sc3 – small medium enterprises (smes)

SC3 – Small Medium Enterprises (SMEs)

Lim Sei Kee @ cK

@ Definition

@ Examples

@ Importance

SME stands for Small to Medium Enterprise.

Different countries define SMEs differently.

SMALL-and medium-sized enterprises (SMEs) play an increasingly important role in the global economy, with a growing proportion now doing business internationally.

SMEs

Distribution of Enterprise by Size, 2010. Small 65% Medium 33% Big 2%

Number of Enterprise by District, 2010. Brunei Muara 4,127 Belait 885 Tutong 390 Temburong 84

SMEs in Brunei[Source: Economic Census 2011]

Agriculture, Forestry, and FisheryMining and QuarryingManufacturingElectricity, Gas, Water Supply and Other Industrial

ActivitiesConstructionWhole and Retail TradeAccommodation and Food Service Activities

Distribution of Enterprise

Transportation and StorageInformation and CommunicationFinancial and Insurance ActivitiesReal Estate ActivitiesProfessional, Technical, Administrative and

Support ServicesEducationHuman Health and Social Work Activities

Distribution of Enterprise

Recognizing the significant role of SMEs, the primary role of the Brunei Government is to create a good business environment to strengthen the competitiveness of SMEs by providing:

Administrative Support Investment and Trading Opportunities Technical Assistance Financial Assistance Incentives

The Resource Centre (MIPR) coordinates the programmes and activities of the government agencies and private sectors that are responsible for SMEs.

The one-stop agency under the Brunei Industrial Development Authority (BINA) provides administrative support in the implementation of the industrial development programme and trade requirement.

www.bina.gov.bn

Administrative Support

An investment / trading arm of the Government has been created with the objective of accelerating strategic industrial development in Brunei Darussalam through foreign direct investment.

Brunei Economic Development Board

www.bedb.com.bn

Investment and Trading Opportunities

Assistance given are in the form of training services, incubation programmes, technical and business advisory services and infrastructure assistance.

Icentre

www.icentre.biz

Technical Assistance

Industrial Development Fund is given to SMEs to support their financial needs through the Enterprise Facilitation Scheme, Microcredit Facilitation Scheme, Export Re-Financing Scheme.

LEAP [Local Enterprise Applications and Products]

www.bedb.com.bn/leap

Financial Assistance

To promote the development and expansion of SME activities, tax and investment incentives, including tax exemption for imported raw materials and machinery

Corporate tax relief of up to 5 years for companies that invest B$500,000 to B$2.5 million in approved ventures

An 11-year tax break if the venture is located in a high-tech industrial park (SPARK)

Incentives

1. How many businesses are there in information and communication sector?

2. How many large businesses are there in real estate activities?

3. How many small businesses are there in manufacturing sector?

4. In which sector(s) is there many more medium enterprises compared with small enterprises?

5. How many businesses are there in Brunei as of 2010?

Based on Chart 2.4, answer the following questions.

1. How many workers are there in small enterprises?

2. How many workers in medium enterprise are working in financial and insurance activities?

3. In total, how many workers are there in accommodation and food service activities?

4. Which sector account for the most workers? 5. Which sector account for the least workers?

Based on Chart 2.5, answer the following questions.

SMEs have a very high potential in contributing to the diversification of the economy.

SMEs are crucial to the economic growth process and play an important role in the country's overall production network.

SMEs have the potential to contribute substantially to the economy and can provide a strong foundation for the growth of new industries as well as strengthening existing ones.

Importance of SMEs

Highly innovative entrepreneurs

Well versed with up-to-date technologies

Able to take the advantage in strengthening their competitiveness

Successful SMEs - characteristics

Business viability as well as a lack of medium/long-term commitment.

A lack of technical knowledge, market knowledge, financial means to conduct research and innovation, human resources and finances to fund their growth.

Lack of financial resources to meet with the opportunities of the wider market

SME - Problems

Often the hardest part of starting a business is raising the money to get going.

The entrepreneur might have a great idea and clear idea of how to turn it into a successful business.

However, if sufficient finance cannot be raised, it is unlikely that the business will get off the ground.

SME - Financing

Set-up costs (the costs that are incurred before the business starts to trade)

Starting investment in capacity (the fixed assets that the business needs before it can begin to trade)

Working capital (the stocks needed by the business –e.g. r raw materials + allowance for amounts that will be owed by customers once sales begin)

Growth and development (e.g. extra investment in capacity

The finance needs of a start-up should take account of these key areas:

Where can SMEs get their financing from?

Discussion Qs

1. Define SME. 2. Examples of SME in Brunei. 3. Importance of SME. 4. Problems of SME. 5. Where can SMEs get their financing from?

GROUP PRESENTATION@ MAY 21st, MAY 28th, JUNE 4th

Work in a group of MAXIMUM 4 students. Presentation title: “Small Medium Enterprises” Presentation date: MAY 21st, MAY 28th, JUNE 4th

** MAX 2 GROUPS PER SESSION **Submit your presentation slides and report (softcopy)

before/on 11th JUNE 2014

Points to remember: Show up early, Proper Introduction, Clear and Concise Points,

Enhance your graphics, Conclude the presentation.

Time: 15 – 20 minutes.

Group Assignment

Read up any one of them and present to the class:

SPARK (Sungai Liang Industrial Park) BEDB (Brunei Economic Development Board) iCentre YEAB (Young Entrepreneurs Association Brunei) LiveWire Brunei

For next week,