.

Enhancing access

to financing

Strategic Thrusts


Nsdc s achievements

NSDC’s Achievements

Improved Policy Formulation, Monitoring and Assessment

Enhanced Access to Financing

Improved Statistical Information

Achievements of NSDC

Strengthened Capacity and Capability

Comprehensive Dissemination of Information


Mrs v vijayaledchumy director central banking services bank negara malaysia

Improved Policy Formulation, Monitoring and Assessment

SME CORP. MALAYSIA

MINISTRIES

AND

AGENCIES

NSDC

Coordinate

Policies

SMEs

Disseminate

Information

and

Research

“One-Referral”

Information

and Advisory

PRIVATE SECTOR

Secretariat to NSDC

7


Mrs v vijayaledchumy director central banking services bank negara malaysia

FUNCTIONS OF SME CORP. MALAYSIA

To Coordinate Policies Formulation and Programmes Implementation

  • Formulate broad SME policies across all sectors

  • Point of reference for Government Agencies on SME related issues

  • Monitor and evaluate effectiveness of policies and programmes

To be ‘One-Stop’ Information

and Advisory Services

  • Channel to obtain feedback on SME issues

  • ‘One Referral Centre’ of reference for SMEs

To Disseminate Information

and Research

  • Liaise with domestic and international organisations to share best practices and relevant programmes on SMEs

  • Manage National SME Database

  • Publish SME related publications and statistics

  • Undertake research on SME environment

Secretariat to National SME Development Council (NSDC)

  • Provide support and administrative services to NSDC

  • Ensure decisions from the NSDC are communicated to all relevant stakeholders

8


Mrs v vijayaledchumy director central banking services bank negara malaysia

  • ORGANISATION STRUCTURE OF SME CORP. MALAYSIA

NSDC

MITI

  • Legal Unit

  • Media and Public Relation Unit

  • Secretariat

  • - Project Management Officer

  • - Transformation Management Officer

Members of the Corporation

Internal Audit Unit

CEO

Deputy CEO II

Implementation

Deputy CEO I

Coordination & Development

Chief Operating Officer

Strategic Planning Division

Programme Coordination Division

Business Development Division

Corporate Communication Division

12 State Offices

Financing and Monitoring Division

Economic Division

Information Technology Division

Corporate Management Division

9


Mrs v vijayaledchumy director central banking services bank negara malaysia

STATE OFFICES

10


Nsdc s achievements1

NSDC’s Achievements

Improved Policy Formulation, Monitoring and Assessment

Enhanced Access to Financing

Improved Statistical Information

Achievements of NSDC

Strengthened Capacity and Capability

Comprehensive Dissemination of Information


Mrs v vijayaledchumy director central banking services bank negara malaysia

DEFINITION OF MICRO, SMALL AND MEDIUM


Mrs v vijayaledchumy director central banking services bank negara malaysia

4,537 (0.8%)

TOTAL ESTABLISHMENTS

BY SIZE

12,610 (2.3%)

100,333 (18.2%)

  • Total establishments = 552,804

  • No. of SMEs = 548,267 (99.2%)

LARGE

435,324 (78.7%)

MEDIUM

SMALL

MICRO

Source: Census of Establishments & Enterprises 2005 – Profile of SMEs


Mrs v vijayaledchumy director central banking services bank negara malaysia

DISTRIBUTION OF SMEs

BY SECTOR


Mrs v vijayaledchumy director central banking services bank negara malaysia

CONTRIBUTION OF SMEs

TO GDP


Mrs v vijayaledchumy director central banking services bank negara malaysia

CONTRIBUTION OF SMEs

TO EMPLOYMENT


Mrs v vijayaledchumy director central banking services bank negara malaysia

CONTRIBUTION OF SMEs

TO TOTAL EXPORTS


Nsdc s achievements2

NSDC’s Achievements

Improved Policy Formulation, Monitoring and Assessment

Enhanced Access to Financing

Improved Statistical Information

Achievements of NSDC

Strengthened Capacity and Capability

Comprehensive Dissemination of Information


Mrs v vijayaledchumy director central banking services bank negara malaysia

PERFORMANCE OF SME DEVELOPMENT

PROGRAMMES


Mrs v vijayaledchumy director central banking services bank negara malaysia

Development Programmes

STRENGTHENING ENABLING

INFRASTRUCTURE

Involves developing and enhancing physical infrastructure

and information management, as well as creating conducive regulations and operation requirements for SMEs.

  • Programmes available:

  • Soft Loan Scheme for Programmesavailable:Factory Relocation – MITI

  • Furniture Promotion Centre – MPIC

  • Provision of Business Premises – MRRD

  • Incubation Centre – MOSTI

  • Urban Development and Growth Centre – MRRD

  • Upgrade basic amenities and relevant infrastructure in kampungs– MOTOUR

  • Landscape Industry Resource Centre – MHLG

  • Halal Park Development – HDC

  • Provision of Marketing infrastructure; Product Packaging Centre (PUSPRO); Distribution Centre; and Agricultural Marketing Centres- MOA


Mrs v vijayaledchumy director central banking services bank negara malaysia

Development Programmes

  • Programmes available:

  • Matching Grant for Business Start-ups - MITI

  • Computer Application in Business – MOE

  • Train and Work Programme- MDTCC

  • Matching Grant for Product and Process Improvement - MITI

  • Quality Palm Oil Seeds Assistance Scheme for Smallholders in Sabah and Sarawak - MPIC

  • Production of Specialty Pepper Programme- MPIC

  • Produk Malaysia Citarasa Kita - MDTCC

  • SME Brand Development Programme- MITI

  • Training Programme for Budget Hotel Operators – MOTOUR

  • Train the Trainer Programme- MOHR

  • TUNAS (TunjukNasihatSawit) - MPIC

  • Skills Upgrading Programme- MITI

  • Biotechnology Entrepreneur Programme- MOSTI

  • Commercialisation of R&D Fund - MOSTI

  • Bumiputera Manufacturing Incubator - MRRD

  • Franchise Development Promotion Programme – MOF

  • Bumiputera Exporters Development Programme- MITI

BUILDING CAPACITY AND CAPABILITY

Includes entrepreneurship

development, human capital development,

marketing and promotion, advisory services, awareness and outreach,

technology enhancement as well as product development.


Mrs v vijayaledchumy director central banking services bank negara malaysia

CAPACITY DEVELOPMENT PROGRAMMES BY SME CORP

  • INDUSTRIAL LINKAGE PROGRAMME

2. SKILLS UPGRADING PROGRAMME

3. SME COMPETITIVE RATING FOR ENHANCEMENT (SCORE)

4. ENTERPRISE 50 AWARD PROGRAMME

5. NATIONAL WOMEN ENTREPRENEUR AWARD (NWEA)


Mrs v vijayaledchumy director central banking services bank negara malaysia

SME DEVELOPMENT PROGRAMMES

6. BUMIPUTRA ENTREPRENEUR ENHANCEMENT PROGRAMME ( BEEP)

7. SME – UNIVERSITIY INTERNSHIP PROGRAMME

8. TECHNOLOGY AND INNOVATION PROGRAMME

9. SME EXPERT ADVISORY PANEL (SEAP)

10. OUTREACH PROGRAMMES


Mrs v vijayaledchumy director central banking services bank negara malaysia

24


Regional cooperation

REGIONAL COOPERATION

25


Mrs v vijayaledchumy director central banking services bank negara malaysia

SKILLS UPGRADING PROGRAMME (cont..)

BEST TRAINING

PROVIDERS

  • Sembilan Resources Management (M) Sdn. Bhd.

  • Selangor Human Resource Development Centre (SHRDC)

  • Institute Global Management (IGM)

  • Sarawak Skills Development Centre (PPKS)

  • Terengganu Advanced Technical Institute (TATI)

  • Penang Skills Development Centre (PSDC)

  • International Computer Driving License

  • Preparing Effective Business Proposal

  • Cashflow Management

  • Accounting for SMEs

  • Halal Certification Procedure Malaysia

POPULAR

COURSES


Mrs v vijayaledchumy director central banking services bank negara malaysia

SME COMPETITIVE RATING FOR ENHANCEMENT

(SCORE)

  • Total SCORED- 1,183 SMEs


Mrs v vijayaledchumy director central banking services bank negara malaysia

What is SCORE?

BACKGROUND OF SCORE

  • a comprehensive diagnostic tool to rate and enhance competitiveness of SMEs based on their performances and capabilities.

  • developed in August 2007.

Example of Radar Diagram for 3-Star company

Function

  • identify strengths and weaknesses for improvements; and

  • facilitate linkages.

Parameter

  • Business Performance

  • Financial Capability

  • Management Capability

  • Production Capability

  • Technical capability

  • Quality System

  • Innovation

Characteristics

  • 0 – 2 Stars : Very basic business operation

  • 3 – 5 Stars : Some degree of sophistication and can be groomed for export

Implementation Channel (Existing Collaborators)

  • Retail & Distributive Trade (PUNB)

  • Construction (CIDB)

  • ICT (MDeC)

Analysis:

Weak in financial capability

Assistance:

Require financial management training

  • Maintenance, Repair & Overhaul (MINDEF)

  • Professional Services

  • (PSDC)

29


Mrs v vijayaledchumy director central banking services bank negara malaysia

SMEs

SCORE PARAMETERS - MANUFACTURING

Management Capability

Financial

Capability

Technical

Capability

Quality

System

Business

Performance

Production

Capacity

Innovation

  • Capital Investment per Employee (CIPE)

  • Factory Automation Level

  • Machine Utilisation

  • Intellectual Property Rights

  • Product & Process Improvement

  • Capability of Products & Process Improvement Activities

  • Corporate Planning

  • Technology & Innovation Management

  • Human Capital Development

  • IT Adoption

  • Sales

  • Average Growth

  • Export

  • Marketing

  • Customer Satisfaction

  • Current Assets

  • Current Liabilities

  • Gearing Ratio

  • Profit

  • No. of Trained Personnel

  • MTS Ratio

  • Types of Technology Utilised

  • Practice of Continuous Improvement

  • Product Certification

  • Certification (Basic & Advance Requirement)

  • Awards


Mrs v vijayaledchumy director central banking services bank negara malaysia

SCORE PARAMETERS - DISTRIBUTIVE TRADE

SMEs

Management Capability

Financial

Capability

Marketing

Capability

Business Performance

Compliance to Requirements

Stock

Management

Operation Management

  • Business Planning / Strategy

  • Human Capital Development

  • Reward System

  • Job Segregation / Management Structure

  • Sales Turnover & Growth

  • Profit Margin

  • Customer Services

  • Business Growth & Expansion

  • Suitability of Location

  • Accessibility

  • Current Assets & Liabilities

  • Liquidity & Gearing Ratio

  • Creditor's Aging

  • Profitability

  • Stock Policy

  • Stock Management

  • Sourcing Strategy

  • Premise

  • Insurance

  • Quality Standards

  • Qualification & Staffing

  • Experience

  • ICT Adoption & Utilisation

  • Standard Operating Procedures

  • Promotional Activities

  • Customer Retention

  • Business Value Proposition


Mrs v vijayaledchumy director central banking services bank negara malaysia

SCORE RATING - MANUFACTURING


Mrs v vijayaledchumy director central banking services bank negara malaysia

SCORE RATING - DISTRIBUTIVE TRADE


Mrs v vijayaledchumy director central banking services bank negara malaysia

SCORE – 2 STAR FIRM

SCORE – 3 STAR FIRM


Mrs v vijayaledchumy director central banking services bank negara malaysia

RECOMMENDATIONS AND ACTION PLAN


Mrs v vijayaledchumy director central banking services bank negara malaysia

SME – UNIVERSITIY INTERNSHIP PROGRAMME

36


Mrs v vijayaledchumy director central banking services bank negara malaysia

TECHNOLOGY AND INNOVATION PROGRAMME

INITIATIVES TO DEVELOP INNOVATION-LED

TECHNOLOGY-DRIVEN SMEs

NATIONAL SME INNOVATION FOCAL POINT

UNDER IMP3

INNOVATION FOR SMEs

STRATEGIC THRUST 4 – SME / TECHNOPRENEUR

UNDER JTPIN

37


Mrs v vijayaledchumy director central banking services bank negara malaysia

TECHNOLOGY AND INNOVATION PROGRAMME (Cont)

MEMBERS OF THE INNOVATION FOR SME COMMITTEE


Mrs v vijayaledchumy director central banking services bank negara malaysia

TECHNOLOGY AND INNOVATION PROGRAMME (Cont)

Technology Database

(in collaboration with MASTIC)

TECHMART

in SMIDEC’s

Website

-270 technologies available for commercialisation

-18,413 researchers’ profile available

Technology Roadmap

  • -Completed Roadmaps →Electrical & Electronics

  • → ICT

  • → Biotech industry

    • -Work In Progress → Automotive Sector

  • →Plastics & Rubber

  • Wood and wood-based


Mrs v vijayaledchumy director central banking services bank negara malaysia

SME EXPERT ADVISORY PANEL (SEAP)

Total Experts : 62

Total SMEs Participated : 59

40


Nsdc s achievements3

NSDC’s Achievements

Improved Policy Formulation, Monitoring and Assessment

Enhanced Access to Financing

Improved Statistical Information

Achievements of NSDC

Strengthened Capacity and Capability

Comprehensive Dissemination of Information


Mrs v vijayaledchumy director central banking services bank negara malaysia

OUTREACH PROGRAMMES

Convention, Seminars/Workshops/ Technical Briefings

42


Mrs v vijayaledchumy director central banking services bank negara malaysia

Business Advisory Services

43


Mrs v vijayaledchumy director central banking services bank negara malaysia

Enquiries through E-mails

  • Note :

  • Officiated during SMIDEX 2003

44


Mrs v vijayaledchumy director central banking services bank negara malaysia

Toll Free Line / Info Line (1-300-18-1801)

  • Note :

  • Officiated during SMIDEX 2003.

45


Mrs v vijayaledchumy director central banking services bank negara malaysia

Publications

46


The national mark of malaysian brand

THE NATIONAL MARK OF MALAYSIAN BRAND

The Mark of Quality


Mrs v vijayaledchumy director central banking services bank negara malaysia

Development Programmes

ENHANCING ACCESS TO FINANCING

Involves the

development and strengthening of institutional arrangements to

support SME financing needs.

  • Financial assistance is provided based on three stages of business cycles:

  • early stage financing

  • business expansion financing

  • rehabilitation


Mrs v vijayaledchumy director central banking services bank negara malaysia

Financial Assistance for SMEs

EARLY STAGE FINANCING

FINANCIAL ASSISTANCE FOR SMES

BUSINESS EXPANSION FINANCING

REHABILITATION


Mrs v vijayaledchumy director central banking services bank negara malaysia

Financial Assistance (cont’…)

EARLY STAGE FINANCING

Examples:

• Venture Capital Funds - MOSTI & MAVCAP

• Business Effort Group Economic (TEKUN) - MOA

• PROSPER, Retail and Graduate PROSPER - PUNB

• DAGS Start-up - CGC


Mrs v vijayaledchumy director central banking services bank negara malaysia

Financial Assistance (cont’…)

BUSINESS EXPANSION FINANCING

• Microfinance Scheme - BNM and participating

Financial Institutions

• Soft Loans for SMEs - MITI

• Japan Bank for International Cooperation (JBIC)

United Loan for ICT Fund - MOF

• Special Fund for Tourism - MOTOUR

• TNB Vendor Financing Programme- MEWC

• Pemborong PROSPER - PUNB

• Skim PKS - PUNB

• Rural Economy Funding Scheme (SPED) - MRRD

• Bank Rakyat Business Financing Scheme - MOF

• PNS Franchise Financing Scheme - MOF

• MARA Business Financing Scheme - MRRD

• Co-operative Financing Fund - MDTCC

• Rural Economic Assistance - MRRD

• Overseas Project Fund – Exim Bank

• Multi Currency Trade Finance (MCTF) and Indirect Exporter Financing Scheme (IEFS) – Exim Bank


Mrs v vijayaledchumy director central banking services bank negara malaysia

Financial Assistance (cont’…)

REHABILITATION

  • Small Debt Resolution

  • Scheme (SDRS)

  • - BNM and participating financial Institutions


Mrs v vijayaledchumy director central banking services bank negara malaysia

CONCLUSION

The Government can play a vital and strategic role in supporting SMEs

The roles should focus on capacity and capability development in terms of providing good infrastructure, information, coordination and some financial support

The roles should complement private sector and be market friendly in its implementation

The Government’s intervention must involved all relevant stakeholders

The Government’s intervention can be permanent but must be flexible and responsive to new requirements of the business world

53


Mrs v vijayaledchumy director central banking services bank negara malaysia

FINANCIAL INCLUSION ADVISERS PROGRAMME

Role of Government in Creating an Enabling Environment for SME and Microenterprise Development

A CPTM SMART PARTNERSHIP INITIATIVE

Thank You

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