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
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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
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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
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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
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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
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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
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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
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Vendor Development Programme
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Localizing the Anchor Cos-SMEs Business EcoSystem
/
MNCs
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THANK YOU
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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)
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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
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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