Friday, May 24

A good year for SMEs


KUCHING: It is a good year for small and medium enterprises (SMEs) in Malaysia, with players across sectors introducing new products on the back of the government’s push.

SMEs are on course to contribute about 33 per cent to the country’s Gross Domestic Product (GDP) this year despite being in an environment which is plagued with a multitude of adversities.

Assistant Minister in the Chief Minister’s Office, Datuk Mohd Naroden Majais noted before that in line with the High Impact Programme’s strategy chartered under its master plan for 2010 to 2012, SMEs aim to increase their contribution to the country’s GDP to 40 per cent by 2020.

Representing 99.2 per cent of total active business establishments in Malaysia, SMEs are no longer mere ‘side ventures’ for entrepreneurs with good ideas and the necessary capital to do so.

Today, the Malaysian SME sector is a robust and growing market, making up a majority of the country’s businesses and serving to fulfil many crucial niches that complete the industries – proving that strength does come in numbers.

The Malaysian SME sector is a robust and growing market. Approximately 98 per cent of businesses in Malaysia are SMEs and they make up almost 40 per cent of Malaysia’s GDP, and are responsible for 59 per cent of employment and 19 per cent of exports.

Despite the global economic challenges present, steady growth is expected for SMEs, especially with strong domestic demand and the implementation of key government initiatives such as the Economic Transformation Programme, SME Masterplan (2012 to 2020), and economic corridors such as Sarawak Corridor of Renewable Energy (SCORE).

To note, the total SME industry covers an estimated 32 per cent of Malaysia’s GDP and employ 56 per cent of total workforce in 2012.

The recent barrage of events in Malaysia promoting SMEs such as the SME Congress, SME Innovation Showcase, Asean-India SME Conference to name a few – affirms the growing importance of this industry to the point where both public and private sectors are building up the platform to enhance the industry further.

The Ministry of International Trade and Industry (Miti) Deputy Minister, Datuk Hamim Samsuri, encourages the setting up of cooperatives to help SMEs expand their businesses and market their products.

Hamim also encouraged the SMEs to venture into new areas which offer potentials to boost their earnings and at the same time diversify their skills into the National Key Economic Areas(NKEA).

At a separate event, Hamim said SME entrepreneurs should also be wise from the aspect of drawing up a marketing strategy for their products to continue competing on the open market.

“The entrepreneurs who succeed in business are those who have paid attention to the aspect of marketing, particularly, promotions, advertising and branding,” he added.

Various choices

Consumers in the globalisation era now have various product choices, and SME entrepreneurs who can showcase uniqueness,creativity, and innovation, will not only be able to compete at home, but also in the global market.

The Federation of Malaysian Manufacturers (FMM) earlier this week has proposed to the government to come up with an innovation voucher of RM50,000 for small and medium enterprises (SMEs) to start their projects.

The recently-launched Malaysia SME community directory is expected to be one of the best channels to boost the development of local SMEs as well as promote their businesses, says SME Corp Malaysia.

The directory, the first of its kind in the country, offers detailed and relevant data about the company, which includes facts, consumer preferences and statistics on 19 business communities driven by SMEs, including agriculture, automotive, building and construction and manufacturing.

It also features an overview, employment, key contributions, growth opportunities and other information such as government policies as well as business ventures.

With so much effort being put into the SMEs in the country, Bizhive Weekly takes a look at some players that both aid and challenge players beyond boundaries into new territories.

Embracing communication needs with Maxis

Maxis Bhd (Maxis) clearly sees the important role that Malaysian small medium enterprises (SMEs) play and their growth potential within the country’s economy, noting that they are are the driving engine of growth, job creation, income generation and competitiveness in domestic and global markets.

Based on the SME Annual Report 2012 to 2013, SMEs contributed 32.7 per cent of the country’s gross domestic product (GDP), superseding the overall GDP growth of the country. This remarkable statistic certainly demonstrates the SME industry’s continued growth potential.

“We are therefore proud to have played a key role in supporting their development in Malaysia through our initiatives and a host of integrated solutions specifically tailored for this market,” noted Shanti Jusnita Johari, head of Enterprise Solutions at Maxis to BizHive Weekly.

“We are very committed to supporting the growth of SMEs in Malaysia, and are keen to empower them with the adoption of viable technology that will help them in their respective businesses.”

As an industry leader in providing end-to-end solutions for SMEs – covering everything from the home, office, personal, fixed-line or mobile access, Internet services and applications, machine-to-machine and cloud-based services – Maxis highlights its deep understanding of the cruciality of communications as a vital point in the daily running of business.

“As a result, our customers will be able to enjoy a seamless experience when using our bundled solutions. This strong leadership position in both fixed and mobile network connectivity, our enterprise solutions help manage their costs and resources more effectively, and expand market reach through a wide range of offerings,” she added.

To achieve their business objectives, SMEs need to be equipped with the right business tools including communications and ICT.

This led to Maxis coming up with a solution to address these needs with its bundled SME offerings  – a  complete one-stop solutions that will help fulfill SMEs’ fixed, mobility and ICT needs.

“On October 2, we launched the most affordable and complete SME solution in the market, called the Maxis Business Kit. It is a demonstration of our continuous commitment to this segment in providing innovative and relevant solutions for the robust SME market.

“The Maxis Business Kit is a solution that offers a combination of mobile, Internet and business voice propositions.

“Value added marketing solutions are also introduced into the bundle, which includes marketing solutions such as free custom website and email domain, directory listing on Maxis’ new digital directory services FINDIT 333 and SMS broadcast, as well as free devices.”

Maxis has played a significant role in the SME and Enterprise segments, where it has been able to offer end-to-end business solutions that are customised to their specific needs.

The group’s aim is to create affordable and complete solutions that cater to a wide range of SME business needs, so that they may continue to thrive in an increasingly technology-driven business environment.

“Having said this, we have been very pleased with the take up of our services and importantly, the trust that has earned from its customers in helping them at every step of their company’s business life-cycle.

“We have always valued customer relationships. Over the years, we have endeavoured to gain a deep understanding of SMEs who have diverse but unique needs that are markedly different from larger corporations.

“Through our relationships, we are able to address their various needs by developing simple solutions and customised services suited to enhance their business operations. SMEs typically do not have the luxury of high IT investments and so they seek out packages or solutions that offer them the best value, convenient installation process and expedient execution whilst staying connected on-the-go,” Shanti enthused.

Educating players  to embrace technology

She also elaborated that the company is keen to play its part in educating SMEs through initiatives such as the SME Business Conference series, with the main objective of enabling participants to identify business growth opportunities by providing insights on commercial business, information on advanced technology, government support and schemes and best practices.

These events are also platforms for SMEs to learn more about new business solutions and how it can help them to get maximum results for their business.

“Furthermore, through the SME Masterplan 2012 to 2020, the government is targeting SMEs to be on par with those in other developed countries by 2020, with the share to GDP increasing to 41 per cent from the current 32 per cent.

“Innovation and technology adoption has been named as one of the performance levers and an area to be addressed under the initiatives of the Masterplan to ensure that SMEs reach their full growth potential

“We believe that all of these factors will further encourage the SME community to embrace technology in their business expansion both for the domestic and international markets. In addition, the majority of family-run SMEs being are assisted by their own children who are now the second generation running the business and who are seen as early adopters of technology,” she said.

What Maxis does is to make solutions simple enough for SMEs to understand and centralized for them, so that they are able to take away all the redundancies. Business owners can then free up more precious time to work on things that matter to them.

So essentially, with ICT-enhanced solutions, SMEs can go to market with more agility, cost-efficiency and competitiveness, enabling them to provide better products and services to Malaysian consumers.

Alliance Bank boosting SME growth

A strong supporter of the local SME sector is Alliance Bank Malaysia Bhd (Alliance Bank). The bank has made major strides in Malaysia’s SME industry, so much so that is has garnered the Asian Banker’s Best SME Bank accolade in April this year.

Alliance Bank executive vice president and head of Group Business Banking, Steve Miller in an interview with BizHive Weekly underscored the need not only to aid in the financing of SMEs but also to continue educating and developing the sector to new levels.

“The SME segment remains a core focus for Alliance Bank, representing a substantial proportion of the Bank’s revenues,” Miller said via email.

“We have one of the highest SME loans to Total Bank Loans ratio in the market, and continue to chart double-digit loans and deposit growth.”

In a previous interview with BizHive Weekly back in 2012, Miller noted there over 6,500 customers to Alliance Bank’s SME Banking portfolio at that point in time.

This year saw continuous strong momentum in new customer acquisition.  In the last financial year ending March 31, 2013, Miller revealed the figure of more than 10,000 new business current accounts for Alliance Bank, capturing an estimated 20 to 25 per cent market share of new start-ups in Malaysia.

“Alliance Bank is widely recognised as a long-term ‘Trusted Partner in Growth’ for its SME clients, offering holistic propositions to SMEs at every life-stage,” he said.

“Our relationship management model goes back to the fundamentals of personalised, long-term relationships, where customers are assigned relationship managers who will serve them through the different life-stages of their business.

“We aim to be the preferred first bank for small businesses and provide incubation support during their initial years; all the way until they become large SMEs that require investment banking services.

“To this end, our loyalty marketing efforts are focused on activities that ‘add-value’ for the business owner, be it through our series of business seminars that we organise annually, ad-hoc conferences on the most relevant business issues of the day, or customer appreciation dinners.”

One such venture was the launch of the Alliance Bank BizSmart Academy, designed to be the ‘go-to’ resource for young business owners and features an online resource centre at

“This online resource is brimming with information to empower businesses to grow profitably and sustainably. Existing customers can also sign up for relevant business seminars via the online site.

“It is the bank’s 360-degree proposition to help SMEs accelerate their businesses from all aspects in terms of business support, business networking, advisory, as well as formal and informal learning.”

In conjunction with the introduction of the Alliance Bank BizSmart Academy, the bank also launched its inaugural annual SME Innovation Challenge 2013, inviting young SMEs who have been in business between one and three years to submit their business propositions for consideration.

When asked on his thoughts on the financing provided for SMEs in Malaysia so far, Miller said the majority of the local banks have increased their focus on SME financing, as it is a higher growth segment.

“At Alliance Bank, we remain confident of capturing a larger market share in this segment, as we proactively anticipate the needs and demands of SMEs and innovate ahead of our competitors.”

Looking ahead, he believed the growth outlook for the SME segment looks promising with  the  government’s initiatives via the Economic Transformation Programme.

“However with the increased liberalisation of trade across the region (e.g. Asean Free Trade Area (AFTA)’s zero tariff rates by 2015), the competitive landscape will rapidly change.

“Malaysian SMEs will need to continually adapt and re-invent their business models to remain regionally competitive.”


SME and branding

Branding acts as a common identifier between the organisation and its customers and fosters emotional engagement.

In the long run, this will help with customer retention and loyalty, noted Steve Miller, executive vice president of Alliance Bank Malaysia Bhd’s business banking group.

“There are many reasons why SMEs may not have been successful with branding themselves. One of the more common perceptions is that it requires huge amount of capital; the money for this ‘unnecessary expenditure’ could be used elsewhere to improve the organisation.

“Whilst larger corporations and multinationals can afford to take a ‘shot-gun’ approach at branding through above-the-line promotions, SMEs must often take a more judicious approach to maximise scarce marketing dollars,” he noted.

At the moment, SMEs locally have this misconception that branding is advertising with a majority of them instantly focusing on designing brochures, buntings, banners, newspaper adverts, billboards and so forth.

Advertising is just one of the many tools for a branding process. Similar to corporate identity, corporate trainings, team building activities, public relations, social media and events, these are tools to create a brand perception among the target audience for them to get to know the company in the most relevant method.

Another misconception is that branding requires a huge budget. Many SMEs think that branding is out of their pocket’s league.

Contrary to popular belief, the only capital branding really needs is time. Branding takes time and scaleble to the company’s budget and in most situations, branding starts internally.

Last but not least, another misconception is that branding would automatically generate sales. Proper branding can result in higher sales as the brand is the personality that identifies the product, service or company but not in a very direct manner.

People engaged in branding seek ways to develop or align the expectations behind the brand experience creating an impression that a brand associated with a product or a service has certain qualities or characteristics that makes it special or unique therefore making it a very valuable element in advertising and not the other way around.

With this in mind, Alliance Bank launched a novel picture business credit card last year called the Alliance Bank MyBusiness Platinum Card. The unique thing about the MyBusiness Platinum Card is that we take our bank’s name off the face of the card.

“We wanted to do something unique for our customers as we know that most SMEs have very little marketing budget or no experience in marketing. So we give them the whole card face, take advantage of picture technology, and let them decide what to put on it.

“It not only gives them branding space, but will also generate a lot more interest about what their company stands for each time they use the card to make a purchase,” Miller noted.

Meanwhile, solutions provider Maxis head of Enterprise Solutions Shanti Jusnita Johari also underscored the importance of branding, noting that SMEs need to establish in their respective businesses, which can be in many forms.

“Apart from their own initiatives on branding, our solutions also contribute to increasing their profile amongst their own customers,” she underlined. “For example, brands can be built online via a website. Because we recognise their needs and awareness on branding, our services can also help them to achieve this.

“Our Maxis Business Kit for example offers value added services which include free custom website and email domain, as well as directory listing on Maxis’ new digital directory services FINDIT 333 and SMS broadcast.

“These are very effective channels as part of the customer’s branding initiatives.”