Promoting Business Incubation : Malaysia Experience

presented by:

Borhan SidikDeputy CEO, SME Corporation Malaysia

7th INTERNATIONAL CEO FORUM FOR CHIEF EXECUTIVES OF DEVELOPMENT FINANCE INSTITUTION

(18th November 2010)

Outline of PresentationOutline of Presentation

1. Malaysia in Brief2. Roles & Functions of SME Corp. Malaysia3. Profile of SMEs4. Strategies & Policies on SME Development5. General Information on Business Incubator6. Business Incubator in Malaysia

• SIRIM Berhad• MTDC Technology Centres• Technology Park Malaysia (TPM)• SME Bank Factory Complex

7. Success Story of Incubator8. Closing Remark

Malaysia : Basic StatisticMalaysia : Basic Statistic

GENERAL INFORMATION 2009 2010

• Population• Labour force• Employment• Unemployment rate• Nominal GDP• Nominal GNI• Real GDP growth rate• Per capita income• Inflation• Exchange rate (RM/USD)

27.9 million12.1 million11.6 million

3.7 %RM 680 billionRM 665 billion

-1.7 %RM 23,841

0.6 %3.52

28.3 million12.2 million11.8 million

3.6 %RM 766.3 billionRM 746.4 billion

6.0 %RM 26,420

2.3 %3.09 (1st November 2010)

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Development of competitive and resilient SMEs in all sectors

Vision MissionThe premier organisation for the

development of progressive SMEs to enhance wealth creation

and social well-being of the nation

Promote the development of competitive, innovative and

resilient SMEs through effective coordination and provision of

business support

ROLES & FUNCTIONS OF SME CORP. MALAYSIA

Role & Function of SME Corp. Role & Function of SME Corp. MalaysiaMalaysia

435,324 (78.7%)

100,333 (18.2%)

12,610 (2.3%)

4,537 (0.8%)

Source: 2005 Census by Department of Statistics Malaysia

• Total establishments = 552,804• No. of SMEs = 548,267 (99.2%)

• Total establishments = 552,804• No. of SMEs = 548,267 (99.2%)

MICROSMALLMEDIUMLARGE

Establishment of Enterprises

Services(86.6 %)

Agriculture(6.2 %)

Manufacturing(7.2 %)

SME Distribution by Sector

Profile of SMEsProfile of SMEs

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Strategies & Policies on SME DevelopmentStrategies & Policies on SME Development

5 strategic thrusts for development of SMEs under IMP3 (2006-2020):

MEASURES1. Adoption and application of leading

technologies, including effective utilization of ICT;

2. Closer collaboration with specialized Government research institutes and universities;

3. Enhancement of human capital of SMEs;

4. Nurturing innovative and resilient SMEs;

5. Acculturation of entrepreneurship & innovation;

6. Creation of more conducive business environment, which stimulates vibrant and innovative entrepreneurial activities

What is Incubator?What is Incubator?

BUSINESS INCUBATION :“ Business incubation is an organization that helps entrepreneurs to develop their ideas in a framework that has been established to help them. It takes them systematically from inception through to launch and beyond. Incubators nurture young firms, helping them to survive and grow during the start-up period when they are most vulnerable.”

TECHNOLOGY INCUBATION:“ A technology-incubating program is an innovative system designed to assist entrepreneurs in the development of new technology-based firms, both start-ups and fledglings. It seeks to effectively link talent, technology, capital and know-how to leverage entrepreneurial talent in order to accelerate development of new companies, and thus speed the commercialization of technology”

Source: Ministry of Science, Technology and Innovation, Malaysia

Incubator Background Incubator Background

COUNTRY NOS. OF INCUBATORSUSA/Canada 1300+

China 600+South Korea 270+

Japan 200+

India 110+

Taiwan 97+

Malaysia 106 +Uzbekistan 20+

Europe 900+

Source: National Incubation Network Association (NINA)

Incubator in MalaysiaIncubator in Malaysia

Source: National Incubation Network Association (NINA)

INCUBATORS NO’S

NINA Members (Tech-based Incubators)

MARA (Indigenious/ Bumiputera)

Banks

State Economy Development Corp.

MARDI (Agro-based)

Handicraft Incubators

Universities

MECD

Others

25 +

18 +

18 +

17 +

10 +

9 +

4 +

2 +

3 +

TOTAL 106+

EXAMPLE 1: EXAMPLE 1: SIRIM TECHNOLOGY INCUBATIONSIRIM TECHNOLOGY INCUBATION

Established in 1975 under Ministry of Science, Technology & Innovation

16th November 1995: Corporatized as a government-owned company under the Ministry of Finance Inc.

SIRIM BerhadSIRIM Berhad

Research & Technology• R&D• Product Development• Process Engineering • Training & Consultancy

Standards & Quality• Measurement & Calibration • Legal Metrology Services • Standards Management • Standards Development

Broad range of services:

Design & Engineering• Product Development • Engineering Services • Plant Engineering• Machinery & Equipment

Technology Transfer Hub

• Intellectual Property Centre• Commercialization and

Business Incubation Centre

SIRIM Incubator ModelSIRIM Incubator Model

Phase I:

Entrepreneur Development Phase

Phase II:

Enterprise Creation Phase

Phase III:

Market Development Phase

SIRIM Technolog

y Incubator Program

SIRIM Technolog

y Incubator Program

• Skills Development

• Networking & Linkages

• Facilities & Services

• Technology Transfer & Consultancy Services

• Advisory Services

• After-Care Service

EXAMPLE 2: EXAMPLE 2: MTDC TECHNOLOGY CENTERMTDC TECHNOLOGY CENTER

Malaysian Technology Development Corporation

• Initiative by Malaysian Technology Development Corporation (MTDC)

• Embodied under Government’s Technology Development Cluster (TDC) program

• Formal and operational links (collaborations) with universities or research institutions.

MTDC Technology CentreMTDC Technology Centre

• Main functionStrengthen linkages between universities/research institutions and

industries.Activate and promote the acceleration of the commercialisation

activities of both the local universities and research institutions.

• Approached method:Develop technology incubation centres via JV collaboration with

Universities

MTDC Technology Incubation MTDC Technology Incubation CentresCentres

UPM (Universiti Putra Malaysia)-MTDC Technology Centre

Centres are developed based on strength of respective universities through JV collaboration:

UKM (Universiti Kebangsaan Malaysia)-MTDC Technology Centre

UTM (Universiti Teknologi Malaysia)-MTDC Technology Centre

• ICT, multimedia, agri-bio• Located at UPM - central of Malaysia

• Biotechnology• Located at UKM - central of Malaysia

• Advanced engineering, life sciences• Located at UTM - southern Malaysia

UPM-MTDC Technology Centre project• Established 1996• JV project between Universiti Putra Malaysia(UPM) - MTDC• The first MTDC technology incubation centres established within Malaysian

universities' campus• Second area awarded with Cybercity status after Cyberjaya

FACILITIES• Covering total acreage of 167 acres• Equipped with high speed bandwidth communication network• Other facilities:

Server Farm (15 acres) International Technology Centre (50 acres) MTDC Technology Centre (15 acres) Data Centre Computer Recovery Centre

UKM-MTDC Technology Centre project

• JV project between Universiti Kebangsaan Malaysia (UKM) - MTDC.

• Planned to attract companies mainly involved in biotechnology.

FACILITIES• Covering total acreage of 6 acres• Able to accommodate 12-15 tenants• Conceptualized as ‘Pusat Teknologi Pintar’ :-

Formal and operational links with university or research institutesTo encourage growth of technology-based businesses that reside on siteManagement functions which actively engaged in transfer of technology

and business skills to industries

UTM-MTDC Technology Centre project• Established in 2001• JV project between Universiti Teknologi Malaysia (UTM) – MTDC

OBJECTIVE• Mainly for companies involved in life sciences. • Develop strong science and technology-based• Increase capability to adopt, adapt and improve

technologies through R&D• Develop pool of skilled researchers capable of

handling new and emerging applied technologies.

FACILITIES• Covering total acreage of 4.3 acre• Located within university (UTM) vicinity

EXAMPLE 3: EXAMPLE 3: TECHNOLOGY PARK MALAYSIATECHNOLOGY PARK MALAYSIA

(TECHNOLOGY & INNOVATION BUSINESS INCUBATION (TECHNOLOGY & INNOVATION BUSINESS INCUBATION PROGRAM)PROGRAM)

Technology Park Malaysia (TPM)Technology Park Malaysia (TPM)TECHNOLOGY & INNOVATION BUSINESS INCUBATION PROGRAMTECHNOLOGY & INNOVATION BUSINESS INCUBATION PROGRAM

• Main function: To spur development of innovative and knowledge-based companies

• Incubation program: Caters specifically to fledgling technology and innovation-based enterprises. Prospects vary from graduates, researchers, start-up SMEs,

professional employees & subsidiary of MNC’s & GLC’s.

SELECTION ASSESSMENT TOOLSINFRASTRUCTURE & SHARED SERVICES

EXIT POLICY PROSPECTS1.Graduates/ researchers2.Start-up SME3.Professionals/ workers4.Subsidiary of big companies5.Soft-landing

HANDHOLDINGBusiness coaching,

consultancy and trainingMARKET LINKAGES

TECHNOLOGY HELP DESK

RESEARCHERS & EXPERTS

INTEGRATED FINANCIAL

ASSISTANCE

• Incubation model:

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Network - Market linkages through incubation associations membership:

• National Incubation Network Association (NINA)

• Asian Association of Business Incubation (AABI)

• Asia Pacific Incubation Network (APIN)

• Association of University Research Parks (AURP)

Facilities - Support from TPM and subsidiaries:

• TPM Engineering• TPM IT• TPM Biotech

Financial Assistance –

Access to funds by Government/commercial banks, venture capital and angels.

Handholding – Integrated coaching, consultancy and training by panel of coaches, consultants & trainers.

Technology Experts - Advisory from researchers and expert panel

Spectrum of Services

Cubicles Land/ building leaseOffice units

EXAMPLE 4: EXAMPLE 4: SME BANK FACTORY COMPLEXSME BANK FACTORY COMPLEX

• Started in 1985

• Full support from Government Fund to build factories in each state in Malaysia.

• Initiated to encourage entrepreneurship in manufacturing and service sector

• Facilties: 24 factories with 419 lots nationwide

SME BANK FACTORY SME BANK FACTORY COMPLEXCOMPLEX

KUALA LUMPUR

• Participant selection by a Panel• Project and concept development with

advisory and approval from SME Bank

• Project is fulltime owned and run by

participant

• Integrated financial assistance

• Incubation period 9 years

SME BANK INCUBATION MODELSME BANK INCUBATION MODEL

Integrated entrepreneurship development approach:

SUCCESS INCUBATEES STORYSUCCESS INCUBATEES STORY

REDtone International Berhad Incubatee of TPM Listed on MESDAQ (now known as ACE Market) in 2004. MSC status company Products:

High speed Internet services Data solutions VoIP services

Operating in Malaysia and China

Green Packet Berhad Incubatee of TPM Listed on ACE Market in 2005 Transfered to Main Board in 2007 Products:

Personal Handy-Phone System 3G, WiFi and WiMAX space

Operating in USA, Malaysia, Singapore, Taiwan, China, Bahrain and Thailand.

SUCCESS INCUBATEES STORY SUCCESS INCUBATEES STORY (Cont’d)(Cont’d)

IRIS Corporation Berhad

Incubatee of TPM Establsihed in 1994 Listed on ACE Market in 2002 Products:

• Digital conference system• Radio frequency identity system (RFID)• Automated electronic ticketing and fare collection• Payment cards• Loyalty management program solution

Tricubes Berhad

Incubatee of TPM Established in 1998 ICT company focusing in

identity authentication and mobility solution

Listed on Ace Market in 2004 Products:

• Smartcard• Biometrics verification devices

CLOSING REMARKCLOSING REMARK

RECOMMENDATION FOR SUCCESS OF RECOMMENDATION FOR SUCCESS OF INCUBATORINCUBATOR

1. University involvement:Success of incubator depends on availability of graduates, access to R&D facilities, and environment of intellectual creativity

2. Collaboration & networking: Networking between industries, universities, research institutions and incubators provide mutual support & encouragement

3. Experienced incubator management:To render continuous support, coaching, mentoring and motivation to start-up companies

4. Conducive business environment:Incubators to function not as landlord but to create conducive business environment to incubatees

5. Linking business & technology:Constitute important channels for distribution of knowledge and tools for business success

SME Corporation MalaysiaLevel 20, West Wing, Menara

MATRADE Jalan Khidmat Usaha, Off Jalan Duta

50480 Kuala Lumpur

03 6207 6000 03 6201 6564

www.smecorp.gov.my

SME Corporation MalaysiaLevel 20, West Wing, Menara

MATRADE Jalan Khidmat Usaha, Off Jalan Duta

50480 Kuala Lumpur

03 6207 6000 03 6201 6564

www.smecorp.gov.my

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