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MALAYSIA SME BUSINESS SUMMIT

SPEECH BY
YB LIM GUAN ENG
MINISTER OF FINANCE MALAYSIA

JW MARRIOT HOTEL, KUALA LUMPUR
930AM, 25 JUNE 2019

 

Yang Berbahagia Tan Sri Datuk Ter Leong Yap,
President, Chinese Chamber Of Commerce And Industry Of Kuala Lumpur And Selangor (KLSCCCI)

Yang Berbahagia Dato’ Liaw Choon Liang
Organising Chairman, The Malaysia SME Business Summit

Distinguished Guests

Ladies And Gentlemen


Good morning and Salam Harapan,

INTRODUCTION

1. I would like to thank the organiser, the Chinese Chamber of Commerce and Industry of Kuala Lumpur and Selangor (KLSCCCI), for inviting me to speak here today to mark its 115th Anniversary this year.

TRANSFORMATION OF SMES

2. In 2017, SMEs contributed 37% to the Malaysian GDP and that figure is expected to rise to 41% by 2020. Furthermore, SMEs employed two-thirds of all workers in Malaysia, and made up 98.5% of all business establishments in the country.

3. Despite its large contribution to the economy, SMEs face a challenging business environment. Introduction of new technology, especially relating to Industry 4.0, is disrupting various SMEs’ model so thoroughly that they have no choice but to change.

4. According to a 2017 report by International Data Corporation (IDC), by year 2020, 50% of the Forbes Global 2000 companies will have their business dependent on digitally enhanced products, services and experiences. This highlights the fact that digitalisation is an essential ingredient for success, and it would not be too long before digitalisation become ubiquitous in our daily life.

5. Businesses that are unprepared for digitalisation will not be able to compete effectively, and risked being left behind by those equipped with the right culture and expertise to provide products and services in a complex and hyperconnected market.

6. The Government is supporting and nudging SMEs towards digital transformation. We have launched a new guarantee scheme worth RM2 billion through SJPP (Syarikat Jaminan Pembiayaan Perniagaan Bhd) to help Malaysian SMEs make the leap towards Industry 4.0. Additionally, RM1 billion is dedicated to bring bumiputra SMEs up. This is part of RM6.5 billion SJPP guarantee scheme to ease SMEs’ access to financing.

7. The Government also provides a RM3 billion Industry Digitalisation Transformation Fund under Bank Pembangunan Malaysia Bhd (BPMB) to accelerate adoption of new technology including artificial intelligence, automation, big data and robotics among Malaysian companies.

8. Other funds SMEs should take advantage of are the RM1 billion Sustainable Development Financing Fund for companies that fulfil United Nations Development Programme (UNDP) sustainable development goals (SDG), and the RM1 billion Tourism Infrastructure Fund. Both facilities are from Bank Pembangunan.

9. The Government is also boosting support for innovating new fundraising methods such as equity crowdfunding (ECF) and peer-to-peer (P2P) financing. We have committed RM50 million towards a coinvestment fund (CIF) for ECF and P2P investment for micro-SMEs.

10. I encourage all Malaysian SMEs to utilise these funds and make the digital leap as soon as possible.

COMPETITIVENESS, AND TRADE AND INVESTMENT DIVERSION

11. The push towards accelerated adoption of Industry 4.0 technology among Malaysian companies, including among SMEs, is part of the Government’s initiative to increase Malaysia’s national competitiveness. Our country has already been acknowledged by IMD as the 22nd most competitive economy out of 63 countries in 2019. The World Bank meanwhile puts Malaysia as the 15th easiest place to do business in the same year.

12. Our current competitiveness has enabled Malaysia to benefit from the ongoing trade war between China and the United States via business relocation, as well as trade and investment diversion. This can be seen when approved foreign direct investment (FDI) for all sectors during the first quarter of 2019 rose 73.4% to RM29.3 billion from RM16.9 billion a year ago.

13. The approved FDI increase was driven by a 127% manufacturing investment surge to RM20.2 billion, compared to RM8.9 billion a year ago. Out of the RM20.2 billion in approved manufacturing FDI, RM11.5 billion came from the United States and RM4.4 billion originated from China.

14. These increase in approved FDI will help increase actual investment as it gets realised on the ground in the near future.

15. Meanwhile, the domestic economy is growing despite challenges from abroad. Our industrial production for April 2019 rose 4.0% yearon-year after increasing 3.1% in March. The April industrial reading is above the 2.5% increase projected by the market, as surveyed by Bloomberg. And of course, our GDP grew 4.5% in the first quarter of 2019, which was also above the market projection of 4.3%.

4P PARTNERSHIP, ENTREPRENEURIAL ECONOMY & INNOVATION

16. However, we cannot depend merely on trade and investment diversion to fuel our growth because the benefits of trade war are only short-term in nature. In a persistent and escalating trade war, there are no winners, only losers.

17. Our goal is first, to defend our relevance to the global supply chain, and then second, to make our economy the essential manufacturing base in the new reoriented global supply chain.

18. To achieve the second goal, we need to encourage innovation and entrepreneurial economy among our population. I believe we can do this by engaging in 4P Partnership between the public sector, the private sector, the people and the professionals.

19. In particular, we should all come together to leverage on the strength of our universities to create an entrepreneurial state. To support new economy innovators and entrepreneurs, we should create one-stop centres located near our universities. The centres will have access to patent office, trade bureau and financing office, as well as start-up incubators and accelerators . Not only that, entrepreneurs will also gain access to highly-trained employees in specific fields relevant to their projects due to the centres’ proximity to tertiary education institutions.

20. The clustering of services through one-stop centres near universities should help innovative entrepreneurs bring their ideas to the next level in a collaborative way, and make our economy not just as an economy of consumers, not also an economy of high-tech producers.

Ladies and gentlemen,

CLOSING

21.The theme of the Malaysia SME Business Summit is “Transform, Innovate & Elevate.” It is an appropriate theme given the challenges SMEs face amid the digitalisation pressures.

22. I hope this summit will help you find new ideas and new ways to do business.

 

Thank You.

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