session 5: perspectives from private sector and...
TRANSCRIPT
Session 5: Perspectives from Private Sector
and Government Institutions
Question: How to encourage technology upgrading and transfers in SMEs to compete globally?
Focus will be on:
JEDCO's approach of catalyzing private investment in innovative SMEs and start-ups - insights, models, lessons learned?
What is unique to JEDCO's approach, as compared to other SME development agencies, that helps it provide SME services in a more cost effective and streamlined way?
JORDAN ENTERPRISE
DEVELOPMENT CORPORATION
(JEDCO)
HANA URAIDI
DIRECTOR – CROSS CUTTING SUPPORT
21 JUNE 2011
A Tool to Develop Private Sector SMEs
Presentation Contents
Jordan - Business Environment and Preferential Market Access
JEDCO (core values, services, etc…)
JEDCO's approach of catalyzing private investment in innovative SMEs and start-ups - insights, models, lessons learned?
What is unique to JEDCO's approach, as compared to other SME development agencies, that helps it provide SME services in a more cost effective and streamlined way? (inclusive Strategic Framework and Process Dynamics, Impact & Indicators)
Thank you
About Jordan
Business Environment – Dominated by MSME‘s (97-98%)
Size of Economy: US$26.5 Billion
Expected Av. GDP Growth 2010-2015 is 5%,
Chronic Trade Balance Deficit US$ 6.6 billion
Exports: US$ 6billion
Preferential Market Access
(25 main agreements)
Commitment to International Best Practices
Continuous learning and improvement culture ―Kaizen‖
A ―National Agenda‖ guides the economy
“Transformation should be phased over several stages starting with
labor-intensive and export-oriented industry promotion.”
Focus
2007-2012
Focus
2013-2017
Focus
2018 onwards
―Value-Added Employment
Opportunities for All‖
―Upgrade and Strengthen
Industrial Base‖
Jordan Time-Phased Socio-Economic Transformation
―World-class Competitor in the
Global Knowledge Economy‖
Implications on
National Agenda
Promote labor-intensive and export-oriented industries
Eradicate structural unemployment by focusing on low-skilled employment
Expand significantly vocational training and employment support
Promote capabilities and skills transfers from MNCs
Reform/enhance education system
Implement public sector reform
Invest in key infrastructure
Liberalize state-controlled markets
Promote capital intensive industries
Induce newly educated workforce in
value-added jobs
Expand services sectors
Foster local enterprise development
Lay the ground for transition into a
‗knowledge economy‘
Transition economic sectors to the
knowledge economy
Use newly formed human capital to
generate transitional momentum
Preparation &
Planning
2005-2006
A new business environment.
Implications for business models
Globalisation of knowledge: from cheap manpower to
cheap brainpower?
Creativity and innovation as the key elements
Information and knowledge as rising constant needs
Value concentrated at each end of the value chain
(innovation, design, marketing and distribution)
About us
Established in April, 2005 to
legally replace the Jordan
Export Development and
Commercial Centers Corporation.
A National Business Support
Organization (BSO) mandated
to support the establishment and
development of enterprises to
become globally competitive.
Efficiency is doing things Right
Effectiveness is doing the Right things
Peter Drucker
Usually refers to characteristics that permit
a firm to compete effectively with other
firms due to low cost or superior
technology.
Source: www.Business Dictionary.com
JEDCO Core Values
Entrepreneurship and innovation are cornerstones of National
economic development
Jordan has the necessary capability to export globally competitive
and unique products and services of substantially high quality
Production and export of quality products and services are the basis
to sustainable enterprise development and substantial growth
Efficient, transparent and effective operations and established success
stories lead to improved interaction with sources of support
Understanding SME Perspective (Stereotype image)
“How does Government spend my taxes?”
Ineffective
Public servants
Reactive
De-motivated
Clueless
Administrative
Generalist
Slow
Effective
Commercially aware
Active
Interested
Well informed
Global
Specialists
SharpBSO: “I pay your Salary”
SMEs: “I know it best !!!”
Reasons for the imbalance between SMEs and BSOs
perspectives?
But business support organisations
play a supportive role :
BSOs: Are ‗big picture’ driven and must remain independent-for the good of the country
(or sector) they represent.
SMEs: Are “results” driven and self focused.
Q1. So where is the middle ground?
Q3. How do we find the balance?
Q2. What do SME’s really need, want and why?
Environment Scan
1. Business Upgrading, Development & Innovation Support
2. Export Development, Promotion & Export Services
3. Facilitate Access to Finance
4. Provide updated and specialized information
5. Advocacy and policy support
6. Other ( e.g. Jordan’s Numbering Association (EAN)
- Jordan’s Garment Design Center (JGDC) etc…)
Services provided to “Enterprises”
Objective: Continuously improving Enterprise/product competitiveness to
meet the needs of a dynamic global market.
JEDCO supports enterprises
throughout its lifecycle via:
Assessing needs and supporting the formulation & implementation of strategies and
development plans
Providing financial and technical assistance
Providing information including investigation of targeted international markets.
Contributing to national export development and improvement in accordance to
Government policies.
Establishing trade centers, exhibitions, organize trade missions to promote and
market Jordanian products and services.
Establishing incubators to support innovation and establish startup companies
Coordinating with donor programs to maximize synergies & avoid waste.
Strategic Framework and Process Dynamics
Corporate Governance
JEDCO is overseen by a
Steering Committee headed
by H.E. Minister of Industry
and Trade and is comprised
of representatives from both
the public and private
(private) sectors..
JEDCO Programs
Jordan Upgrading and Modernisation Program (JUMP I & II).
Jordan Services Modernisation Program (JSMP).
Export Promotion Program.
Entrepreneurship and Innovation
Support Program (JIC Network)
Access to Financial Tools
Jordan
Enterprise
Development
Corporation
Financial Tools
JSMP
JIC Network
JUMP
Export Promotion
ProgrammeJEDCO is a proactive yet Demand-driven
Organization.
JUMP I Financial and Technical Services
Other FunctionsMain Functions:
Full Scale Diagnostic Studies
Business Plans
National Linkages Program
Energy Saving
ProjectsSectoral Services
Establishment of
Export Consortiums
Faculty for Factory
Other Initiatives and Services
Mechanism to Achieve Functions (JUMP I)
Capacity Building Services Capability Building Process
Inform JUMP of the Machinery
Specification
Conformity with Upgrading Plan and
JUMP Approval
Provide JUMP with necessary documents
Site Visit & Check the Machine
Pay Grant according to the capability
implementation %
Inform JUMP of the Services
JUMP Approval and Provide company
with TOR
Bidding and Proposal by the company
Approve the selected offer
Provide JUMP with necessary documents
Pay Grant After Completion
Industry Support Directorate (JUMP I) Achievements
up to Year 2010
Activity Grand Total Completed In process
Conduct studies (FSD, BP, NLP) 139 137 2
Signed Agreements to Implement Development plans 103 70 33
Conduct Energy Audit and Solar Energy Studies 31 28 3
Signed Agreements to Implement 8 8 0
Export Consortium 2 2 0
Faculty for Factory project 122 109 13
Sectorial services 33 18 15
Services resulted from development plans 1033 906 127
Other activities ( training , workshops , ..etc) 329 329 0
Total companies benefited from JUMP 767 701 66
Total services supported by JUMP 1565 1418 147
Impact of the Support to JUMP I clients
(56 Companies)
Indicator Baseline Actual (2008) Increased Value %
Total Sales (000 JD) 209,446 363,341 153,895 73 %
Exports (000 JD) 72,678 156,816 84,138 116 %
Gross Profit (000 JD) 41,078 64,245 23,166 56 %
Net Profit before Tax (000 JD) 12,201 15,655 3,454 28 %
Employees 6,257 7,325 1,068 17 %
JUMP I
Impact on Domestic Economy
Item Total (000 JD)
Revenue 6,139
Sales Tax 5,479
Income Tax 656
Total Support paid by JUMP 2,523
% of rate of return 2.43
Each 1JD support will return
2.43JD in tax
JUMP II
EU Funded Programme to Support Enterprise and Export Development
Total value: Euro 15 million
Duration: 3 years
Launched January 2011 and first round of applications received 17th April 2011.
Grant Scheme 1: Participation to trade missions and trade events.
Grant Scheme 2: Support to export development.
Grant Scheme 3: Association / Federations and joint initiatives.
Grant Scheme 4: Support to Startups And Microenterprises.
Grant Scheme 5: Reinforcements.
Services Support Directorate / Jordan
Services Modernisation Programme
The Jordan Services Modernisation
Programme (JSMP) was launched in Jan.
2010 aims at assisting the development of
Jordan‘s services sector.
Funded by the European Union and
implemented by the Jordan Enterprise
Development Corporation (JEDCO), the
programme is designed to enhance service
quality, create new domestic opportunities
and help Jordanian companies expand
into international markets.
JSMP Grant Schemes
0500,000
1,000,0001,500,0002,000,0002,500,0003,000,0003,500,000
Grant Scheme
1
Grant Scheme
2
Grant Scheme
3
Grant Scheme
4
Grant Scheme
5
EurosGrant Scheme 1: Participation to
trade missions and trade events.
Grant Scheme 2: Support to export
development.
Grant Scheme 3: Association /
Federations and joint initiatives.
Grant Scheme 4: Support for
certification.
Grant Scheme 5: Reinforcements and
start-ups.
Impact Assessment on 43 Companies
Impact Indicator Reported Impact % attributed to JEDCO in
Average
No. of Companies Reporting
Impact
Increase in Profit (in JDs) JD 310,000 during the 6 months
following project completion
JD58,000 are direct impact of
JEDCO's support
11
Increase in Export (in JDs) JD 747,560 during the 6 months
following project completion
JD49,250 are direct impact of
JEDCO's support
5
penetration of New Markets 4 companies entered 7 markets for
the first time: Canada; Libya; UAE;
Sudan; Syria; Oman; Spain
100% 4
Established business linkages 16 business linkages with companies
in Algeria, Europe, Gulf
56% 9
Introduced new services 43 new services were introduced 16 new services were a direct result
of JEDCO's support
12
Increase in employment 52 jobs were generated during the 6
months following project
completion
15 new jobs are a direct result of
JEDCO's support
15
JSMP in its First Year of ImplementationGrant Schemes’ Promotion
Information Day Date Num of Attendees
Amman (4) 26 Jan 10,
19 + 20 May 10
21 Jul 10
1070
Irbid 28 Jan 10 150
Aqaba 31 Jan 10 90
Petra 01 Feb 10 90
Sector specific Information Day (7) 02-11 Feb 10 570
Ajlun 12 Jun 10 150
Zarqa 16 May 10 60
JEBA 01 Sep 09 150
Exporters Business Association 30 Mar 10 100
Total 18 Info Day 2430
Sample: JSMP in its First Year of ImplementationNumber of Employees
0-10 10-20 20-40 40-60 ˃ 60 Total
Round One
QRGS 25 5 5 3 5 43
Scheme 1 2 1 1 3 7
Scheme 2 2 5 1 1 3 12
Scheme 3 11 2 13
Scheme 4 3 1 1 5
Total 43 (54%) 14 (17%) 7 (9%) 4 (5%) 12 (15%) 80
Round Two – In process of Technical Evaluation
Scheme 5 56 5 1 1 6
69
Full Proposals
Scheme 1 1 1 2 4
Scheme 2 4 3 6 4 4 21
Scheme 3 13 1 1 4 19
Scheme 4 1 2 1 1 5
Scheme 5 95 5 7 2 4 113
Total 170 (74%) 17(7%) 16 (7%) 9 (4%) 19 (8%) 231
Companies Participation in Trade Fairs
208134
264343
378
489
0
100
200
300
400
500
600 2005 2006
2007 2008
2009 2010
Impact of the Export Promotion Support
Indicator Rate of Increase
More than 30% 15% - 20% 10% -15%
Improvement in Production 14% 27% 45%
Increase in Exports 14% 24% 48%
Increase in Sales 5% 30% 45%
New Markets 37% of the companies
Venture Capital Funds
Early Stage Fund: Specially designed for investments in Start-Ups at the size of 5 Million Euros.
Contribution for both the Government and the EIB is up-to 1.5 million Euros (constituting up to
60% of the minimum size of the fund).
Capital for Growth Fund: Designed for investing in already existing projects with a min. size of
20 million Euros; the government's contribution is 2 million Euros and the EIB‘s is 5 Million Euros,
constituting to 35% of the minimum size of the fund.
Cabinet approved establishing Two Venture Capital and Investment Funds as a joint venture
between GoJ represented by JEDCO and the European Investment Bank (EIB). JEDCO
launched an international tender to identify the fund managers in 2008. The first fund is
expected to initiate its operations in the last quarter of 2011. Delay occurred due to
legislative obstacles!
Banking Window Programme
Increase your company‘s readiness to access competitive financing through improving your company‘s readiness to raise financing and optimising the use of its financial resources.
Access to competitive bank financing through helping the companies in raising term loans, new credit lines or undertaking a review of existing financing.
Better use of and access to collateral that would result in obtaining better conditions for existing financings and accessing additional financing against the same amount of guarantees.
Banking Window Programme is a best practice in the EU-Med Database of Best Practices.
Banking Window
offers three key
services to
Jordanian
companies
looking for
greater access
to finance.
Loan Guarantee Scheme
The LGS is funded under the JSMP and co-funded by EU and the GoJ. The funding made available under the JSMP will cover 60% of the loan amount, while the JLGC will provide an extra 10% guarantee on its own funds.
It is supervised by a committee constituted of Jordan Enterprise Development Corporation, the European Union, the Ministry of Planning and International Cooperation and the Central bank of Jordan.
The Loan Guarantee Scheme (LGS) has been
established to help services-oriented SMEs access
medium- and long-term loans from commercial banks as
one of the facilities of the Banking Window
Programme.
This innovative, flexible and streamlined guarantee
aims to assist the borrower in meeting the collateral
minimum requirements requested by the banks.
The LGS will provide a guarantee to the lending bank
against the risk of repayment default of up to 70% of
the outstanding loan capital, with a ceiling of Euro
75,000 (or JD equivalent).
Q: How to encourage technology upgrading
and transfers in SMEs to compete globally?
Ans. 1
Recruit Technology brokers (i.e. people who discovered how to bridge the disparate worlds and apply scientific concepts or processes to new situations or circumstances).
E.g. Archimedes
Technology transfer: the process of skill transferring, knowledge, technologies, methods of manufacturing, samples of manufacturing and facilities among governments and other institutions to ensure that scientific and technological developments are accessible to a wider range of users who can then further develop and exploit the technology into new products, processes, applications, materials or services. It is closely related to (and may arguably be considered a subset of) knowledge transfer.
Q2: How do we apply this to SMEs?
Q: How to encourage technology upgrading
and transfers in SMEs to compete globally? Cont.
Ans. 2
Establishing 10
TTO‘s in Jordan
(JEDCO hosts an
office).
Many companies, universities and governmental organizations now have an "Office of Technology Transfer" (TTO) dedicated to identifying research which has potential commercial interest and strategies for how to exploit it.
Example: a research result may be of scientific and commercial interest, but patents are normally only issued for practical processes, and so someone—not necessarily the researchers—must come up with a specific practical process. Another consideration is commercial value; for example, while there are many ways to accomplish nuclear fusion, the ones of commercial value are those that generate more energy than they require to operate.
Entrepreneurship and Innovation
Program (JIC Network)
Ans. 3
JIC Mission:
Turn innovative
ideas into businesses
by supporting
entrepreneurs to
start sustainable
enterprises and
spin-off ideas.
JEDCO‘s involvement with Incubators (JIC) started in 2005.
100 Entrepreneurs supported to date and approximately 850K invested.
40 graduates ….and 30 new EU supported SRTD graduates in the pipeline…(aims at increasing Jordan‘s scientific and technological capacity by fostering research and innovation linked to private sector).
Impact assessment highlights that although graduated companies are surviving …the problems they face are in finance, packaging, marketing …
Interesting Statistics on Patents
(source: WIPO)
Facts:
1. A Patent is only ―internationally recognized‖ when WIPO accepts it.
2. WIPO accepts approx. 30% of applications from Japan, 20% from USA and 1% from Arab World.
3. Cost of registering a patent is approx. US$ 30K.
No. of Patents
2010 2009
Rank &
Country
70781. KSA
33462. Egypt
28293. UAE
154. Morocco
125. Syria
96. Tunisia
77. Qatar
48. Oman
Countries submitting patent
applications to WIPO in 2010:
1. USA – 44,855 (less 1.7% cf
2009).
2. Japan – 32,156 (up 7.9% cf
2009)
3. Germany – 17, 171
4. China – 12,337 (up 56% cf
2009)
5. Korea up 20.5% cf 2009.
Note: KSA (SABEC has 10 inventors
and 4 inventions and ARAMCO
has 11 inventors and 3 inventions)
How to Apply to an Incubator?
Approach the director of the incubator & fill in the application
interview with the director
project is presented to the incubator‘s technical committee
Accepted Project sent to JEDCO
Project Assessed and if approved
awards a seed capital grant
JIC Network Institutional Achievements
JEDCO is
currently
spearheading
the development
of a National
Start-ups and
Incubators
Strategy 2012-
2015.
Member of EBN (2010)
Has an international best practice Quality System that its members adhere to.
High visibility as a national tool to support start-ups, in coordination with other JEDCO programmes.
Granted patents:2
Granted copy rights:2
Registered trade marks:3
Provided training courses:50
At
National
Level!
JICs Network Impact / Increase
Exports
53%
11%4%
11%
21%
10-15% 15-20% 20-25% 25-30% More Than
JICs Network Impact / Increase
Sales
59%
5%
24%
12%
10-15% 15-20% 25-30% More than
JICs Network Impact / Increase
Income
32%
11%
5%
26%
26%
10-15% 15-20% 20-25% 25-30% More Than
Why Business Incubation Continues
to be a Priority for GoJ?
Business incubation has been identified as a means of meeting a variety of economic & socioeconomic policy needs, which includes:• Creating jobs and wealth• Fostering a community's entrepreneurial climate• Technology commercialization• Diversifying local economies• Building or accelerating growth of local industry and/or services clusters
Why Business Incubation Continues
to be a Priority for GoJ? Cont….
Business creation and retention
Encouraging women or minority entrepreneurship
Identifying potential spin-in or spin-out business opportunities
Community revitalizationFact: Support to Incubation & Startups
continues to be a priority in the National
Agenda.
Incubator services:
Help with business basics
Networking activities
Marketing assistance
High-speed Internet access
Help with accounting/financial
management
Access to bank loans, funding and
guarantee programmes
Access to angel investors or venture
capital
Help with presentation skills
Links to higher education resources
Links to strategic partners
Comprehensive business training programs
Advisory boards and mentors
Management team identification
Help with business etiquette
Technology commercialization assistance
Help with regulatory compliance
Intellectual property management
Current JICs are established at:
1. Al-Hassan Science City (Royal Scientific Society)
2. Jordan University – Agro-Business Incubator(BIC)
3. Al-Hassan Industrial Estate (BIC)
4. Al-Hussein Bin Abdullah II Industrial Estate (BIC)
5. Jordan Forum for Business and Professional Women
(Amman & Jerash)
6. Philadelphia University (Engineering Related Businesses)
Case Illustration: What did the EU funded
SRTD mean to us @ JEDCO?
―develop an innovation-based culture by
supporting new startup businesses.”
―provide grants to individuals with viable start-up
ideas.”
“facilitating the connection of the project to the
business community and the business sectors in
order to ensure its sustainability.”
Initiatives taken with the support of SRTD …1
Investigating the Feasibility of Establishing a Creative Industries Incubator in Jordan
Developing Jordan‘s National Startups and Incubation Strategy 2010-2015
Establishing a TTO @ JEDCO & Training Staff
Developing the JIC Quality Assurance System
Becoming a partner in the EU-Jordan Net Project to promote FP7 and facilitate the connection between Academia & SME‘s.
Initiatives taken with the support of SRTD …2
Two new incubators are established (Al-Karak and the Women‘s Incubator in Jerash) and become part of the JIC Network.
Introducing the ―Grow-box Tool‖
Offered a joint SRTD/JEDCO Consultancy Support Programme to incubatees
And many training courses & sponsorships…
But what was/is still missing:
A partnership with a Bank(s)…thus the role of Financial Support Schemes at JEDCO!
What Needs to be Done?
Entrepreneurs
are
―opportunity
hunters‖
How do we
sustain them?
Cont. Working with partners and stakeholders to promote and reward entrepreneurship.
Facilitate a conducive business environment that facilitates start-ups growth.
Secure funding to establish an “all-encompassing” Business Support Services Center – inclusive of a Creative Industries Incubator.
Stay open-minded and receptive to new ideas!
Plans for 2011-2013
Grow the JIC Network…revisit, assess and develop taking into account ideas presented in the draft National Start-ups & Incubation Strategy.
Support the offering of Business Counseling Services
Continue with spreading awareness of he entrepreneurial culture and provide tailored training opportunities
Q. Is it about business plan competitions?
Facilitate access to finance (VC, Banking Window & Financial Coaching Services)
Enhance and grow business networks
Allocate Euro 600-700K grants to startups focused on exporting!
But most important:
“Utilize JIC members as local economic development agencies.”
Impact and Performance
Indicators (2010 - 2011):
Approximately 600 companies are supported at various levels annually.
Establishment and launch of Euro 25 million VC Funds by end of 2011
58 currently incubated Projects at JIC Network, 28 graduated and are
currently successful start-ups.
Employment opportunities are created.
Increases in local sales are registered.
Increases in exports are registered.
Developed Human Capital skills and know-how acquired through
JEDCO‘s training programs.
Over 18 different Business Associations supported.
Business Advocacy and Policy Support is extended.
Thank you for your good listening
For further information:
www.jedco.gov.jo
Or contact us: