Policy Formulation Framework for Preparing Youth Entrepreneurs Becoming Innovation Players in Global Market

The 3rd Asian Innovation Forum (AIF) Towards Better Asia: Seeking New Possibilities 29 August 2017 at Seoul, Korea Policy Formulation Framework for Preparing Youth Entrepreneurs Becoming Innovation Players in Global Market By: Dr Aini Suzana Ariffin Perdana School of Science, Technology & Innovation Policy Universiti Teknologi Malaysia Kuala Lumpur. MALAYSIA Contact: ainisuzana@utm.my 1

CONTENTS 1. Introduction 2. Problems and Issues on Youth Entrepreneurs 3. Methodology 4. Youth Entrepreneurs: Innovation Adoption Case of Malaysia 5. Government Intervention & Initiatives 6. Barriers Faced by the Young Entrepreneurs 7. Policy Formulation & Policy Framework 8. Proposed Youth Entrepreneurship Innovation Ecosystem Framework (YWIE) 9. Conclusion 2

1. INTRODUCTION - MALAYSIA Located in Southeast Asia. It consists of 13 states & 3 Federal Territories. Total Population 31.5 million (2017), the youth population aged between 15 to 30 years are 9.1 million which represents 28 % of the population. Capital city is Kuala Lumpur & Prime Minister is the head of the country. The country is multi-ethnic &multicultural. Malaysia has had one of the best economic records in Asia, with its GDP growing at an average of 6.5%/per annum for almost 50 years. 3

Cont. Industry Development Resource driven Economy 1950 s Investment-driven Economy 1990 s Innovation-driven Economy 2000 s Rubber, Palm Oil 1960s Manufacturing & Trading Free Trade Zones 1980s Knowledge-based/ Innovation 2000s From Resource to Innovation Driven Science, Technology & Innovation (STI) are the driver to sustain economic growth and global competitiveness. RUs & Government Research and Technology Institutions to act as Centre of Knowledge also to support young entrepreneurs to increase their technology commercialization and to deliver innovations for wealth creation, economic growth and society well being. 4

Government Policy Objectives for Improvement; Youth Entrepreneurs Promote entrepreneurship as an alternative life-style compared to conventional work career. Increase local research findings through competitive innovation, productivity and economic growth. Increase number of successful youth entrepreneurs Increase Job creation & Opportunities Poverty alleviation Upgrade Society wellbeing

Universiti Teknologi Malaysia -RU The oldest public engineering and technological university & in 2005 transformed into Research University (RU) Located in Kuala Lumpur & Johor Baharu Specialises in engineering includes Civil, Mechanical, Electrical, Chemical and Biomedical, STI Policy, IBS & Human Res. 2,100 Academic staff (83% are PhD). 22,000 students. 25% are postgraduates, 3,500 foreign students. UTM provides almost two-thirds of the country s workforce in engineering and technology-related profession. 6

UTM Perdana School Of Science, Technology & Innovation Policy Established In 2010 STI is central to a Successful Modern Economy Policies are Important Components in Planning Art and Science of Policy Making must be disseminated UTM Perdana aims to help National/ Organisational success Science Technology and Innovation (STI) are central to the development and success of any modern economy. Policies (Dasar, Polisi) are important components in national/organisational planning to ensure their goals and objectives are met. The art and science of Policy making must be understood and disseminated as national/ organisational current and future success are at stake. UTM Perdana, being part of UTM, aims to help ensure national/ organisational development and success through better formulation, implementation and evaluation of STI and Policy.

2. PROBLEMS & ISSUESS In many countries, youth unnemployment has reached a critical level and is expected to rise over the next five years, threatening the global economic recovery & raising the specter of a lost generation. Rougly 75 million young people are unemployed or underemployed. Majority of enterprise particularly Youth Entreprenerus in Malaysia fail to become sucessful innovators eventhough there are many interventions, incentives and full support from government. Athough some may have met with initial success, many cannot grow or sustain their business in a long run. 8

Research Questions Three Research Questions being established. 1. How can adoption of innovation culture among youth entrepreneur namely Bumiputra being measured? 2. What are the failures and barriers faced by the youth in translating innovation into wealth? 3. What measures can be taken to create dynamic youth entrepreneur in order to sustain and becoming global player? 9

Research Objectives In view of the above discussions, this study carried out an investigation with the following objectives; To define the innovation culture among youth entrepreneurs. To determine and measure the level of adoption of innovation culture and practices among youth entreperenuer to sustain and become a global player. Develop an appropriate Intervention Conceptual Framework of Innovation Adoption for growing dynamic SMEs as well as translating innovation to wealth. 10

3. METHODOLODY Adopted Mixed Method Secondary Data: Review and analysis relevant existing policies, master plan, blueprint and Malaysia Plan to establish the levels and trends of innovation adoption. Interview: Structured & Semi-structure interviews with government agencies and successful youth entrepreneurs to gauge the key challenges and barriers faced for the development of the survey questionnaire. 20 respondents Survey on Youth Entrepreneurs Development were carried out. (Adopted Survey.Monkey. Comprise of 8 parts and 50 questions) 550 respondents 11

Survey: Preparing Youth Entrepreneurs Becoming Innovation Players in Global Market 8 Parts Part 1 : Respondent Profile ( 1-6) Part 2 : Business Venture (7-20 ) Part 3 : Current Activities & Capabilities (21-26) Part 4 : Barriers & Challenges (27 & 28) Part 5 : Entrepreneurship Education in Malaysia (29-35) Part 6 : Customer Relation Management (36-39) Part 7 : Innovation Capabilities & Adoption (40-44) Part 8 : Government Support & Others (44-50) 12

4. YOUTH ENTREPRENEURSHIP Defining Youth Entrepreneurship Defined as the practical application of enterprising qualities such as initiative, innovation, creativity, and risk-taking into the work environment (either self-employment or employment in small start-up firms), using the appropriate skills necessary for success in that environment and culture ; (Prof Francis Chigunta -In development studies and political economy at the University of Zambia & University of Lusaka). 13

Age Classification as Youth As defined in the 1997 National Youth Development Policy, youth range between the ages of 15 40. However for Youth Entrepreneurship Development Programme shall be focused on youth aged 18 30. Country Age (years) Malaysia 15-40 Singapore 15-35 Thailand 18-25 Indonesia 16-30 Philippine 15-30 Viet Nam 16-30 United Kingdom 13-19 United States under 25 Japan under 30 14

The Importance of Youth Entrepreneurship Creating employment/self-employment opportunities and reducing issue of joblessness; Bringing marginalised youths into the economic mainstream- may be responsive to new economic opportunities & trends; Helping address some of the socio-psychological problems; Promoting innovation and resilience in youths; Promoting the revitalisation of the local community; By empowering Young entrepreneur, it gives young people a sense of meaning and belonging; It also helps youths develop new skills and experiences that can be applied to many other challenges in life. 15

Youth Entrepreneurs: Innovation Adoption Case Of Malaysia Definition of SMEs : According to Central Bank : 1 January 2014 Micro (76.5%) Sales turnover not exceeding RM300,000 OR Full-time employees not exceeding 5 Small (21.2%) Sales turnover from RM300,000 to less than RM 3 million OR Full-time employees from 5 to less than 30. Medium (2.3%) Sales turnover from RM3 million to not exceeding RM 20 million OR Full-time employees from 30 to not exceeding 75. 98.5 % (907,065) business are SMEs and they contributed to 65.3 % of employment in the economy. 16

GEM 2016/2017 Total Early-stage Entrepreneurial Activity In 65 Economies 17

Key Challenges Facing Youth Entrepreneurs Commence business with lower levels of initial capital; (majority running family business) Access to Global sourcing; Enterprises owned by young people have lower market value or inventory; Engage in a narrower range of activities; Access to space and tend to operate from homes or streets; Experience, exposure and contacts to the business community; Intellectual Property, Legal issue in global business & bankruptcy; IT & E-Commerce as well as English communication skill especially those from rural community; Branding the products in the global market. ( refer to : Ariffin SA 2017, Saleh & Ndubisi (2006), Wafa (2005) 18

5. GOVERNMENT INTERVENTION & INITIATIVES In May 1996 established a specialised agency to stimulate the development of SMEs by providing infrastructure facilities, financial assistance, advisory services, market access etc. In 2010 formed the SME Corp Malaysia as a Central Coordinating Agency under the Ministry of International Trade and Industry. Many initiatives by the government agencies and private sectors partnership in empowering youth entrepreneurship in Malaysia. The initiatives are in the forms of various support by various stakeholders on supporting entrepreneurship by heavily investing, nurturing and producing more innovative entrepreneurs. 19

The Evolution of Malaysia SME Development 20

Major Initiatives By Government Establishment of the Malaysian Global Innovation and Creativity Centre (MAGIC) to act as a one stop centre to empower entrepreneurs (focus on Youth)- Funded Fund RM50 million. Establishment of Genovasi to develop youth as innovation ambassadors and to be catalysts for progress, a better quality of life and solutions for the nation; Launching of the Gathering of Rising Entrepreneurs Act Together (GREAT), a movement acts as a platform for aspiring entrepreneurs to collaborate one another and potential investors; SME Bank allocating RM50 million to assist Malaysia s young and building business-minded through its Young Entrepreneurship Fund (YEP)- RM87 mill. Yayasan Inovasi Malaysia (YIM) to champion the agenda on building innovation ecosystem to benefit SMEs and society/community; TEKUN Nasional is a financial services agency for micro and small entrepreneurs under the Ministry of Agriculture & Agro-based Industry and TEKUN also to provide comprehensive entrepreneur development support. 21

Formation of National ecommerce Council (NeCC), Council members from various Ministries and Agencies Established to drive the implementation of the roadmap towards doubling Malaysia s ecommerce growth rate & reach a GDP of RM 211 billion by 2020. Following 5 minilabs, focused interviews and inputs from over 100 stakeholders across 54 public and private organizations, Malaysia s National ecommerce Strategic Roadmap has been developed. It outlines focused Government intervention in six thrust; 1. Accelerate seller adoption of ecommerce - Establishment of DFTZ ( Digital Free Trade Zone) : the world 1 st special zone for digital trade. 2. Increase adoption of eprocurement by businesses 3. Lift non-tariff barriers (e-fulfilment, cross-border, e-payment, consumer protection) 4. Realign existing economic incentives 5. Make strategic investments in select ecommerce player(s) 6. Promote national brand to boost cross-border ecommerce 22

FY2017 Budget Allocation For SME Development Programmes RM1b for shariah-compliant SME Financing Scheme (until 31 Dec 2017) RM900m to increase equity ownership and strengthen Bumiputera entrepreneurship RM600m for Bumiputera and Indian entrepreneurs RM200m soft loans at 4% interest rate RM200m under Funding Scheme for Technology and Innovation Acceleration RM107m for SME Blueprint to fund SMEs business development RM100m to Malaysian Innovation Agency (AIM) RM60m for Entrepreneurs Acceleration & SME Capacity and Capability Enhancement Schemes RM35m to Malaysian Global Innovation & Creativity Centre (MaGIC) RM30m for youth entrepreneurship programme (Global Entrep. Community) RM18m to expand Small Retailer Transformation & Automotive Workshop Modernisation project RM10m for Corporate Entrepreneurs Responsibility Fund. 23

Poor Technology Transfer & Diffusion Poor IP Knowledge and management Speed of Technology vs R&D Investment Lack of creativity Lack of Business Acumen include Planning, Sales, Marketing & Promotion Lack of Innovation Skill Lack of IT & E-Commerce Lack of Soft Skill (Interpersonal & Negotiation etc. ) Lack of Collaboration & Networking Lack of knowledge on trade & regulation Lack of Innovation Culture Adopt Close Innovation Lack of Knowledge Sharing. Limited Capital Reduction of Government Fund Loan approval is too rigid No and Poor Business Support System No investment on IT applications Insufficient Business Experience & exposure Low level of education Lack of Commitment & passionate Limited Network & Collaboration Decision too dependent on Government direction Lack of Leadership Quality 24

7. POLICY FORMULATION & FRAMEWORK For any policy to be appropriate, effective and successful it must be owned by all those concerned namely policy formulator, policy maker, implementers of the policy as well those the policy will impact on. Policy Actors for Youth Entrepreneurs policy framework include: Policy Decision-makers/Legislators Policy Advisors Policy Analyst Policy Advocators/Communicators Policy Evaluator (new or existing policies) Specialists & experts from industry, education institutions Entrepreneurs or SMEs Generalists NGOs 25

Policy Formulation Process Debate over alternative policy choices Importance of policy analysis o It includes an attempt to assess as many areas of potential policy impact as possible. o Involves the crafting of alternatives or options for dealing with a problem. Actors provide inputs for their preferred positions. 26

NATIONAL INNOVATION SYSTEM TO FACILITATE YOUTH ENTREPRENEURSHIP DEVELOPMENT 27

POLICY FRAMEWORK Policy aimed to accelerate innovation activities of firms Framework: A supporting structure around which something can be built ; contains the processes and flow of information. Many countries have developed Entrepreneurship Policy in general. ( Malaysia SME Masterplan 2012-2020) Policy framework is to integrate and place clear policy objectives, specific actions plans, measurable, achievable, realistic and time bound, and which may result in increasing number of youth entrepreneurs who are able to produce quality and innovation outputs and outcomes in the global market. 28

8. YOUTH ENTREPRENEURSHIP INNOVATION ECOSYSTEM FRAMEWORK (YWIE). The policy framework and strategy consists of the document and literature review which is aimed at understanding the various frameworks, mechanisms and contexts that could facilitate the uptake of innovation adoption among youth entrepreneurs in Malaysia as well as the strategies that could be implemented to increase the number of successful youth entrepreneurs. 29

PROPOSED YOUTH ENTREPRENEURSHIP INNOVATION ECOSYSTEM FRAMEWORK (YWIE). 1. INCULCATE INNOVATION & ENTREPRENEURI AL GLOBAL CULTURES 2. NATIONAL YOUTH ENTER- PRENEURSHIP STRATEGY 6. FUNDING & GLOBAL SOURCING Global Youth Entrepreneurs 3. GLOBAL COLLABORATION & NETWORKING 5. IT SUPPORT AND BUSINESS INTERNATIONAL ISATION 4. EDUCATION & GLOBAL ENTREPRENEURI AL SKILL 30

1. INCULCATE INNOVATION & ENTREPRENEURIAL GLOBAL CULTURE Creativity Innovation Culture Idea suggestion box Entrepreneurial Culture Role-model Traits of successful Entrepreneurs Risk-taker & Competition International Business Culture Interpersonal Communication 31

National SME Policy & Masterplan National Ecommerce Strategic Roadmap Youth Entrepreneurship Policy Youth Entrepreneurship Development MasterPlan GEC Masterplan Youth Entrepreneurs Education & Skill Development Blueprint Youth Entrepreneurship Innovation Ecosystem 2.. NATIONAL YOUTH ENTER- PRENEURSHIP STRATEGY 32

Government & Agencies Entrepreneurs (Local & Foreign) Companies (Local & Foreign) Industries Suppliers (Local & Foreign) Associations (Local & Foreign) NGO s & Societies Training & Learning Institutions 3. GLOBAL COLLABORATION & NETWORKING 33

Innovative Leadership Innovation Management Business Intelligence & Strategic Plan Market Assessment & Planning Technology Assessment & Planning Business Communication IT E-Commerce Investment, Finance & Accounting Entrepreneurial Skill International Business Development Negotiation & Closing Deal (MoU & MoA) Development & Management of IP Research & Development Technology Transfer & Diffusion Project Monitoring & Evaluation Trade Requirement Standard, Testing & Compliance Environment & Sustainability Community & Society wellbeing 4. EDUCATION & GLOBAL ENTREPRENEURIAL SKILL 34

5. IT SUPPORT AND BUSINESS INTERNATIONALISATION International Business Planning & Monitoring System IT systems E- Trade Business System International Financing & Tax System Global Business Venture /JV International Market & Promotion International Standard & Quality Mgmt. International Trade Requirements Managing and Implementing MOAs Global Business Institutions Networking/Collaboration System 35

6. ENHANCING FUNDING SME Development Bank Financial Institutions Venture Capital Government grants/funds o SME Financing Schemes o SME Blueprint for SMEs business development o Commercialization Fund - Malaysian Innovation Agency (AIM) o Malaysian Global Innovation & Creativity Fund MAGIC o Soft Loan at 4% interest rate o Funding Scheme for Technology and Innovation Acceleration MOSTI o Corporate Entrepreneurs Responsibility Fund. 36

9. CONCLUSION Based on inputs gathered during interview session following are initiatives needed and strategies to facilitate youth entrepreneurs to grow, sustain and becoming global players. Initiatives Recommendation: Introducing Human Governance Practices Enhancing Creativity and Innovation Skills & Competencies Developing Innovation Policy & Strategies for Youth Entrepreneurs Inculcating Innovation, Creativity and Risk Taker Culture Establishing Enterprise Simulation Centre which emphasize on Strategic Business Planning, Marketing & Sales, Technology Management, Business, Big Data Mining System etc. Establishing Global Collaboration Platform and Promotion & Branding System 37

Strategies Recommendation: Taking the opportunities presented by the new framework to popularize adoption of innovation culture. Minimising impediments to innovation among youth entrepreneurs through providing adequate business support Improving resource allocation fund, infrastructure, education & skill development system Improving the knowledgebase on innovation and internationalisation Improving the understanding innovation culture, values and practises of innovation and communication. 38

Thank You Contact Detail: Aini Suzana Ariffin (PhD) Email: ainisuzana@utm.my or aini.suzana@yahoo.com Mobile: + 6019 316 8797 39