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How SMEs can leverage Technology to overcome economic challenges and stay competitive

Teh Kee Sin
President , SME Association of South Johor, Johor

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How SMEs can leverage Technology to overcome economic challenges and stay competitive

  1. 1. Teh Kee Sin President SME Association of South Johor, Johor How SMEs can leverage Technology to overcome economic challenges and stay competitive
  2. 2. Teh Kee Sin (MBA, Demonfort UK) <ul><li>1. SM E Association of Johor Selatan, President </li></ul><ul><li>2. SM E Association of Malaysia, Vice President </li></ul><ul><li>3. Johor Bahru Chinese Chamber of Commerce & Industry (JBCCCI), </li></ul><ul><li>Committee Chairman of SME & HRM (2003- April 2009) </li></ul><ul><li>4 . Johor CCCI, Committee Chairman of SME & HRM </li></ul><ul><li>(2003 – April 2009) </li></ul><ul><li>5. ACCCIM, Committee Member of SME & HRM (2003 – April 2009) </li></ul>
  3. 3. IBM Confidential In tandem with global market conditions, Malaysia is expected to experience lower growth rates in 2009 <ul><li>First Quarter 2009 – Contracted 6.2% (BNM) </li></ul><ul><li>2009 GDP growth estimated to be -4% to 5% (MIDA) </li></ul><ul><li>Total FDI in 2008 estimated to be US$6.6bil but expected to plunge to only US$1.1bil in 2009 (EIU). </li></ul><ul><li>Inflation for 2009 is forecasted to be 3.5%. (BNM) </li></ul><ul><li>Unemployment rate forecast for 2009 : 4.5% (MIER) </li></ul><ul><li>Malaysia is increasingly feeling the impact of the global economic crisis </li></ul><ul><li>Total exports in December 08 dropped 14.9% compared to a year ago and expected to be on a downward decline in the Q1 of 2009 (manufacturing – 17.6%) </li></ul><ul><li>However, for full year 2008, Malaysia’s external trade balance posted a surplus of RM142.0 billion (US$39 billion), surged 41.5% compared to last year. Total exports increased by 9.6% to RM663.5 billion (US$182 billion) </li></ul><ul><li>Malaysia’s top ten trading partners were Singapore, the USA, Japan, China, Thailand, Korea, Indonesia, Hong Kong, Taiwan, and Germany. These countries accounted for 71% of Malaysia’s total trade in 2008. </li></ul>Economic Trends Country Data and Trends Source: Dept of Statistics Malaysia, MIER Source: Economist Intelligence Unit GDP Growth (%) Export Growth (%), 2008 Y-o-Y Source: DOS, CEIS (Extracted from CIMB Research Report dated 13 February 2009)
  4. 4. Overview on SMEs <ul><li>In Malaysia, there are 556,000 SMEs (99.2% registered company). More than 90% of SMEs are in manufacturing. The development of SMEs is at the forefront of the nation’s thrust towards achieving industrialized country status. </li></ul><ul><li>SMEs contributed 32% of the country’s GDP in 2008 and target to increase to 37% in 2010. </li></ul><ul><li>56% - Employment (6 million) & 19% - Export </li></ul><ul><li>Malaysia is also the 21st largest trading nation in the world. 76.2% of Malaysian exports are manufactured goods. </li></ul><ul><li>Export activities would continue to be a key strategy for the Malaysian manufacturing sector and national economy. </li></ul><ul><li>To improve our competitiveness outside of Malaysia, SMEs must leverage IT to grow </li></ul>
  5. 5. 435,324 (78.7%) 100,333 (18.2%) 12,610 (2.3%) 4,537 (0.8%) Source: Census of Establishments & Enterprises 2005 – Profile of SMEs <ul><li>Total establishments = 556,804 </li></ul><ul><li>No. of SMEs = 551,267 (99.2%) </li></ul>TOTAL ESTABLISHMENTS BY SIZE MICRO SMALL MEDIUM LARGE
  6. 6. <ul><li>Challenges for SMEs are greater due to : </li></ul><ul><ul><li>Fundamentally lack of resources </li></ul></ul><ul><ul><li>Ability </li></ul></ul><ul><ul><li>Limited market access </li></ul></ul><ul><ul><li>Lack of R&D and technology capacity </li></ul></ul><ul><li>SMEs will have greater flexibility and adaptability in their operating structure, if they have knowledge-driven entrepreneurs investing and understand new technologies. </li></ul>Key Challenges
  7. 7. <ul><ul><li>Greatest impact from implementing ICT </li></ul></ul><ul><ul><ul><li>Building and managing customer relationship, </li></ul></ul></ul><ul><ul><ul><li>Managing suppliers and improvement in strategic management (decision making process and better financial control, greater efficiency in operations leading to improved business flow); </li></ul></ul></ul><ul><ul><ul><li>Access to new markets with better branding, prompt delivery </li></ul></ul></ul><ul><ul><ul><li>Higher employee productivity and improved communications. </li></ul></ul></ul><ul><li>Source : SME Annual Report 2007, published by the National SME Development Council, </li></ul>Opportunity
  8. 8. TAP ON THE STIMULUS PACKAGES FOR SMEs 1.Working Capital Guarantee Scheme (WCGS) – 5 billion 2.Industry Restructure Loan Guarantee Scheme (IRLGS) - 5 billion RM2billion RM60 billion SME Assistance Guarantee Scheme (SAGS) RM7billion 2 nd Stimulus Package (8 th Mac 2009) Special Assistance (3 rd Feb 2009) 1 st Stimulus Package (Nov ’08)
  9. 9. Roles : <ul><li>Government </li></ul><ul><li>Financial Institutions </li></ul><ul><li>SMEs </li></ul><ul><li>NGO / Trade Association </li></ul>
  10. 10. How can Manufacturing be smarter? <ul><li>Creating an infrastructure that drives down costs, is intelligent and secure in a dynamic business climate </li></ul><ul><li>Maintaining continuous business operations while rapidly adapting and responding to risks and opportunities with an integrated infrastructure. </li></ul><ul><li>Leadership virtualization and consolidation solutions that reduce cost, improve asset utilization, and speed provisioning of new services. </li></ul><ul><li>Understand, manage & response to customers’ expectations, develop sustainability strategies aligned with overall business strategy. </li></ul><ul><li>Use fewer resources in the creation of products and ensure that the products are environmentally friendly. Avoid the costly disposal of environmentally harmful byproducts </li></ul>
  11. 11. <ul><ul><li>The fundamental effort towards innovation must start with a change in SMEs mindset and organisation culture. </li></ul></ul><ul><ul><li>SMEs should be more active and aggressive in seeking and securing new knowledge, especially knowledge that would help them to manage resources effectively and efficiently. </li></ul></ul><ul><ul><li>Continuous technology enhancement has to be carried out to further improve operation capabilities and business opportunities. </li></ul></ul>Conclusion - How SMEs can leverage Technology to overcome economic challenges and stay competitive
  12. 12. Thank You