Promoting Business Incubation : Malaysia Experience

1. Promoting Business Incubation : Malaysia Experience presented by: Borhan Sidik Deputy CEO, SME Corporation Malaysia 7th INTERNATIONAL CEO FORUM FOR CHIEF EXECUTIVES OF DEVELOPMENT FINANCE INSTITUTION (18th November 2010)

2. Outline of Presentation • Malaysia in Brief • Roles & Functions of SME Corp. Malaysia • Profile of SMEs • Strategies & Policies on SME Development • General Information on Business Incubator • Business Incubator in Malaysia • SIRIM Berhad • MTDC Technology Centres • Technology Park Malaysia (TPM) • SME Bank Factory Complex • Success Story of Incubator • Closing Remark

3. Malaysia : Basic Statistic

4. Role & Function of SME Corp. Malaysia Development of competitive and resilient SMEs in all sectors VisionMission The premier organisation for the development of progressive SMEs to enhance wealth creation and social well-being of the nation Promote the development of competitive, innovative and resilient SMEs through effective coordination and provision of business support ROLES & FUNCTIONS OF SME CORP. MALAYSIA

5. Profile of SMEs • Total establishments = 552,804 • No. of SMEs = 548,267 (99.2%) SME Distribution by Sector Establishment of Enterprises 4,537 (0.8%) LARGE Manufacturing(7.2 %) Agriculture(6.2 %) 12,610 (2.3%) MEDIUM 100,333 (18.2%) Services(86.6 %) SMALL MICRO 435,324 (78.7%) Source: 2005 Census by Department of Statistics Malaysia

6. Strategies & Policies on SME Development 5 strategic thrusts for development of SMEs under IMP3 (2006-2020): • MEASURES • Adoption and application of leading technologies, including effective utilization of ICT; • Closer collaboration with specialized Government research institutes and universities; • Enhancement of human capital of SMEs; • Nurturing innovative and resilient SMEs; • Acculturation of entrepreneurship & innovation; • Creation of more conducive business environment, which stimulates vibrant and innovative entrepreneurial activities

7. BUSINESS INCUBATION : “ Business incubation is an organization that helps entrepreneurs to develop their ideas in a framework that has been established to help them. It takes them systematically from inception through to launch and beyond. Incubators nurture young firms, helping them to survive and grow during the start-up period when they are most vulnerable.” TECHNOLOGY INCUBATION: “ A technology-incubating program is an innovative system designed to assist entrepreneurs in the development of new technology-based firms, both start-ups and fledglings. It seeks to effectively link talent, technology, capital and know-how to leverage entrepreneurial talent in order to accelerate development of new companies, and thus speed the commercialization of technology” Source: Ministry of Science, Technology and Innovation, Malaysia What is Incubator?

8. Incubator Background Source: National Incubation Network Association (NINA)

9. Incubator in Malaysia Source: National Incubation Network Association (NINA)

10. EXAMPLE 1: SIRIM TECHNOLOGY INCUBATION

11. SIRIM Berhad Established in 1975under Ministry of Science, Technology & Innovation 16th November 1995: Corporatized as a government-owned company under the Ministry of Finance Inc. Broad range of services: • Research & Technology • R&D • Product Development • Process Engineering • Training & Consultancy • Design & Engineering • Product Development • Engineering Services • Plant Engineering • Machinery & Equipment • Technology Transfer Hub • Intellectual Property Centre • Commercialization and Business Incubation Centre • Standards & Quality • Measurement & Calibration • Legal Metrology Services • Standards Management • Standards Development

12. SIRIM Incubator Model • Phase I: • Entrepreneur Development Phase • Phase II: • Enterprise Creation Phase • Phase III: • Market Development Phase SIRIM Technology Incubator Program • Skills Development • Networking & Linkages • Facilities & Services • After-Care Service • Technology Transfer & Consultancy Services • Advisory Services

13. EXAMPLE 2: MTDC TECHNOLOGY CENTER Malaysian Technology Development Corporation

14. MTDC Technology Centre • Initiative by Malaysian Technology Development Corporation (MTDC) • Embodied under Government’s Technology Development Cluster (TDC) program • Formal and operational links (collaborations) with universities or research institutions. • Main function • Strengthen linkages between universities/research institutions and industries. • Activate and promote the acceleration of the commercialisation activities of both the local universities and research institutions. • Approached method: • Develop technology incubation centres via JV collaboration with Universities

15. MTDC Technology Incubation Centres Centres are developed based on strength of respective universities through JV collaboration: UPM (Universiti Putra Malaysia)-MTDC Technology Centre • ICT, multimedia, agri-bio • Located at UPM - central of Malaysia UKM (Universiti Kebangsaan Malaysia)-MTDC Technology Centre • Biotechnology • Located at UKM - central of Malaysia UTM (UniversitiTeknologi Malaysia)-MTDC Technology Centre • Advanced engineering, life sciences • Located at UTM - southern Malaysia

16. UPM-MTDC Technology Centre project • Established 1996 • JV project between Universiti Putra Malaysia(UPM) - MTDC • The first MTDC technology incubation centres established within Malaysian universities' campus • Second area awarded with Cybercity status after Cyberjaya • FACILITIES • Covering total acreage of 167 acres • Equipped with high speed bandwidth communication network • Other facilities: • Server Farm (15 acres) • International Technology Centre (50 acres) • MTDC Technology Centre (15 acres) • Data Centre • Computer Recovery Centre

17. UKM-MTDC Technology Centre project • JV project between UniversitiKebangsaanMalaysia (UKM) - MTDC. • Planned to attract companies mainly involved in biotechnology. • FACILITIES • Covering total acreage of 6 acres • Able to accommodate 12-15 tenants • Conceptualized as ‘PusatTeknologiPintar’ :- • Formal and operational links with university or research institutes • To encourage growth of technology-based businesses that reside on site • Management functions which actively engaged in transfer of technology and business skills to industries

18. UTM-MTDC Technology Centre project • Established in 2001 • JV project between UniversitiTeknologi Malaysia (UTM) – MTDC • OBJECTIVE • Mainly for companies involved in life sciences. • Develop strong science and technology-based • Increase capability to adopt, adapt and improve technologies through R&D • Develop pool of skilled researchers capable of handling new and emerging applied technologies. • FACILITIES • Covering total acreage of 4.3 acre • Located within university (UTM) vicinity

19. EXAMPLE 3: TECHNOLOGY PARK MALAYSIA (TECHNOLOGY & INNOVATION BUSINESS INCUBATION PROGRAM)

20. Technology Park Malaysia (TPM) TECHNOLOGY & INNOVATION BUSINESS INCUBATION PROGRAM • Main function: • To spur development of innovative and knowledge-based companies • Incubation program: • Caters specifically to fledgling technology and innovation-based enterprises. • Prospects vary from graduates, researchers, start-up SMEs, professional employees & subsidiary of MNC’s & GLC’s. • Incubation model:

21. Spectrum of Services • Facilities - Support from TPM and subsidiaries: • TPM Engineering • TPM IT • TPM Biotech Technology Experts - Advisory from researchers and expert panel • Network - Market linkages through incubation associations membership: • National Incubation Network Association (NINA) • Asian Association of Business Incubation (AABI) • Asia Pacific Incubation Network (APIN) • Association of University Research Parks (AURP) Financial Assistance – Access to funds by Government/commercial banks, venture capital and angels. Handholding – Integrated coaching, consultancy and training by panel of coaches, consultants & trainers. Land/ building lease Cubicles Office units

22. EXAMPLE 4: SME BANK FACTORY COMPLEX

23. SME BANK FACTORY COMPLEX • Started in 1985 • Full support from Government • Fund to build factories in each state in Malaysia. • Initiated to encourage entrepreneurship in manufacturing and service sector • Facilties: • 24 factories with 419 lots nationwide KUALA LUMPUR

24. SME BANK INCUBATION MODEL Integrated entrepreneurship development approach: • Participant selection by a Panel • Project and concept development with advisory and approval from SME Bank • Project is fulltime owned and run by participant • Integrated financial assistance • Incubation period 9 years

25. SUCCESS INCUBATEES STORY REDtone International Berhad • Incubatee of TPM • Listed on MESDAQ (now known as ACE Market) in 2004. • MSC status company • Products: • High speed Internet services • Data solutions • VoIP services • Operating in Malaysia and China Green Packet Berhad • Incubatee of TPM • Listed on ACE Market in 2005 • Transfered to Main Board in 2007 • Products: • Personal Handy-Phone System • 3G, WiFi and WiMAX space • Operating in USA, Malaysia, Singapore, Taiwan, China, Bahrain and Thailand.

26. SUCCESS INCUBATEES STORY (Cont’d) IRIS Corporation Berhad Incubatee of TPM Establsihed in 1994 Listed on ACE Market in 2002 Products: Digital conference system Radio frequency identity system (RFID) Automated electronic ticketing and fare collection Payment cards Loyalty management program solution TricubesBerhad • Incubatee of TPM • Established in 1998 • ICT company focusing in identity authentication and mobility solution • Listed on Ace Market in 2004 • Products: • Smartcard • Biometrics verification devices

27. CLOSING REMARK

28. RECOMMENDATION FOR SUCCESS OF INCUBATOR • University involvement: Success of incubator depends on availability of graduates, access to R&D facilities, and environment of intellectual creativity 2. Collaboration & networking: Networking between industries, universities, research institutions and incubators provide mutual support & encouragement • Experienced incubator management: To render continuous support, coaching, mentoring and motivation to start-up companies • Conducive business environment: Incubators to function not as landlord but to create conducive business environment to incubatees • Linking business & technology: Constitute important channels for distribution of knowledge and tools for business success

29. T K E A R S I SME Corporation Malaysia Level 20, West Wing, Menara MATRADE Jalan Khidmat Usaha, Off Jalan Duta 50480 Kuala Lumpur 03 6207 6000 03 6201 6564 www.smecorp.gov.my I M H A