National SME Council Charts Future Direction

The National Small and Medium Enterprise (SME) Development Council convened its first meeting today. Chaired by the Prime Minister, the Council represents the highest-level policymaking body to chart future direction and strategies for SME development.

Strategic Focus and Coordination of SME Development Across All Sectors

The Council will provide the strategic framework for more focused and coordinated inter-agency efforts on SME development to oversee the efficient coordination and to ensure effective policy implementation and outreach. The formation of the Council represents the Government’s commitment to the development of SMEs at the highest level. The SMEs have the potential to provide support to the development of existing and new industries in the services, agriculture and agro-based, manufacturing and ICT sectors. A viable and dynamic SME sector is essential to promote domestic-led growth, and therefore strengthen the resilience of the economy in the more competitive and challenging economic environment.

Terms of Reference of the Council

The terms of reference of the Council are as follows: -

1. Formulate broad policies and strategies to facilitate the overall development of SMEs across all sectors;
2. To increase the focus of the roles and responsibilities of Government Ministries and Agencies responsible for SMEdevelopment;
3. Enhance inter-Ministry and Agency cooperation and coordination to ensure effective implementation of SME development policies and action plans; and
4. Encourage and strengthen the role of the private sector in supporting the overall development of SMEs.

Council Members

The Ministries and Agencies represented in this Council are based on their role and contribution in SME and entrepreneurial development.

1. The Prime Minister (Chairman)
2. Minister of International Trade and Industry
3. Minister of Domestic Trade and Consumer Affairs
4. Minister of Entrepreneurial and Cooperative Development
5. Minister of Agriculture and Agro-Based Industries
6. Minister of Human Resource
7. Minister of Finance 2
8. Minister of Energy, Water and Communications
9. Minister of Plantation Industries and Commodities
10. Minister of Science, Technology and Innovations
11. Minister of Tourism
12. Minister of Rural and Regional Development
13. Minister of Education
14. Minister of Higher Education
15. Minister of Housing and Local Government
16. Minister in The Prime Minister’s Department, Y.B. Dato’ Mustapa Mohamed
17. Governor of Bank Negara Malaysia
18. Director-General of the Economic Planning Unit
19. Chief Executive Officer of the Multimedia Development Corporation

Definitions for SMEs 

The Council discussed the various definitions of SMEs that would adequately apply for the manufacturing, agriculture, agro-based and services sector. The Council agreed for the need to have specific definitions for SMEs according to the specific and unique nature of their activities across all economic sectors. The Council also agreed in principle for the definitions to be based on annual sales turnover and number of full-time employees across these sectors. This would provide for the effective formulation of policies and support programmes aimed at target sectors within the economy, facilitate the provision of technical and financial assistance, and allow for the identification of SMEs in the various categories and levels. In addition, the definitions according to economic activity will facilitate the identification of issues and prospects of the sectors concerned to enable the appropriate policy actions to be taken. It will also allow closer monitoring of SME performance and contribution to the economy.

Establishment of a National SME Database 

The Council decided that the Department of Statistics will establish and maintain a comprehensive National SME Database. The database will provide policy makers and industries with relevant and timely information to monitor developments in the SME sector including their operational conditions, financial status and development requirements.

The Council decided that a baseline census of all enterprises and businesses would be conducted nationwide. This would assist the Council in assessing the current status of SMEs, their requirements and identify important issues relating to their performance and development. Information compiled from the census would also facilitate the formulation of policies to promote SMEs as an important driver of growth and in the formulation of strategies for the forthcoming 9th Malaysia Plan.

Profile and SME Development Programmes 

The Council also discussed the SME-related development programmes by the various Ministries and Agencies that were already in existence. These programmes were aimed at meeting different objectives for different target groups, such as rural industries, Bumiputera entrepreneurs and micro enterprises.

The Ministry of International Trade and Industry (MITI) and its Agencies, the Malaysian Industrial Development Authority (MIDA) and the Small and Medium Industries Development Corporation (SMIDEC) have been tasked to look into the development of SMEs in the services sector. To expand the coverage of the support programmes in the services sector, SMIDEC has been given an allocation of RM14.4 million. The four sectors that have been targeted are distributive trade (wholesale and services), logistics, professional services and manufacturing related services.

Enhancing Access to Financing by the SMEs

In the efforts to enhance SMEs’ access to financing, Bank Negara Malaysia has established a comprehensive SME Special Unit in May 2003. The role of the SME Special Unit has now been expanded to not only provide information on the various sources of financing available to SMEs, facilitate loan applications, address problems faced by viable SMEs in securing financing and provide advisory services on other SME financial requirements, but also facilitate loan restructuring under the Small Debt Resolution Scheme (SDRS). The SME Special Unit represents an integrated reference center for all issues relating to access to financing for the SMEs, including undertaking the responsibility of administering the SDRS.

In relation to this, Bank Negara Malaysia is setting up a customer service centre as a reference point to facilitate a rapid and efficient response for the public in general and the SMEs in particular on financial matters.

National SME Development Council

See also : Opening Remarks by Y.A.B. Dato' Seri Abdullah Ahmad Badawi, Prime Minister of Malaysia