Putting the country first involves doing what is right for the country before doing what is right for you. Driving the economic development of a country depends on developing the private sector and SMEs are a key engine of private sector growth. In 2017 98.5% of business establishments in Malaysia are SME of which 89.2% are in the services sector.
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The Evolution of SMEs in Malaysia
The importance of SMEs in Malaysia can be traced back to the early 1970s with the implementation of the New Economic Policy (NEP) in 1971 which aimed to improve people’s welfare and restructure ethnic economic imbalances. The commitment of the Malaysian Government to develop SMEs was further strengthened by the implementation of the Malaysia Industrial Master Plan, particularly the Industrial Master Plan 2 (IMP2) from 2000 to 2005 which was followed by the IMP3 spanning 2006 to 2020. Among other policies, this plan coincides with the country’s vision to be a developed nation by 2020. In particular, the IMPs were formulated to enhance the growth of the manufacturing sector across the entire value chain and cluster-based industrial developments. Using an integrated approach, the Malaysian government aims to develop SMEs from the start up stage with lower levels of technology through to maturity and thus enable them to compete globally.
In Malaysia on May 2nd 1996, a specialized agency known as the Small and Medium Industries Development Corporation (SMIDEC) was established to increase the development of small and medium enterprises (SMEs) by providing financial assistance, advisory services, infrastructure facilities, market access and other support programmes. Its aim was to develop Malaysian SMEs to be competitive in the global market. In 2004, the establishment of the National SME Development Council (NSDC) began another chapter in SMEs development in Malaysia. As the highest policy-making body, its role was to formulate strategies for SMEs development across all the economic sectors and related Ministries and Agencies as well as to ensure effective implementation of the overall SMEs development programs in Malaysia. In 2007, the NSDC decided to appoint a single dedicated agency to coordinate programs across all related Ministries and Agencies and to formulate overall policies and strategies for SMEs. So, SMIDEC was tasked to assume the role and the official transformation into Small and Medium Enterprise Corporation Malaysia on 2 October 2009. http://www.smecorp.gov.my/
Malaysian SME Success Stories
Innovation in SMEs
Device Semiconductor Sdn Bhd (DSEM) is the first Malaysian company to venture in to design and manufacturing of new-age energy-efficient lighting. DSEM is a turnkey Original Design Manufacturer (ODM) specialising in LED Light Engines and Concentrated Photo Voltaic Engines. Energy efficiency is a top priority for business globally and so creating solutions that use less energy, create less pollution and have longer life cycles is key for global sustainable development. LED lights are renowned as saving more energy and delivering better lifecycle assessment results in the future as they become increasingly efficient. Research has shown that LED lights use five times less energy than conventional incandescent bulbs. DSEM grasped this opportunity to meet industry needs by providing technology that enables mass adoption of Solid State Lighting. DSEM is a Green Technology company that provides solutions and products to help companies reduce their carbon footprint. In so doing DSEM has become a successful global player supplying to global companies in Japan and USA. Meeting rising global demand DSEM has impacted millions of people’s lives.
Women in SMEs
Anita Fragrance is a Borneo-based SME producing skincare and cosmetic products. The leader behind this SME is a woman, Anita Mohamad, a confident and dedicated Bumiputera entrepreneur who is the founder of Anita Fragrance. It is rapidly gaining a leadership position in the marketplace. It all began with a woman’s desire to produce good skincare products based on natural ingredients obtained from local resources. The rich supply of fruits and plants available locally provided an ample source of raw materials. In 2006, with only RM500 (200USD) as initial capital and barely equipped with a soap-cutter, a mould and a mixer, Anita embarked on the production of soap in her backyard. In just a few years and despite all the challenges of economic slowdown, Anita Fragrance is now a successful company producing 4,000 pieces of soap per day from a factory at Kompleks Kilang SME in Lok Kawi. Anita Fragrance has been acknowledged as the first Good Manufacturing Practice (GMP) and Halal compliance cosmetic factory in Sabah. Anita capitalises on the abundant resources in Sabah such as palm oil, seaweed, honey, lime, ginger, papaya, virgin coconut oil, betel leaf and many more. According to her, each product is uniquely blended with local produce which make it truly a home-made product. The main ingredient is palm oil combined with water and other substances without any use of alcohol. The raw materials availability at reasonable price has allowed Anita Fragrance to reduce its production costs and increase its competitiveness in terms of pricing. Currently most of her products are marketed through the nine Anita Fragrance outlets with 200 sales agents throughout Malaysia. Through franchising, Anita Fragrance is planning to further expand its business.
Branding for SMEs
Branding a country is an emerging value-added concept that can be linked to leading sustainable development. Smart SME owners who find a niche in a global industry may add value by co-branding their business with a leading company in a country. Established in 1992, Tekno Logam Sdn Bhd (TLSB) provides highly specialized precision metal fabrication. With an impressive array of state-of-the art equipment such as laser cutters, water jets and turret punches as well as various tonnages of presses they are able to provide fabrication capability even through on-line electronic data transfer and is also equipped with capabilities to refurbish mechanical seals, pumps and valves.
In January 1995, TLSB was appointed as a vendor to Petronas under the Ministry of Finance Vendor Development Programme (VDP) for the manufacture of gaskets for the oil and gas industry, making it the only local company to manufacture these gaskets in Malaysia. Gaskets are sealing materials used to prevent leakage in flows like water, oil, chemicals, gases and even hot air. Leakage prevention is vital for energy saving, safety and environmental protection. Their Gasket Express centre is based on the need for faster delivery and on-site presence during plant turnaround. TLSB is also licensed by Petronas to manufacture and sell pipes and fittings for the oil and gas industry. As a gasket manufacturer, the customer base includes companies like PETRONAS, Shell, ExxonMobil, and Talisman and fabricators such as Sime Engineering, Technip and Kenchana. With a brand associated with Malaysia’s top Oil & Gas Company TLSB are able to maintain a high standard of quality assurance, fast delivery and competitive prices.
There are many ways to celebrate a country’s National Day; one way is to showcase the success stories of the key drivers in the nation’s economy. Vision with action is inspiring and yields benefits for everyone in current and future generations.