Using Entrepreneurship Ecosystem to Promote Economic Growth

Using Entrepreneurship Ecosystem to Promote Economic Growth

Globally, entrepreneurship is key in stimulating economic growth Contribute to Gross National Product Promote Investment Penetrate into International Market Role of Entrepreneurship in Economy Generate Employment Lead to Diversity in Products & Services 2

There are many ways to define entrepreneurship Prof. Kabeya Tshikuku Entrepreneurship involves a conscious content, a precise commitment and a definite practice. It involves a project, a framework for its implementation and a recurrent activity geared to the materialisation of the project Economic Dictionary Entrepreneurship is the process of discovering new ways of combining resources. When the market value generated by this new combination of resources is greater than the market value these resources can generate elsewhere individually or in some other combination, the entrepreneur makes a profit. Business Dictionary Entrepreneurship is the capacity and willingness to develop, organize and manage a business venture along with any of its risks in order to make profit Professor Howard Stevenson of Harvard Business School: Entrepreneurship is the pursuit of opportunity beyond resources controlled. Wikipedia Entrepreneurship is a process of identifying and starting a business venture, sourcing and organizing the required resources and taking both the risks and rewards associated with the venture. 3

Dynamism of entrepreneurship is reflected in the number of new business entry and exit In Malaysia, registration of new firms have been strong, averaging about 42,780 per year in recent years easy to register or form a business entity 4

Malaysia is ranked 13 th in Starting a Business in the Doing Business Report 2015 by World Bank World Ranking Economy Ranking New Zealand 1 Canada 2 Macedonia, FYR 3 Armenia 4 Georgia 5 Singapore 6 Australia 7 Hong Kong SAR, China 8 Kyrgyz Republic 9 Portugal 10 Lithuania 11 Azerbaijan 12 Malaysia 13 Belgium 14 Taiwan, China 15 Slovenia 15 Korea, Rep. 17 Burundi 18 Ireland 19 Jamaica 20 East Asia & Pacific Economy Ranking Singapore 1 Hong Kong SAR, China 2 Malaysia 3 Taiwan, China 4 Samoa 5 Source : World Bank From 189 countries around the world A high ranking on the ease of doing business index means the regulatory environment is more conducive to the starting and operation of a local firm Ranking is based on Distance to Frontier (DTF). The frontier represents the best theoretical score (i.e.100) observed on each of the Doing Business indicators. The DTF score shows the gap between an economy s performance and the best performance on each indicator 5

Entrepreneurship is often embedded in SME development ecosystem Human capital Access to finance Product development Business services Regulation Innovation Entrepreneurship R&D Infrastructure Technology Market access -6-6

In Malaysia, SMEs are important economic agent 97.3% (645,136) business establishments in the country are SMEs Medium: 3% SMEs cut across all sectors of the economy 90%: Services 5.9% Manufacturing 3% Construction Small: 20% Micro: 77% 1% 0.1% Agriculture Mining & Quarrying SMEs contribution to the economy Source: Department of Statistics Malaysia and SME Corp. Malaysia 35.9% 65.0% 17.8% GDP Employment Exports -7-7 7

Malaysia has a comprehensive framework to oversee SME development Coordinate programmes & policies Ministries & Agencies National SME Development Council Set up in 2004 Chair: Prime Minister of Malaysia Members: Ministers & Head of Key Agencies in SME development Formulate policy & undertake economic assessment Secretariat to NSDC One Referral Centre SMEs Chambers & Industry Associations 8 8

Holistic approach to SME development brought positive results but still a long way to achieve a high income nation Outcome of policies by NSDC Other supportive policies (improvement in government delivery, higher domestic demand and tourism, focus on farmers and small contractors) SME vs Overall GDP Growth Contribution of SMEs to GDP Annual growth, % Partly due to the redefinition of SMEs 60% 50% 40% 51% 30% 20% 39% 36% 10% 0% 16% Low income Middle income High income countries countries countries Malaysia Source: Department of Statistics Malaysia 9 9

SME Masterplan takes a new approach in SME development P ublic-private partnership Innovation and productivity-led Outcom e-based Approach Live plan 10

through a new SME development framework for innovation-led and productivity-driven growth Vision Globally competitive SMEs across all sectors that enhance wealth creation and contribute to the social well-being SME Development Framework Goals Increase business formation Expand number of high growth and innovative firms Raise productivity Intensify formalisation Focus Areas Innovation & Technology Adoption Market Access Human Capital Development Legal & Regulatory Environment Access to Financing Infrastructure Action Plan Institutional Support Reliable Database Monitoring & Evaluation Effective Coordination Effective Business Services 11

SME Masterplan reveals 4 key findings Low productivity: compared to large firms in Malaysia & SMEs in developed countries Low business formation compared to high income countries, mainly sole proprietorships & partnerships Characteristics of SMEs in Malaysia Material share of informal sector in economy: 31% of GNI Small no. of high growth firms contribute most to economy 12

Focus will be on addressing key constraints to growth Innovation & Technology Access to national innovation system Low commercialisation & R&D Poor technology uptake Human Capital Development Workforce lacks job readiness Low utilisation of existing training Non-competitive rewards & benefits Access to Financing Limited non-banking avenues Poor creditworthiness Lack of know-how and resources Market Access Procurement by Govt/LSIs Information barrier to exports Limited focus on marketing & branding Low bargaining power Legal & Regulatory Environment Licensing / permits Complying to regulations Legislations disincentivising formation & growth Infrastructure Trade clearance and facilitation system Low and infrequent trade volume 13

Findings of GEM Report 2014 shows that Government policies have been effective in promoting entrepreneurship in Malaysia Trend in necessity-driven entrepreneurs has been declining, while improvement-driven opportunity entrepreneurs have been on the rise. Government policies played a role in reducing fear of failure, increasing perceived capabilities and increasing the perception of opportunities. A prevalent reason for business discontinuation is low profitability (45% of responses) and less of financial problems (10% of responses). Besides providing funds, initiatives by the Government are very much augmented and centred on up-scaling and up-skilling entrepreneurs. * Denominator: age group 18-64 perceiving good opportunities to start a business ** Respondent expects to start a business within 3 years; denominator: age group 18-64 that is currently not involved in entrepreneurial activity 14

Going forward, entrepreneurship continues to be a national priority under 11th Malaysia Plan towards Vision 2020 PRODUCTIVITY through encouraging automation & mechanisation, technology adoption and improved skills INNOVATION raises productivity through new or improved processes, technologies & business model and create additional revenue ENTREPRENEURSHIP important to better cope with competition by building capacity and capability of SMEs INCLUSIVENESS a balances growth benefitting all segments of the population to ensure greater prosperity 15

The ultimate goal of SME Masterplan is to enhance SMEs contribution to the economy to 41% by 2020 High-income nation 2020 GDP 41% Employt Exports 62% 25% ETP SME Masterplan 2013 RTP GDP 33% National policies GTP Employment 57% Exports 17% 16

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18 DOING THE SAME THING OVER AND OVER AGAIN AND EXPECTING DIFFERENT RESULTS THATS INSANITY - ALBERT EINSTEIN

INNOVATIVE AND DIGITAL ECONOMY ECOSYSTEM: Innovative (non-conventional) Nurturing Business Culture Comprehensive / Inclusive (national, regional, global) Entrepreneurial Ecosystem Implementable & Sustainable Conducive and Dynamic (Reliable, affordable) 19

DIGITAL ECONOMY ECOSYSTEM TO PROMOTE: INTEGRATION PROCESS COMPETENCIE S e-documentation TRANSPARENCY (TRACKING 20 & VISIBILITY 20 SECURITY

SHIPMENT COMPLEXITIES (APEC BAC STUDY) 27-30 DIFFERENT PARTIES INVOLVED IN THE GLOBAL SUPPLY CHAIN PROCESS 40 DOCUMENTS REQUIRED 200 DATA ELEMENTS WHERE 30% ARE REPEATED AT LEAST 30 TIMES RE KEYING OF 60-70% OF DATA AT LEAST ONCE. (HIGHLY INEFFICIENT AND FRAGMENTED IN THE MOVEMENT OF A SHIPMENT) 21

UN ECE and UN ESCAP : THE EFFICIENCY OF INTERNATIONAL TRADE TRANSACTIONS DEPEND ON THE AVAILABILITY, QUALITY AND RELIABILITY OF INFORMATION ASSOCIATED WITH THE MOVEMENT OF GOODS AND RELATED SERVICES ACROSS THE BORDERS A SINGLE WINDOW INITIATIVE, IF SUCCESSFULLY IMPLEMENTED, MAKES A MAJOR CONTRIBUTION TO THE NATIONAL CAPACITY TO EXPORT TO THE WORLD 22

SINGLE WINDOW INITIATIVE 23

WHAT IS THE SINGLE WINDOW? A facility that allows parties in trade activities to lodge standardized info / data / document with a single entry point to fulfill all import, export and transit-related regulatory requirements. For electronic info / data to submit only once. 24

OBJECTIVE OF SINGLE WINDOW INITIATIVE Single point submission Risk management (Control, enforce) Reduced cost, delays / errors Improve trade compliance Faster clearance Correct revenue yield 25

MAIN FOUNDATION FOR SUCCESSFUL GSW and monopolistic concerns worldwide s GSW- Global Single Window 26

HOW TO OFFSET GEOPOLITICAL AND MONOPOLISTIC CONCERNS? Public Private Partnership Equal Governance Planning & Execution Authority 4 Regional Councils (Americas, Europe, Asia and MEA) Equal Share of Benefits / Revenue Global B2B Connectivity (without boundaries) ** PPP Public Private Partnership 27

TRUSTED GLOBAL NETWORK FOR GSW REVENUE SHARING ROLE PROFIT DRIVEN ROLE PRIVATE SECTOR NEEDS PPP ROLE GOVERNMENT ROLE PPP Public Private Partnership 28

VIDEO: CASE STUDY FOR MALAYSIA s SHIPMENT EFFICIENCY ANALYSIS: CURRENT SITUATION (TO PLAY VIDEO) 29

GLOBAL SINGLE WINDOW: FOUNDATION FOR THE FUTURE INTERDEPENDENCIES AND COMPLEXITIES OF GLOBAL TRADE REQUIRE OPTIMUM EFFICIENCY EFFICIENCY THROUGH AVAILABILITY, QUALITY AND RELIABILITY OF DATAs ON REAL-TIME 24/7 PROACTIVE VS PASSIVE DATAs MANAGEMENT AND USAGE 30

GLOBAL SINGLE WINDOW: FOUNDATION FOR THE FUTURE REAL B2B BUSINESS CONNECTIVITY COUNTRIES, REGION AND GLOBAL WITHOUT BOUNDARIES TOOL FOR SHELF TO SHELF EFFICIENCY-INCREASE PRODUCTIVITY, ENHANCE GLOBAL COMPETITIVENESS INCLUSIVENESS OF SCOPE AND FUNCTIONALITY FOR ALL PARTICIPANTS NATIONAL, REGIONAL AND GLOBAL 31

GLOBAL SINGLE WINDOW: FOUNDATION FOR THE FUTURE MONITORING AND GOVERNANCE MECHANISM TO ADDRESS GEOPOLITICAL AND MONOPOLISTICS CONCERNS RAPID GLOBAL DEPLOYMENT AND ADOPTION VOLUNTARY, NO COST, NON-INTRUSIVE 32