datuk mohd radzif mohd yunus : smes' gateaway to localisation
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SMEs GATEWAY TO LOCALISATION
by DATUK MOHD RADZIF MOHD YUNUS,
GROUP MANAGING DIRECTOR, SME BANK, MALAYSIA
4th November 2015
Global Importance of the SMEs
Its contribution to the EconomicGrowth, Exports and Employment
The Engine of Growth and Backbone of Domestic Investment and Private
Consumption
1
ASEAN SMEs Landscape
USD 2.5 Trillion combined GDP
6th largest economy
630 Million population
3rd largest labour force behind China & India
60% population below age of 35
Broad Disparity on Economic Growth
Singapore GDP is 50x higher than Cambodia and Myanmar
7x Variance in Average Earnings
Only 25% Intra-Regional Trade
POINTS OF CONTENTION
OPPORTUNITIES
1A
SMEs Profile & Contributions in Malaysia
OPPORTUNITIES
Source: SME Corporation 2014/2015 & Annual Report BNM 2014
35.9% 65.0% 19.7%
97.3% (645,136) Business Establishments in Malaysia are SMEs
SMEs cut across all sectors of the Economy
SMEs Contribution to the Economy 2014
2
SMEs Stages of Growth
M
A
T
U
R
I
T
Y
G
R
O
W
T
H
I
N
F
A
N
C
Y
Large SMEs
Medium
Small
Micros
Startups
3
Importance of StrengtheningDomestic Supply Chain
Offers employment diversities, towards innovation,
creativities and K-based economies
To build that conducive business environment, the
whole eco-system must support its entities and
strengthen their relationships.
To complement the varying levels of needs through outsourcing, there need to be element of:
Comparative Advantage
Competitive Advantage
Distribution of Labour
4
Building SMEs Capacity:Some Possible Initiatives
SUPPORT BUSINESSES IN AREAS WHERE SUPPLY
CHAIN IS WEAK
ENCOURAGE COLLABORATIVE
INVESTMENT IN R&D
INTELLECTUAL PROPERTY PROTECTION
PROMOTE INDUSTRIAL STANDARDISATION &
CERTIFICATION
INCREASE R&D SPENDING
(Malaysia : 1% of GDP; Singapore 2.2% ; US : 2.8% of GDP)
SUPPORT LONG TERM INVESTMENT
DEVELOP STRATEGIC PROCUREMENT
PROTECT AND ENHANCE CAPABILITY
BUILD AN INNOVATIVE ECOSYSTEM
INCENTIVISE UPTAKE OF STEM-BASED DEGREES
AND JOBS
ADDRESS SKILLS REQUIREMENTS
MONITOR GAPS AND OFFER INCENTIVES TO BUSINESSES TO FILL IN
GAPS
ATTRACT BUSINESSES TO FILL SUPPLY CHAIN GAPS
6
Vendor Development Programme
7
Localizing the Anchor Cos-SMEs Business EcoSystem
/
MNCs
8
THANK YOU
SMEs Landscape in East andSoutheast Asia
CountryNumber of Enterprises (% of total)
Number of Employees(% of total)
Contribution to GDP
(%)
East Asia
Japan 99.7 [06] 69.4 [06] 47.7[08]*
Korea 99.9 [09] 87.7 [09] 47.6 [09]
China 99.0 [08] 75.0 [08] 58.5 [08]
CountryNumber of Enterprises (% of total)
Number of Employees(% of total)
Contribution to GDP
(%)
Southeast Asia
Brunei 98.4 [08] 58.0 [09] 22.0 [09]
Cambodia 98.5 [09] - 85.0 [08]
Indonesia 99.9 [09] 97.0 [09] 56.5 [09]
Lao PDR 99.8 [06] 83.0 [06] 6 to 9
Malaysia 99.2 [10] 59.0 [10] 31.9 [10]
Myanmar 92.0 [07] - -
Philippines
99.6 [09] 63.2 [09] 35.7 [09]*
Singapore 99.4 [05] 62.3 [05] 46.3 [05]
Thailand 99.8 [10] 78.2 [09] 36.7[10]
Vietnam 97.4 [07] 77.3 [02] 26.0 [07]
[ ] : year of latest available dataGDP : gross domestic productSME : small and medium enterprise*% of total manufacturing value added.
Note: SMEs are defined by national firm classification in their respective host countries.
Source: ADB; ADBI; ASEAN Secretariat; ASMED (Vietnam);DTI (Philippines); JODC (Japan); JSBRI (Japan); NSDC (Malaysia); SBC (Republic of Korea); SMBA (Republic of Korea); and SMRJ (Japan)
0
20
40
60
80
100
120
140
OverallStatus (%)
Micro (%) Small (%) Medium(%)
20.3 16.230.7
47.7
55.9 58.1
49.6
46.4
14.3 1512.7
8.530 28.8
33.6
35.5 Others
Borrowings from Friends or Relatives
Personal Savings or Internally Generated Funds
Financing from Banks, DFIs, Micro Credits Insts. and Others
Sources Of Financing : (%) Accessed By SMEs By Size
Who are the SMEs in Malaysia?
OPPORTUNITIESCRITERIA SIZE
MANUFACTURING (INCLUDING AGRO-BASED) &
MANUFACTURING RELATED SERVICESSERVICES SECTOR (INCLUDING ICT)
FULL
TIM
E EM
PLO
YEE
Micro Less than 5 employees Less than 5 employees
Small Between 5 - 75 employees Between 5 - 30 employees
Medium Between 75 - 200 employees Between 30 - 75 employees
AN
NU
AL
SALE
S
Micro Less than RM300,000 Less than RM300,000
SmallBetween RM300,000
& less than RM15 millionBetween RM300,000
& less than RM3 million
MediumBetween RM15 million
& RM50 millionBetween RM3 million
& RM20 million