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Chaired by the Prime Minister, with representation from Ministers and Heads of 19 key Ministries and Agencies involved in SME development, the NSDC serves as the highest policy-making body to set the strategic direction for the Government policies on SME development so as to ensure coordination and effectiveness of Government programmes.
The NSDC convenes bi-annually to deliberate on strategies and new policies to support SME development across all sectors, as well as to monitor and evaluate the progress and effectiveness of SME policies and programmes in promoting the growth and development of SMEs.
TERMS OF REFERENCE OF THE NSDC
- Formulate broad policies and strategies to facilitate the overall development of SMEs across all sectors;
- Review the roles and responsibilities of Government Ministries and Agencies responsible for SME development;
- Enhance cooperation and coordination, as well as guide Ministries and Agencies to ensure effective implementation of SME development policies and action plans;
- Encourage and strengthen the role of the private sector in supporting the overall development of SMEs; and
- Provide emphasis to the development of Bumiputera SMEs across all sectors of the economy.
In order to increase SMEs’ contributions to the economy, the main thrust of SME development efforts are aimed at:
- Strengthening the infrastructure for SME development;
- Building the capacity of domestic SMEs; and
- Enhancing access to financing by SMEs.
In line with the three-pronged strategy, NSDC has begun several initiatives since its inception.
Strengthening the Infrastructure for SME Development
- Establishment of a comprehensive National SME Database by the Department of Statistics Malaysia. This gives a clear picture of the status and development needs of SMEs across all sectors, and helps monitor the effectiveness of SME development policies and programmes.
- Introduction of standard definitions for SMEs.
- Adoption of the SME Policy Formulation and Evaluation Framework for greater coordination and focus in the formulation and implementation of SME policies and programmes.
Building the Capacity of Domestic SMEs
- Appointment of Pembangunan Sumber Manusia Berhd (PSMB) as the central coordinating body for SME development.
- Launch of an online Human Resource Development Portal to encourage and help employers, particularly SMEs, to retrain and upgrade the skills of their employees.
- Introduced new ways to improve the marketing and promotion of SMEs and their products.
Enhancing Access to Financing by SMEs
- Establishment of the SME Bank to provide SME-specific loans and advisory services.
- Introduction of the securitisation of SME loans to encourage further lending by financial institutions to SMEs.
- Introduction of to encourage SMEs to export their goods and services to non-traditional markets, especially to member countries of the Organisation of Islamic Conference.
The NSDC convened its seventh meeting on 13th September 2007 and endorsed several key initiatives to further promote a competitive and resilient small and medium enterprise (SME) sector.
Establishment of the SME Central Coordinating Agency
The NSDC agreed to establish the SME Central Coordinating Agency, a single dedicated Government agency to spearhead the development of SME across all sectors of the economy. The Small Medium Industry Development Corporation (SMIDEC) will be transformed to become the SME Central Coordinating Agency.
The establishment of the Agency reflects the Government’s strong commitment in promoting the development of entrepreneurship and SMEs in Malaysia. This is a key initiative aimed at accelerating the development of the SME sector by providing greater focus in formulating strategies and implementation of programmes for SMEs.
The Agency will collaborate with the relevant Ministries and Agencies to ensure that comprehensive policies are in place, as well as coordinate and synchronise implementation of SME programmes across all sectors and Agencies.
The Agency will provide a one-stop information and advisory services to SMEs. This single point of contact and reference will make it much easier for SMEs to obtain comprehensive and up-to-date information on all programmes and provided by the Government assistance, as well as advisory services. This will significantly enhance the delivery of Government programmes and advisory services to SMEs. In addition, the Agency will monitor the performance of SMEs, towards developing appropriate policy response.
The SME Central Coordinating Agency will be placed with the Ministry of International Trade and Industry, but will report to the National SME Development Council. Necessary financial and non-financial resources will be provided by the Government to ensure that the Agency can perform its roles effectively.
The NSDC believes that the establishment of the Agency will accelerate the development of the SME sector through better coordination and effective implementation of SME programmes. The Agency will have a key role in achieving the target set by the NSDC to increase SME contribution to the economy from 32% in 2005 to 37% of gross domestic product by 2010.
Significant Progress in Implementation of Microfinance and Launch of the National Microfinance Logo
The NSDC was informed of the significant progress of the participation of financial institutions in the roll out of microfinance. As more than 435,000 businesses are micro enterprises, the NSDC, in August 2006, approved the commercially-driven microfinance institutional framework, which involves the participation of banking and development financial institutions in the provision of microfinance. Through microfinance, viable businesses can have easy, fast and convenient access to financing for their businesses. By bringing these micro enterprises into the economic mainstream, microfinance is an important mechanism to achieve balanced economic development.
Currently, there are six banking institutions and three development financial institutions offering microfinance products, for loans size ranging between RM500 to RM50,000. Key features of the microfinance products offered by these financial institutions include no collateral requirement, minimum loan documentation and fast approval.
YAB Prime Minister launched the national microfinance logo and presented prize award to the winner of the logo design. The winning entry was selected from the Microfinance Logo Design competition held by Bank Negara Malaysia on 7 May - 8 June 2007. The national microfinance logo is aimed at creating public awareness on the availability of microfinance. Branches of financial institutions that provide microfinance will display the national microfinance logo. Similarly, borrowers are encouraged to display the logo at their business premises to symbolise their success in obtaining microfinance.
Branding Enhancement for Effective Marketing of SME Products and Services
The NSDC approved the BRAND-SME Development Programme. The objective of the programme is to promote and reinforce the value of individual SME’s brand. The goal is to encourage SMEs to leverage on branding to market their products and services. This programme comprises four core elements; Capacity Building; Certification & Award of a National Mark (a symbol of excellence, distinction and assurance of compliance); Auditing & Monitoring; and Promotion. Qualified SMEs can take advantage of various support and financial incentives provided by government agencies to assist them in developing and promoting their brands.
Development Programmes for the Agro-based Industry
The NSDC was briefed on the development programmes for the agro-based industry. Since 2005, the programmes have successfully created 6,060 new entrepreneurs in the agro-based industry. The present programmes will be strengthened to enhance entrepreneurship, product quality and standards that meet the international requirements, as well as capacity and capability of SMEs, particularly in production capacity and technology adoption.
Developing Innovation-driven SMEs
The NSDC was briefed on the initiatives undertaken by the National SME Innovation Focal Point. Established in December 2006, the Focal Point provides a platform for entrepreneurs, industry associations, research institutes, financiers and relevant Government agencies to discuss initiatives to develop innovation-driven SMEs. The following action plans and programmes have been identified:
- Technology-based institutions to undertake Technology Foresight Pogrammes to facilitate SMEs access to best technologies;
- Implement specific programmes, such as Industrial Linkage Programme and Global Supplier Programme to nurture SMEs as R&D partners to tap the opportunities of R&D outsourcing by MNCs and GLCs.
- Benchmark and strengthen Incubation Centres to further support the growth of technology-based SMEs; and
