SMEs must upgrade skills, says Mukhriz

SMALL businesses need to upgrade skills amid the changing economic landscape, International Trade and Industry Deputy Minister Datuk Mukhriz Tun Mahathir said.

This is because large corporations have collapsed, taking down supporting systems that consist of small and medium-scale enterprises(SMEs).

"Re-engineering is one of the pertinent processes for SMEs to be further integrated into the global marketplace," Mukhriz said.

He said while it is the duty of the government in every economy to ensure the survival of their business communities, efforts must be made to equip SMEs with the right strategic direction and approach to withstand the effects brought about by the crisis.

US Ambassador to Malaysia, James Keith, noted that although SMEs helped drive economic growth, their contribution to exports was still small.

He said their exports comprised only one-third of the total in the US. Keith suggested that Apec governments act as facilitators to remove barriers to boost SMEs' exports.

Incentive scheme for SMEs to boost skills of workers

AN ATTRACTIVE training incentive scheme has been in place since May 1 to encourage Small and Medium Enterprises (SMEs) to conduct training programmes for their employees, said Human Resources Minister Datuk Dr S. Subramaniam.

He said that the government would match every ringgit spent by employers to train their employees under the Human Resources Development Fund (HRDF).

For example, if an employer spent RM20,000 to train its employees, the government would contribute RM20,000 to the HRDF.

"It is part of the government's efforts to emphasise on training so as to cultivate more skilled workers who can be highly productive and earn better wages," Dr Subramaniam told reporters after opening an SME training fair in Penang on June 2.

"We do not want to depend on lowly paid workers who do not possess the necessary skills, knowledge or experience."

He urged SMEs to take advantage of the initiative and incentives to be equipped with a trained, skilled and experienced workforce.

On another matter, Dr Subramaniam advised contractors who employed labourers to register themselves with the ministry because those who worked under them were entitled to Employees Provident Fund and Perkeso deductions and contributions. - BERNAMA

Danajamin can help SMEs gain easier access to financing

THE setting up of Danajamin Nasional Bhd will facilitate access to funding for industries, especially the small and medium enterprise (SME) sector, International Trade and Industry Minister Datuk Mustapa Mohamed said.

He said financing is one of the issues currently facing the industries.

"We hope Danajamin will help revive the SME sector by reducing financing problem. This will definitely help the manufacturing sector, which comprises mostly the SMEs," he said launching the 2008 Productivity Report in Kuala Lumpur recently.

A week earlier, Prime Minister Datuk Seri Najib Razak had unveiled government-owned Danajamin with an initial paid-up capital of RM1 billion to provide credit enhancements that will help companies raise funds in the bond market.

'Lower corporate tax, power tariff will benefit SMEs more' - survey indicated

SMALL and medium-sized enterprises (SMEs) feel that a reduction incorporate tax and electricity tariffs will be more effective in helping them deal with the impact of the global economic crisis.

The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) said that a majority of respondents to its 2009 SME Survey indicated that their businesses had yet to benefit or see any impact fromthe various assistance programmes and stimulus packages offered by the government.

"This is probably because the stimulus package is still new and needs time to take effect and changes will only be seen in the long run,"ACCCIM president Tan Sri William Cheng said in Kuala Lumpur on its findings.

He said the SMEs expressed hopes that the government could revert to the electricity rate before the 26 per cent increase in June last year.

Such quick fixes have been used before, Cheng said, citing the 40 per cent electricity tariff subsidy to the manufacturing sector during the previous economic crisis, which was gradually adjusted when the economy recovered.

Cheng also said that the SMEs would welcome a corporate tax cut of 1-2 per cent.

"If that's not possible, we hope the government can give a two-year temporary reduction and the SMEs can use the surplus as working capital."

The ACCCIM survey, conducted from March 25 to April 25, covered 1,231 respondents, or 61.6 per cent of the 2,000 sets of survey papers sent out.

Cheng said the survey also indicated a lack of awareness among industry players of the various programmes and schemes offered by the government, such as the SME Assistance Facility, SME Modernisation Facility and SME Assistance Guarantee Scheme.

Despite the tough times, the SMEs gave their assurance that retrenchments would be the last resort.

Cheng said the association would submit its survey findings soon to the Finance Ministry, Bank Negara Malaysia and the Economic Planning Unit.

Workers must power new economy, says PM

Prime Minister Datuk Seri Najib Razak wants workers to power a new economic model that will take the country to high-income status.

He said details of the economic model would be drawn up by an economic council to be set up for the purpose.

Najib said council members would comprise experts from Malaysia and abroad and provide input on how the nation could improve its economic position from the current high middle-income level to high-income level.

Najib was speaking after delivering his Workers Day message at the 2009 national Workers Day gathering in Bukit Jalil.

The prime minister said the increase in workers' output should not be merely through increased productivity but also via innovation and creativity.

"If we stress this, then we will be able to raise the productivity level not only incrementally but also by a quantum leap. And when we achieve this, naturally, workers can be paid much more."

Najib said the private sector, government-linked companies and even the government must look into raising workers' skills through innovation and creativity.

"This is the model I am stressing - a new economic model beneficial to workers that can attain for the nation a higher level of competitiveness.

We will not allow the country to remain as it is but find ways to achieve a quantum leap so that we can be in the high-income bracket."

Touching on the retrenchment fund proposed by the Malaysian Trades Union Congress, Najib said it was being studied as a long-term measure to assist jobless workers during hard times.

He said the Human Resources Ministry was in the midst of discussions involving the setting up of the fund.

The ministry's proposal would be brought up to the cabinet, he said.

Najib said the government would be looking at enhancing the Employees Provident Fund's retirement withdrawal scheme.

He said the present disbursement depleted the savings too soon, or between three and 10 years after retirement, when life expectancy was now in the 70s.

He urged workers and employers to maintain industrial harmony and continue as the backbone of the country's progress and development.

He said the three-way relationship between employers, workers and the government must be based on mutual help.

"Employers must understand the aspirations of the workers, while the workers should contribute with dedication, and the government discharge its responsibilities through positive policies to stimulate the economy."

Najib called on employers to provide better working conditions and employment terms to attract local workers.

"I hope employers do not take the easy way out by offering job opportunities to foreigners because of their lower pay. Give the locals a chance, too."

He hoped the unemployment rate would be kept at a minimum although it was likely to rise from 3.1 per cent last year to four per cent this year.

BMMB, SME Bank launch new loan scheme

BANK Muamalat Malaysia Bhd (BMMB) and SME Bank recently signed an agreement to launch the Kafalah scheme which will provide the small- and medium-sized enterprises (SMEs) customers the chance to get syariah-based financing.

"The Kafalah scheme will give opportunities to customers especially those in the small and medium category in the field of manufacturing and services besides encouraging entrepreneurs to get financing from BankMuamalat," chief executive officer of BMMB Datuk Mohd Redza Shah Abdul Wahid said in a statement.

While Datuk Azmi Abdullah, SME Bank managing director, said among the advantages of Kafalah system is that the SME customers will be able to enjoy facilities offered by commercial banks at a reasonable cost.

The scheme is also expected to raise the profile of Islamic financial services in the country. - BERNAMA

Encouraging growth of businesses

HERE we look at the business environment in the country and how policies and procedures encourage the growth of business.

It also looks at the various sectors that have boomed due to governmental initiative and support.
There are several key economic policies that enable businesses in the country to form and flourish, helping the country become a dynamic player in the global economy.

Through Vision 2020, the government has set nine strategic challenges, which includes establishing a prosperous society with an economy that is fully competitive, dynamic, robust and resilient.
In 1983, the Malaysia Incorporated Policy was announced, to bring forth a new way of approaching the task of national development that would impact both public and private sectors.

The policy encourages a mindset that the nation is a business entity jointly owned by both public and private sectors working together in building the nation.
The policy saw to the deregulation of bureaucratic rules and regulations, improving the delivery system and institutionalising the consultative machinery between the private and public sectors. The policy also encourages smart partnerships and privatisation.

As a result, privatisation projects were successfully executed, affecting major industries and services.
The government, in identifying human resources as one of the country's most valuable assets, continuously works toward creating a supply of highly skilled and knowledgeable workers and entrepreneurs.
The education system is formulated to keep up with the needs of the market. Beyond schools and universities, the government also promotes lifelong learning to enhance employability and productivity of the labour force.
Responding to the needs of the people in rural areas, the government rolls out development programmes to promote advancement and create business opportunities.

Besides improving infrastructure and access to the targeted areas, initiatives are undertaken to introduce various cottage and craft industries as well as improve existing farming practices.
Flexible financial support and technological facilities are put in place to help speed up the progress of the rural areas, in particular in the areas of agriculture-related trade, services and ecotourism.
With agriculture evolving into a sector that is increasing in its importance and in view of international trade liberalisation, the National Agriculture Policy III was launched in 1998 to increase competitiveness and ensure a dynamic growth for players within the sector.
Realising that a comprehensive range of infrastructural facilities and amenities is also a boon for economic growth, the government undertakes long-term integrated planning and coordinated implementation of projects affecting roads, bridges, urban transport and rail, ports, airports, communications and water and sewerage.
The National Energy Policy was also formulated to ensure adequate, secure and cost-effective supply of energy.

The policy additionally promotes efficient utilisation of energy and focuses on environment protection in the production and utilisation of energy.
Through the next phase of the Ninth Malaysia Plan (2006 - 2010), the government has outlined critical missions to keep pace with the constantly evolving local and global socio-economic landscape.

One of the key missions is to move the economy up the value chain by increasing productivity and competitiveness.

To achieve this, a key strategy set by the government is to give a lead role to the private sector and increase private sector investment.
The government facilitates small and medium enterprise (SME) development as well as increase public-private partnerships as part of the package towards entrepreneurial development.

Towards creating a conducive business environment, the Economic Planning Unit (EPU) plays a vital role in facilitating the nation's socio-economic development, strengthening internal resilience and international competitiveness as well as promoting optimum utilisation of available resources.

The EPU executes development programmes and initiates economic research for the benefit of the people and businesses alike.
Through the effort of the government linked agencies, businesses in Malaysia are given ample opportunities to flourish.

With the strategies set in accordance to the key policies, the government is taking Malaysia closer towards becoming a developed nation.

Supporting a dynamic business environment

FOR local businesses to grow and contribute towards a vibrant economic environment, the government has in place a support structure that helps create a dynamic business environment.

Legislation, licensing and permits, financing and grant schemes, promotions and marketing, courses and training, investment opportunities and research and development are some of the areas that the government continues to address in its endeavour to cultivate entrepreneurial skillsand boost local businesses.

Government authorities such as the Malaysian Entrepreneurship Development Centre, SME Corporation, Multimedia Development Corporation (MDeC) have outlined various measures towards creating a more conducive business environment in the country.

Another agency, the Malaysian Industrial Development Authority (MIDA) takes on a pivotal role in helping investors - foreign and local - in the manufacturing and services sector.

The authority provides a helping hand to local companies by identifying markets and investment opportunities abroad.

Through the national trade promotion agency, Malaysia External Trade Development Corporation (MATRADE), the government promotes Malaysia's enterprises to the world. The agency formulates marketing strategies and trade promotion activities to support Malaysia's export and position the country as a globally competitive trading nation.

Funds are also made available through financial institutions including Bank Negara, Bank Simpanan Nasional, Agrobank Malaysia, SME Bank, Credit Guarantee Corporation Malaysia Berhad, and Export-Import Bank Malaysia Berhad (EXIM Bank).

In the area of human resources development various facilities for training and re-skilling employees have been made available.

The Ministry of Human Resource's Industrial Training Institutes, for example, offer apprenticeship courses in the mechanical, electrical, building and printing trades.

The ministry also operates the Centre for Instructors and Advanced Skills Training, the Japan-Malaysia Technical Institute (JMTI) and Advanced Technology Centres.

For the development of Bumiputera workforce, MARA manages skills training institutes. Among them are the German-Malaysian Institute, British Malaysian Institute and Malaysia France Institute.

To trigger more innovations from local businesses, the Malaysian Intellectual Property Corporation (MIPC) provides services in administering, supervising and handling the management of intellectual property.

The agency promotes the registration of business inventions and creations in order for intellectual property to be protected by law.

A helping hand for SMEs

SMEs are recognised as vital in the development of a healthy economy. The Ninth Malaysia Plan outlines the government's commitment in producing globally competitive and resilient SMEs through relevant initiatives and programmes.

The National SME Development Council (NSDC) was formed to formulate policies and strategies for SME development.

Headed by the Prime Minister and comprising heads of ministries and agencies, the council has adopted measures to strengthen infrastructure for SME development, facilitate access to finance and build SMEs' capacity and capability.

Bank Negara Malaysia is the secretariat to the NSDC, which takes on the role of ensuring that a comprehensive programme for SME development is formulated, and effectively implemented.

SME Corporation (previously known as SMIDEC) under the International Trade and Industry Ministry ensures SME development programmes, as well as financial assistance schemes in various ministries and agencies, are effectively implemented.

Through SME Corp, the government offers technical support, consultancy and networking opportunities to give SMEs an edge when competing with other players in the market.

SME Corp also extends training to enhance the competitiveness of local women entrepreneurs.

Currently dedicated franchise programmes are extended to women and graduate entrepreneurs.

For easy access to information on SME development, the SME info portal, www.smeinfo.com.my, a one stop information centre for SMEs have been set up.

The portal provides information such as financing and funds, governmental support programmes and advisory services.

Included in the portal is a SME Business Adviser Network (SME-Net) which links experts from various agencies and financial institutions.

Through the HRD portal, www.hrdportal.com.my, SMEs are provided information on training programmes.

Incentive schemes such as grants, soft loans and venture capital funding are channelled to SMEs through channels such as Bank Negara's SME Special Unit and SME Corp.

Addressing bureaucracy through PEMUDAH

IN fostering growth of businesses, the government realised the need for acoordinated cross-ministerial initiative to facilitate greater improvement in the way businesses are regulated.
The Special Taskforce to Facilitate Business or PEMUDAH (Pasukan Petugas Khas Pemudah cara Perniagaan) was formed to improve the public sector work processes and establish a conducive business environment.
PEMUDAH facilitates businesses by introducing improvements to existing government processes and regulations, based on public feedback and global benchmarking reports.
Working together with the Companies Commission of Malaysia, the processes required to start a business has been hastened considerably.
If previously registering a new business took three days to process, now the process takes only an hour, while renewal of registration which previously took a day to process is now being done in 15 minutes.
PEMUDAH also improved processes pertaining to land matters, licences, employing expatriates and paying taxes.
In terms of licensing, one of the most significant changes enforced by the taskforce was the issuance of Certificate of Compliance and Completion (CCCs) by professionals to replace Certificate of Fitness for Occupation (CFO).
This exercise reduced the number of steps and time taken in registering property, which affected construction and property business positively.
Another milestone achieved by PEMUDAH in 2007 involved patent registration process for intellectual property which was reduced from three to four years.
Together with Intellectual Property Corporation of Malaysia (MyIPO), PEMUDAH reviewed the patent registration process, which involves six Acts (Trade Mark Act 1976, Patent Act 1983, Copyright Act 1987, Industrial Design Act 1996, Layout Designs and Integrated Circuit Act 2000 and the Geographical Indications Act 2000), which required up to 6 years to complete.
For businesses in need of skilled workers, PEMUDAH also made enhancements to the process of employing expatriates.
After reviewing the existing process, the taskforce and the Department of Immigration successfully set up Executive Counters at all state immigration offices and provided application forms online.
Application process was also reduced to seven days while the work permit tenure was extended from two to five years per renewal.
With the Inland Revenue Board (IRB), PEMUDAH worked at reducing time taken for refunding tax overpaid due to companies from one year to between 14 and 30 days in cases of submissions through e-filing.
Last year, PEMUDAH tackled more issues including trading across borders and government services.
To allow for efficient trading, the taskforce worked toward the release of customs documents based on the vessel's Estimated Time of Arrival as opposed to Actual Time of Arrival for cases where inspection is not required, as well as cargo clearance to be done on weekends and public holidays.
Customs Verification Initiative (CVI) was also introduced by the Royal Malaysian Customs to provide a comprehensive risk management system in verification of cargo.
PEMUDAH's effort also realised a one-stop centre that expedited the incorporation of companies.
Established under the Small and Medium Industries Development Corporation (SMIDEC), now known as SME Corp, the centre features representation of government agencies namely IRB, Companies Commission of Malaysia (SSM), Employees Provident Fund (EPF), Social Security Organisation (SOCSO) and Royal Malaysian Customs (KDRM) along with financial institutions including Malaysian Industrial Development Finance Berhad (MIDF), SME Bank, Bank Simpanan Nasional (BSN) and Credit Guarantee Corporation Malaysia Berhad (CGC).
To further encourage new businesses, charges for incorporating a company was also reduced from RM3,700 to RM2,800 while annual fees was brought down from RM1,850 to RM1,200.
BLESS, or Business Licensing Electronic Support System is another one-stop centre under PEMUDAH.
The virtual centre provides simultaneous processing of multiple licensing involving multiple agencies, composite and standardised forms and online tracking and monitoring tools.
Synergy through BLESS enabled faster turnaround time and improved transparency and accountability.