2011-0021 37 enterpreneurship

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    INTRODUCTION

    This topic introduces the evolution and development of entrepreneurship in theMalaysian context specifically and the global arena generally. Here, studentswould be able to learn about the underlying history contributing significantly tothe emergence of entrepreneurship. This topic will also explore the importance ofentrepreneurship as we examine the question on Why do we need

    entrepreneurship?

    TTooppiicc11Entrepreneurship:

    An Overview

    LEARNING OUTCOMES

    By the end of this topic, you should be able to:1. Explain how entrepreneurship evolved and emerged as a leading

    economic force in Malaysia since independence;

    2. Identify the emerging industries available for Malaysianentrepreneurs;

    3. Discuss the emerging of entrepreneurship in the global scene; and

    4 Analyse the importance of entrepreneurship in the context ofcountrys development.

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    2 TOPIC 1 ENTREPRENEURSHIP: AN OVERVIEW

    Figure 1 1: EntrepreneurshipSource: http://www.cartoonstock.com/directory/e/entrepreneur.asp

    Refer to Figure 1.1. Do you agree entrepreneurship skill is a talent? Or is it simplya motivation and determination within a person.

    ENTREPRENEURSHIP IN MALAYSIA

    Entrepreneurship is a common trend that we can see in many countries aroundthe world. In Malaysia, entrepreneurship activities have been one of the most

    important engine of growth for the past 50 years. The Malaysian Registrar ofCompanies (ROC) has recorded an astounding amount of start-ups, with the totalnumber of companies registered hitting 766,087. This is in sharp contrast towhere we are many years ago. How did we get here?

    1.1.1 Entrepreneurship: The Rising

    A review of history clearly depicts that the climbing of the ladder was not easy.The ruling of Malaya by the British colonialist back then set the stage forsegregated economies (Figure 1.2). It is known that the Indians were brought into work in rubber plantations, whereas the Chinese were employed at tin minesor given trading rights to become shopkeepers and petty traders. The Malayswere confined mainly to the agriculture sector. Upon independence in 1957, thethree major ethnic groups agreed that the Malays would be granted special rightsin order to elevate their status and create an equitable society.

    1.1

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    TOPIC 1 ENTREPRENEURSHIP: AN OVERVIEW 3

    Figure 1 2:Segregated economy during British colonial in Malaya

    However, the growing discontent about economic inequalities sparked off racialriot on 13 May 1969. The riot paved the way for the institution of the NewEconomic Plan (NEP) in 1970. This plan focused on Bumiputera ownership andpartnership, improvement of Bumiputera participation in high incomeoccupation and subsequently, reducing the income gaps. Fundamentally, NEP

    became the driving force towards the formation of the Bumiputera entrepreneurcommunity.

    The NEP was eventually replaced with the New Development Policy (NDP). The

    policy further strengthened the government endeavour in promotingentrepreneurial development programmes. The establishment of the BumiputeraCommercial and Industry Community (BCIC) and National EntrepreneursCorporation (NEC) facilitated the nurturing of Bumiputera entrepreneurs. Sincethen, numerous new policies and support mechanisms have been developed forBumiputera entrepreneurs specifically and non-Bumiputera entrepreneursgenerally.

    Figure 1 3: Malaysian Technology Development Corporation (MTDC) wasestablished in 1992

    Source: http://www.mtdc.com.my/

    Malay: Agriculture Chinese: Tin Indian: Rubber

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    4 TOPIC 1 ENTREPRENEURSHIP: AN OVERVIEW

    In 1992, the Malaysian Technology Development Corporation (MTDC) wasestablished to augment the technical capabilities of entrepreneurs by offering riskcapital for promising ventures and also technical advice (Figure 1.3).

    Subsequently, the setting up of the Ministry of Entrepreneur CooperativeDevelopment (MECD) in 1995 was one of the most significant steps taken by thegovernment to support entrepreneurial initiatives. The MECD was established tofoster cooperation between Bumiputera and non-Bumiputera entrepreneurs instrategic business besides coordinating entrepreneurial activities in general.

    From 1971 to late 1990s, Malaysia has transformed from a producer of rawmaterials into an emerging multi-sector economy, with strong reliance onexports. However, the global economic downturn in 1997 strongly affected theMalaysian economy. The Growth Domestic Products (GDP) increased by only 0.3

    percent during the slump and 46,643 workers were retrenched from July 1997 toJune 1998. Understanding the predicament of high unemployment rate at thattime, the government arranged special assistance and support systems toencourage entrepreneurship as an alternative source of income among theretrenched workers.

    MTDC set up five incubators in the country with collaboration of universities tofacilitate entrepreneurial start-ups in 1998. In addition, the Malaysiangovernment through the Multimedia Development Corporation (MDC), set upthe MSC venture capital company to provide financial assistance and advice toinformation technology start ups. As time went by, more effort was put in placeto promote entrepreneurial activities. Since the inception of the Second IndustrialPlan, the Third Outline Perspective Plan (OPP3), the Eighth Malaysia Plan up tothe recent Ninth Malaysia Plan (2006-2010), various forms of support systemwere derived in order to encourage entrepreneurial activities in emerging sectorssuch as agriculture, manufacturing, information and communicationstechnology.

    To date, there are 12 ministries and 40 government agencies that shoulder theresponsibility of developing small and medium enterprises (Utusan Malaysia,2007). These agencies provide support such as financial assistance, advice andtraining programs to facilitate the development of SMEs. A total of 190programmes are currently in place to support these development initiatives. Forinstance, Development Financial Institutions (DFIs) were developed to providefinancing for strategic activities as stated above. In 2005 alone, a total of RM47.5

    billion was allocated for financing purposes a 50 percent increase since 2000.

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    TOPIC 1 ENTREPRENEURSHIP: AN OVERVIEW 5

    The Role of Small and Medium Enterprise BankSME Bank (Figure 1.4) was introduced in 2005 to ease the financial burden ofstart-ups and to assist start-ups in propelling themselves forward in the domestic

    and international market. The Malaysia Venture Capitalist Association (MVCA)provides financial assistance for all stages of funding. Bank PembangunanMalaysia Bhd was assigned the responsibility of financing capital intensive andhigh technology industries, maritime and infrastructure. Additionally, womenentrepreneurship has been promoted intensively, with the establishment of

    bodies such as the National Association of Women Entrepreneurs of Malaysia(NAWEM). Essentially, with the Ninth Malaysia Plan, the government is movingat full speed to promote entrepreneurship and achieve Thrust 1: to move theeconomy up the value chain.

    Figure 1 4: The main building of SME bank in Kuala Lumpur

    Entrepreneurship in Malaysia has come a long way. There are a vast number ofindustries that hold great potential as a fertile ground for new ventures. The nextsection briefly lists potential industries in Malaysia that are favourable to new

    start-ups.

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    6 TOPIC 1 ENTREPRENEURSHIP: AN OVERVIEW

    Table 1.1 below is a summary of the arising of entrepreneurships in Malaysia.

    Table 1 1: The Rise of Entrepreneurship in Malaysia

    Date Plan / Action

    Before 1957 British colonial rule of Malaya set the stage for segregated economy

    Indians = rubber plantations.

    Chinese = tin mines.

    Malays = agriculture sector.

    1957 Malaysia Independent

    Malays are granted special rights.

    May 13, 1969 Racial Riots

    1970 New Economic Plan (NEP)

    Bumiputera ownership.

    After 1970 Replaced NEP with New Development Policy (NDP)

    Bumiputera Commercial and Industry Community (BCIC).

    National Entrepreneurs Corporation (NEC).

    1992 Setting up of Malaysian Technology Development Corporation(MTDC).

    1995 Formation of Ministry of Entrepreneur Development (MED).

    1997 - 1998 Global economic downturn:

    GDP increased only 0.3 percent.

    44,643 workers were retrenched.

    1998 MTDC set up five incubators in the country with collaboration ofuniversities.

    MDC set up the MSC Venture Capital Company.

    2005 SME Bank was introduced.

    2007 12 ministries and 40 government agencies responsible for

    developing small and medium enterprises

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    TOPIC 1 ENTREPRENEURSHIP: AN OVERVIEW 7

    1.1.2 Emerging Industries

    There are many opportunities in the business arena that are waiting to be tapped

    and hold great potential. Table 1.2 shows the major industries that call out fornew ventures based on the Ninth Malaysia Plan.

    Table 1 2: The Major Industries based on the Ninth Malaysia Plan

    Types of Industry Description

    Agriculture Revitalised as the third pillar of economicgrowth which leans towards modern andcommercial scale production. Examples:

    Aquaculture, deep sea fishing and

    seaweed. Herbs.

    Ornamental fish and floriculture.

    Hal