Published: September 03, 2012
By DALJIT DHESI
daljit@thestar.com.my
PETALING JAYA: The Government's ambitious plans for the small and medium enterprises (SMEs) to be a significant contributor to the country's economic growth could be hampered if it overlooks or fails to address some of the lingering issues in the sector, according to industry players and observers.
These include in the implementation of certain schemes, mismatch of funds, stronger emphasis on product-centric organisations rather than SME sub-segments, lack or absence of effective measures for start-ups like the self-employed and scarcity of funds for the SME services sector.
An industry player, who is a veteran in the area of SMEs but prefers to be anonymous, said although the Government had numerous SME assistance schemes, the measures had only been partially effective especially in its implementation for several reasons.
Some of these schemes such as those introduced by SME Corp on 1-InnoCERT, The National Mark of Malaysian Brand, are not widely participated when considering the number of SMEs who took part versus the total number of SMEs in the country, he said.
“There is also a certain amount of mismatch in terms of types and amount of funding.
Lim:There is a greater need for the Government to
address each SME sub-segment based on their needs and requirements
As these government SME funds were applied and disbursed through commercial banks, he said many a times in the past the bankers would give priority to its existing customers, sometimes to replace higher cost loans, thus depriving other needy SMEs, especially those without good or sufficient track records.
The industry veteran also said the Government should consider working more closely with SME trade organisations in implementing assistance programmes instead of using purely government-based agencies such as SME Corp.
The National SME Development Council chaired by the Prime Minister should also open to participation and input by private sector and SME organisation representatives who can give input, as currently it only comprised government agencies, he said.
Managing director of Innosol (M) Sdn Bhd Dr Umasuthan Kaloo, who is also the author of Managing Small Enterprises, said for the sector to be vibrant and help increase gross domestic product (GDP) and reduce unemployment, there was a need for effective initiatives for SME start-ups.
He said almost all the measures introduced and implemented by both the public and private sectors to date were aimed at nurturing the SMEs by providing easier access to money, markets, technology and trained manpower.
What was missing, he said, was effective initiatives to broaden the base and “plant more seeds” in terms of increasing the base of self-employed individuals.
“We need more initiatives for the start-ups of self-employed individuals. Grants are not the answer, because the availability of grants encourages the kind of start-up created for the sole purpose of playing the system and acquiring public funds set aside for the purpose.”
Currently, the SME sector's contribution to GDP was still low at around 32% compared with about 60% in countries like Taiwan, Hong Kong, South Korea and Singapore.
Under the Small Medium Enterprise Masterplan (2012-2020), a roadmap to boost the SME sector over the next eight years, certain targets had been set for the sector to achieve during the period.
The plan has set a target for SMEs to achieve an average GDP growth of 8.7% annually from this year until 2020. Its contribution to GDP is expected to reach 41% by 2020 from the current 32%, while its contribution to exports is set to expand to 62% from 59% now. Its share of employment is also targeted to increase to 25% from 19%.
Marketing consultancy company J1 Consulting Sdn Bhd managing director Jeanisha Wan said the SME sector, accounting for more than 90% of business establishments in Malaysia, was diversified and fragmented.
She said there was a greater need for the Government to address each SME sub-segment based on their needs and requirements, adding that a lot of focus had been given to product-centric organisations.
Service-based organisations (such as those offering professional services and consultancy) also formed a large bulk of the SME business but there were not enough initiatives rendered to this segment for it to grow, she noted.
The authorities needed to have dedicated focus groups to address the different needs of the various sub-segments, Wan said.
Instead of waiting for the SMEs to seek the relevant assistance, the authorities could conduct regular roadshows targeting different SME sub-segments. The authorities should also continue to encourage innovation and knowledge sharing by having successful SMEs in those sub-segments share their success stories in the talks and roadshows.
PiPR Consultancy Sdn Bhd managing director Lee Ting Ting said funding for the SME services sector was still scarce compared with other sectors or lines of businesses, adding that this needed to be urgently looked at for it to grow. PiPR Consultancy is a an IT-focused public relations agency.
Furthermore, she said, there were many small but successful entrepreneurs in the services sector like consultants and agencies which was vital for economic advancement.
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