1) The document discusses SME Bank Malaysia and its role in supporting small and medium enterprises (SMEs) in Malaysia. 2) SME Bank provides financing and advisory services to SMEs in manufacturing, services, and construction. Its mandate is to finance underserved SMEs in a sustainable way to have both social impact and financial sustainability. 3) The document outlines challenges facing SMEs like financing gaps and discusses how SME Bank addresses these gaps through developmental programs and financing while balancing its development and financial goals.

1. SME BANK MALAYSIA21 SEP 2016
CEO Forum of the World Federation of Development Finance Institutions (WFDFI)
Gaborone International Conference Center (GICC)
Gaborone, Botswana. November 2-4, 2016
Theme: “DFIs: Sustaining Relevance in the Age of Disruption”
DFIs and the Agenda for Development : Expanding Possibilities
by Datuk Mohd Radzif Mohd Yunus
3 Nov 2016

2. SME BANK MALAYSIA21 SEP 2016
Overview:
SME Landscape in Malaysia
SMEs in Malaysia
Source: SMEs 2011 Census Report by the Statistics Department of Malaysia & Eleventh Malaysia Plan
Source: SME Bank Financing Portfolio YTD Mar 2016
October 2016

3. SME BANK MALAYSIA21 SEP 2016
Full time
employee
Manufacturing Services & Other Sector
Micro Less than 5 employees Less than 5 employees
Small Between 5 - 75 employees Between 5 - 30 employees
Medium Between 75 - 200 employees Between 30 - 75 employees
Annual Sales
Micro Less than RM300,000 (USD71.4K) Less than RM300,000 (USD71.4K)
Small
Between RM300,000
& less than RM15 million (USD3.6M)
Between RM300,000
& less than RM3 million (USD0.7M)
Medium
Between RM15 million
& RM50 million (USD11.9M)
Between RM3 million
& RM20 million (USD4.8M)
Eligibility Criteria
Status Entity defined as Small Medium Enterprise (SME)
Business activity Activities related to manufacturing, services and construction that not in contrary
Shariah principles
Primary agriculture, mining, private/commercial housing, gambling and other
activities determined by the Bank from time to time ARE NOT ELIGIBLE
Ownership Malaysian owned entity ( >51% Malaysian equity)
Note: RM1.00 = USD4.20
SME Definition & General Financing Criteria
October 2016

4. SME BANK MALAYSIA21 SEP 2016
SME Master Plan 2012-2020
October 2016

5. SME BANK MALAYSIA21 SEP 2016
Perspective of DFIs in Malaysia : Role of DFIs
October 2016

6. SME BANK MALAYSIA21 SEP 2016
Rationale of existence : Unique Individual Mandate
DFI MANDATE
Development Bank of
Malaysia
Providing financial services focusing on capital intensive industry i.e.
infrastructure projects, maritime & hi-tech sector
SME Bank Providing financing and advisory services activities to SMEs
involved in manufacturing, services and construction sectors
Export-Import Bank of
Malaysia Berhad (EXIM)
Providing facilities to support exports & imports of goods, services and
overseas investments
Agro Bank Malaysia Providing full range of financial services focusing on agricultural sector
Co-operative Bank
Provide financing and accept deposits as well as producing satisfactory
dividend for its members (co-operative)
National Savings Bank
To encourage savings, investments and smart financial management
among Malaysians to increase quality of life
The remaining 7 entities which are not governed by Central Bank have their own respective specific
mandates

7. SME BANK MALAYSIA21 SEP 2016
Central Bank
(Regulator)
MITI
(Supervising Ministry)
Broad Focus on:
• Manufacturing sector
• Services sector
• Construction sector
SME Bank :Ownership and Reporting
Ministry of Finance
(Shareholder – 100% )
• Authorized Capital
RM5.0 billion
• Paid up Capital
RM1.35 billion

8. SME BANK MALAYSIA21 SEP 2016
&
A full-fledged specialised
financial institution, an
international benchmark
for nurturing SME
excellence
To develop SMEs to be
the nation’s engine of
growth, in line with the
Government’s
economic agenda
October 2016

9. SME BANK MALAYSIA21 SEP 2016
SME Bank Competitive advantages : What SME Bank is doing
Beyond Financing
MEDIUMSMALLMICRO
Small Medium Enterprises (SMEs)
DevelopmentBanking
High Impact Developmental
Program Through
Synergized Approach of
Financial Assistance
and Intervention
Financial assistance
serves as enabler
for SMEs, as
engine of growth, to
move up the value
chain and create
viral effect to
the economy
Hand-holding
approach from
the entry point
to inculcate business
acumen and propel
SME business
to the next level
FINANCING INTERVENTION

10. SME BANK MALAYSIA21 SEP 2016
…Financing gaps are
driven by two broad
categories of market
inefficiencies
Underserved by
commercial banks
due to information
asymmetry, lack of
collateral, age of SMEs,
and structural
complexity of industry
Desire to accelerate
growth to meet
government’s socio-
economic agenda
through stimulus
financing
DFIs need to play a critical role in supporting government’s goals for SME sector to
(1)address SME financing gap due to continued “market inefficiencies” &
(2) invest in capability building to nurture SMEs.
SME Bank focuses on providing funding
assistance to businesses that are in the
development and growth stage or small to
medium.
Financing Gap for SMEs: Unserved and Underserved markets
October 2016

11. SME BANK MALAYSIA21 SEP 2016
SME Bank’s mandate is to finance and support the growth
of underserved SMEs in a financially sustainable way
“Do Good”
Socio-economic Impact
“Do Well”
Financial Sustainability
SME
GDP
Impact
Bumi
Parti-
cipation
SME
Growth in
NKEAs
Access to
Financing
Capacity
Building
High
Growth
SMEs
Nurtured
Financial
Sustainability
(ROE to be
independently
scalable)
October 2016October 2016
Play the balancing act : Development growth vs financial sustainability

12. SME BANK MALAYSIA21 SEP 2016
Business Impact
Policy Impact
Other Impact
1.Service Sector
2.Financial Technology
(FinTech)
 Large-Scale Involuntary
Migration
 Cyber Attacks and Terrorist
Attacks
 Urbanization
 Scarcity of core commodities
(e.g. clean water)
Source: The Global Risks Report 2016-11th Edition
Forces of Change
 Climate Change
 Gen-Y
 Bloc Economy
 Ageing Society
 Women
Economy
 Rise of the
Richest
Recognize, prepare and act to forces of change

13. SME BANK MALAYSIA21 SEP 2016
Find new focus sector or in downstream sector
• Moving Digitally
• Explore FinTech Financing
•e.g. IAP
• Look at FinTech Companies- Crowdo &
Others
• Factoring and Leasing
Importance &
Readiness
FinTech
Bloc Economy
Gen-Y
Ageing Population
Service Sector
Women Economy
Climate Change
Speed of
Progression
• 46% of SME Bank workforce(2015)
• 9% job turnover rate (2015)
• 42.5% at Associate position
Explore new areas of service sector
e.g. ICT, Green Tech, R&D
• Potential source of fund
• Positive outlook for services sector, luxury items, properties
• Loss to GDP
• Positive for waste mgt
.companies
Private pension scheme not ready20
40
60
80
100
• More than half total
workforce-woman
• New financing products
• Increase woman
entrepreneurship
• Concern on TPPA, AEC,
RECEP
• Need to push SME-Export
Mapping of our current state to the Forces of Change
29/3/2016
Oil Price
Rise of the Richest
Ringgit vs USD
New Economic Power
• New Export market for SMEs
• Opportunities:-provide consultancy in
the new emerging market

14. SME BANK MALAYSIA21 SEP 2016
Source: The Global Risks Report 2016-11th Edition
Realising the opportunities
Focus on
mandated role :
financing &
developmental
assistance to
underserved and
unserved
markets
Adoption of
financial
technology &
digitization for
greater market
outreach &
productivity
Constant
upgrade
capacities &
capabilities of
SMEs
Produce
innovative
products &
programs; thus
improve access
to financing
Development
of focused
strategic
partnership
Improve service
delivery and
market outreach
Establishment
of Banking
School
Improve
infrastructure
& distribution
channels
Understand
market & take
opportunity
offered by trade
agreements
Adopting best
practices from
other
institutions
Mobile Apps,
mobile banking
& internet
banking

15. SME BANK MALAYSIA21 SEP 2016October 20163 Nov 2016