History and Background of SME Corp. Malaysia

It all started on 2 May 1996 when the Government of Malaysia decided to establish a specialised agency to stimulate the development of small and medium enterprises (SMEs) by providing infrastructure facilities, financial assistance, advisory services, market access and other support programmes. Known as the Small and Medium Industries Development Corporation (SMIDEC) during that period, its aim was to develop capable and resilient Malaysian SMEs to be competitive in the global market.

In 2007, the National SME Development Council (NSDC) decided to appoint a single dedicated agency to formulate overall policies and strategies for SMEs and to coordinate programmes across all related Ministries and Agencies. SMIDEC was tasked to assume the role and the official transformation into Small and Medium Enterprise Corporation Malaysia (SME Corp. Malaysia) commenced on 2 October 2009. SME Corp. Malaysia is now the central point of reference for information and advisory services for all SMEs in Malaysia.

2. Vision, mission and functions of SME Corp. Malaysia

Vision :  PREMIER organisation for development of progressive SMEs to enhance wealth creation and social well-being of nation

Mission : Promote  development of competitive, innovative & resilient SMEs through effective coordination & provision of business support

 SME Corp. Malaysia was established not only as the Central Coordinating Agency for the SME industry but also to provide various services and assistance to the SMEs namely :

• Business advisory through the “One Referral Centre”;

One Referral Centre (ORC) is the focal meeting point for SMEs to get business advisory and information. Acting as the Central Coordinating Agency, one of SME Corp. Malaysia’s function is as a centre on advisory and information, which are to provide and disseminate relevant and updated information to the SMEs, as well as a channel for feedback on SMEs issue. Advisory services in SME Corp. Malaysia covered business matters as well as programmes available in SME Corp. Malaysia and other relevant Ministries, Agencies, Banks, Development Financial Institutions (DFIs) and Associations.

• Disseminate information on Government funds and incentives on SMEs;

All allocations given by the Government to industry will be consolidated and made known to the public. As the allocations are given to different Ministries and Agencies for the purpose of conducting programmes and giving assistance to the SMEs, it is important for SME Corp. Malaysia as the Central Coordinating Agency to have all the information in one place.

• Channel for feedback on SME issues;

The One Referral Centre is not just a one stop centre for SMEs to come and get business advisory, information and anything related to the industry but it also function as a centre for SMEs to give feedback and as well as to respond to the services provided not only by SME Corp. Malaysia but also other Ministries and Agencies.

• Liaison for domestic and international communities on SME matters;

Every year, SME Corp. Malaysia will organise the SME Annual Showcase with the purpose of showcasing the capabilities as well as the expertise that SMEs from Malaysia can offer on the international ground. This platform has been used by other countries to engage and collaborate with Malaysia exchanging the best practises that both industries can offer. Thus, SME Corp. Malaysia is considered as the embassador to link international corporation and SMEs with local SMEs creating a bridge and opportunity for development of the industries.

• Nurture and develop competitive SMEs through specific capacity building programmes and financial assistance;

SME Corp. Malaysia is committed to giving the industry not just what they need but what is important to assist them in moving forward. Several programmes and financial assistance have been introduced and implemented to ensure that Malaysia’s SMEs are competent not just locally but internationally. Programmes such as Business Accelarator Programme and Enhancement & Enrichment (E²) were introduced to assist SMEs in expanding their businesses.

• Facilitate linkages with large companies and MNCs

Business linkages is very important to ensure that SMEs have been given the relevant opportunities to expand their businesses and also the ability to export their products or services other than the local markets. SME Corp. Malaysia is committed to provide this opportunity by organising business matching session during the SME Annual Showcase, Satu Daerah Satu Industri Programme and during other national programmes that will attract SMEs to participate.

3. Assistance provided by SME Corp. Malaysia to the SME industry

Realising the potential of SMEs in the nation, Government assistance is also crucial and SME Corp. Malaysia has designed as well as commenced several development programmes to boost the growth of smaller firms and help them to stay competitive in the industry. It is important for the Government to identify the needs of the market and design programmes as well as assistance that will address the issues faced by the industry players.

To begin with, the Ministry of International Trade and Industry (MITI) through SME Corp. Malaysia has allocated RM263.5 million under the RMKe-10 for the Business Accelerator Programme (BAP), to develop and nurture dynamic, competitive and resilient SMEs through a structured manner. The programme begins with the evaluation of the applicants through the SME Competitiveness Rating for Enhancement (SCORE) system, and then the required assistance is provided based on the evaluation, be it capacity building, advisory, technical support, market access, linkage or financial support. For microenterprises, a similar programme called the Enrichment and Enhancement Programme (E²) has been given an allocation of RM72.6 million under RMKe-10.

Other financial assistance such as the Syariah Compliant SME Financing Scheme, Soft Loan Scheme for SMEs and SME Emergency Fund are among the financial assistance introduced by SME Corp. Malaysia in collaboration with several commercial banks and MIDF. These financial assistance were introduced to suit current needs of the SMEs as access to financing has been one of the issues that was brought forward by the SMEs from time to time.

It’s important for the Government to identify and evaluate the performance of a company in order to create and develop suitable programmes to cater the needs of the industry. Hence, SME Corp. Malaysia developed a star rating programme or popularly known as SCORE (SME Competitiveness Rating for Enhancement) in 2007.  SCORE is a diagnostic tool that rates SME performance at firm level. The programme, initiated by SME Corp. Malaysia’s own officers, has caught the attention of international organisations as a useful diagnostic tool to measure SME competitiveness. A number of MNCs have in fact used SCORE for purposes of industrial linkages and their supplier programmes. Utilising this tool, SME Corp. Malaysia would be able to identify areas of improvement to ensure better efficiency and productivity of the SMEs.

In addition, SME Corp. Malaysia also initiated the SME Expert Advisory Panel (SEAP) which provides SMEs with expert advisory services in the areas of technology, productivity and process improvement, as well as conformance with international standards and ICT. These officers are ready to provide value-added services to the SMEs and at the same time share their vast knowledge and experience as the subject matter expert with the business owners.

To cater for SMEs which are not located at Klang Valley areas, SME Corp. Malaysia has a total of 11 State Offices which facilitate matters pertaining to SMEs. Through these initiatives, SMEs are provided with the latest information on policies, incentives, programmes and financial assistance provided by the Government.

SME Corp. Malaysia also introduced the SME@University Programme which provides a structured learning opportunity to the CEO’s of Small and Medium Enterprises (SMEs). The Programme is designed to help develop capable human capital that will drive diverse management innovation and creativity in developing business acumen among new and existing entrepreneurs. The Programme is based on the model of SME University of Japan, a hands-on approach, to ensure the participants gain knowledge on entrepreneurship and business tools.

The “SME-University Internship Programme” initiated in 2008 as an initiative to link SMEs to the universities as part of the Government efforts to enhance the synergy between the industry and university to upgrade the SMEs’ capacity and capability. An MoU was signed between SME Corp. Malaysia and Ministry of Higher Education (MOHE) to roll out this Programme to all public universities throughout Malaysia.

In reaching out to potential partners and link Malaysian SMEs across borders, SME Corp. Malaysia embarked on a strategic approach by formalising bilateral Memoranda of Understanding (MoU) with international counterpart agencies, namely from Iran, Thailand, Korea, Japan, Syria, Oman, Bangladesh, Pakistan, Turkey, Brunei, and Egypt. Areas of cooperation under the MoUs include exchange of information on policy measures adopted for the promotion of SMEs, establishment of business contacts, linkages and networking, as well as co-organising trade promotion activities in the respective countries.

In the effort to encourage SMEs to go global, SME Corp. Malaysia has introduced the National Mark of Malaysian Brand which is a certification process, audited and monitored by SIRIM. Through this initiative, it is hoped that Malaysian brands are developed not just for the local market, but more important that it is able to penetrate international markets as well.

4. SME Definition in Malaysia

In July 2013 the new SME definition was announced by the Prime Minister of Malaysia during the National SME Development Council Meeting. The definition which has been implemented since January 2014, raised the qualifying threshold for sales turnover and employment of SMEs for all economic sectors. The redefinition was timely in order to take into account the changes that have taken place in the economy since a common definition was adopted in 2005. Businesses are considered as SMEs based on:

• For Manufacturing Sector: Sales turnover ≤ RM50 million OR full-time employees ≤ 200 workers

• Services & other sectors: Sales turnover ≤ RM20 million OR full-time employees ≤ 75 workers  

• Locally incorporated under Companies Act 1965; or

• Registered under ROBA (1956)   or (LLP) Act 2012; or

• Registered under respective authorities in Sabah & Sarawak; or

• Registered under respective statutory bodies for professional service providers.

• Not public-listed company in main board in Malaysia or other countries

• Not a subsidiary of public-listed company in main board in Malaysia or other countries

• Not a subsidiary of large firms, MNCs, GLCs, Syarikat Menteri Kewangan Diperbadankan (MKDs) and State-owned enterprises