Growth strategies for SMEs

THE government has put in place a number of strategies geared to further develop existing industries and also create new business opportunities for small and medium enterprises (SMEs).

They are centered on potential new growth drivers, namely in the services, agriculture and manufacturing sectors.

Prime Minister Datuk Seri Najib Tun Razak said as support, infrastructure, institutional framework and appropriate incentives will be provided to facilitate a conducive investment environment for SMEs to leverage on the new business opportunities.

He said growth areas identified include among others those in electrical and electronics, medical devices, textiles and apparel, machinery and equipment, petrochemicals, pharmaceuticals, wood-based, rubber and rubber-based products, oil palm-based and food processing.

“One sector we strongly encourage SMEs to enter into is biotechnology, with programmes that include facilitating business start-ups, capacity building and product development,” he told reporters after launching the SME annual report 2008 at Parliament House in Kuala Lumpur recently.

Najib said various initiatives are made available for SMEs in their effort to acquire new technologies such as the Technology Database, Technology Roadmap Repository, development of i-SMEs as well as the Technology and Innovation Showcase.

He said the liberalisation of the services sector is also expected to spur investments in new areas and create higher value employment opportunities.

“The services sector will continue to be a key driver of growth and adopting new technologies will be key factors, especially in non-traditional services such as information communication technology, health, education, shared service and outsourcing,” he said.

Elaborating on the SME annual report 2008 titled “Rising to Meet Global Challenges”, Najib said a total of 174 programmes, including 17 new ones, worth RM3.04 billion are being implemented to further enhance the capacity and capabilities of SMEs.

“To ensure effective and efficient implementation, SME Corp will introduce a new framework to closely track implementation of the programmes and undertake independent assessment using an outcome-based approach, namely the Impact Analysis Framework on SME Programmes,” he said.

Last year, a total of 202 programmes worth RM3 billion were carried out, benefiting 598,000 SMEs, accounting for a two-fold increase from the number of beneficiaries in 2007.

“SMEs will be developed based on three strategic thrusts — strengthen infrastructures that support, develop capacity and capabilities and increase access to financing,” Najib said.

ENDS

Source:-Business Times

Reinvent and Reposition Business Strategies, SMEs were told

Small and medium-sized enterprises (SMEs), especially those in the manufacturing sector needs to reinvent and reposition their business strategies to ensure growth, SME Report 2008 revealed.
The report, compiled by SME Corp Malaysia said, this is important in efforts to find new markets and avenues for growth.
Re-engineering processes would also help reduce production costs and make SMEs more competitive.
The SME Report 2008 said export-oriented industries were expected to be most affected during the current global economic downturn, and in efforts to reduce effects, the government announced measures to reduce costs of doing business, thus, cushion the impact on vulnerable segments such as motor vehicles, textiles and electrical and electronic industries.
The move include exemption on levy payment for Human Resource Development Fund and fund allocation to help the motor vehicle industry and its vendors, the report said.
SME annual report 2008 revealed the total output by SMEs in the manufacturing sector grew by 6.3 per cent last year due to strong demand for resource-based products.
The government has implemented various measures to liberalise the services sector to attract more investments, bring in professionals and technology as well as strenghten competitiveness.
To stimulate demand in the retail sector, SMEs should devote efforts on promotional and marketing activities, service innovation, customer service enhancement and the development of human capital, it said.
The report said amid the global economic slowdown and weaknesses in commodity prices, the agriculture sector was expected to face many challenges this year.
In order to mitigate the impact and enhance growth opportunities, the private sector, including SMEs, need to increase investment in food, animal feed and production of fertilisers, it said.
The report said farmers and smallholders needs to improve technological capabilities to help ease business and work processes as well as to enhance productivity.
To support this, there is a need for greater emphasis on research and development, embracing of new technology, methods and processes, as well as the push towards modernisation that includes the use of automation and machinery.
Emphasis will also be given to develop new products including herbal products, kenaf and jatropha, which have a multiplier effects in developing new activities.
To ensure the viability of these projects and their contributions to enhancing productivity, there was a need for greater collaboration from both private and public sectors.
It said SMEs involved in the agriculture sector constituted 6.2 per cent of total business establishments and provided 12.1 per cent of total employment in the country.
Agriculture exports expanded strongly by 30 per cent to RM68.1 billion in 2008, thus accounting for an increased share of 10.3 per cent of gross exports, it said.
ends

Don't rely on govt subsidies to kickstart business, Bumis told

BUMIPUTERA entrepreneurs have been advised not to rely on government subsidies as their main resource to kickstart business.

Bank Perusahaan Kecil & Sederhana Malaysia Bhd (SME Bank) assistant vice-president and head of the business network management, Wan Baharudin Wan Ismail, said they should not continuously rely on the subsidies if they want to survive in today's competitive business world.

"For example, when we ask Bumiputera entrepreneurs to join a certain exhibition to promote their products, the first thing they ask is whether it is free," he said in an interview.

Wan Baharudin also dismissed claims that banks are being selective when disbursing loans.

"That is not the case. How do you expect us to approve their loans if we don't get complete applications? Some of them don't even have a proper accounting system to begin with," he said.

For Bumiputera graduates below the age of 35, who want to start a business, SME Bank offers loans up to RM250,000 under the Programme Inkubator Usahawan Siswasah (PIUS).

The loan comes with a 4 per cent interest per year. Wan Baharudin said SME Bank is working with the Higher Education Ministry to identify students who may be interested to participate in this programme and become entrepreneurs as soon as they graduate.

However, this loan is not given to those in the agricultural or fishing projects, which are categorised as "high risk".

A loan with PIUS does not require any collateral, but a guarantee letter from the applicants' parents or guardian.

Today, 199 Bumiputera graduates have benefited from the programme, which is conducted three times a year. - Business Times