National Entrepreneurship Policy 2030

1 — Creating a holistic and conducive entrepreneurship ecosystem to support Malaysia’s inclusive, balanced and

1 Creating a holistic and conducive entrepreneurship ecosystem to support Malaysia’s inclusive, balanced and sustainable socio-economic development agenda

2 — Creating a nation that possesses and enculturates entrepreneurship thinking

2 Creating a nation that possesses and enculturates entrepreneurship thinking Increasing the number of Malaysian entrepreneurs that are of high-quality, viable, resilient, competitive and 3 possess a global mindset

4 — Improving the capabilities of micro, small and medium enterprises as well as cooperatives

4 Improving the capabilities of micro, small and medium enterprises as well as cooperatives

5 — Making entrepreneurship a preferred career choice

5 Making entrepreneurship a preferred career choice The NEP 2030 has outlined 6 Strategic Thrusts by considering the global economic growth, the current entrepreneurship achievements as well as issues and challenges faced by entrepreneurs in creating a conducive entrepreneurship ecosystem. The 6 strategic thrusts are supported by 19 Strategies and 62 Initiatives as the pillar of the mechanism to implement this policy. The six Strategic Thrusts are as follows: STRATEGIC THRUST 1 STRATEGIC THRUST 2 STRATEGIC THRUST 3 Fostering Entrepreneurship Culture Optimising Regulatory Environment and Stimulating Holistic and Integrated Across All Segments of Malaysian Access to Funding Entrepreneurship Development Society STRATEGIC THRUST 4 STRATEGIC THRUST 5 STRATEGIC THRUST 6 Accelerating Economic Growth Through Strengthening Entrepreneurial Capabilities Internationalising High Growth Innovation-driven Enterprises and Performance of Micro, Small and Enterprises Medium Enterprises (MSMEs) iii TABLE OF CONTENTS Executive Summary NATIONAL ASPIRATIONS 01 01 • Way Forward for Malaysia 2030 • New Development Model ENTREPRENEURSHIP LANDSCAPE 07 • Entrepreneurship Environment 02 • Global Entrepreneurship Landscape Scanning • Transformation into the New Economic Direction • National Entrepreneurship Landscape Scanning • Current Programmes and Initiatives

03 — ISSUES AND CHALLENGES 27

03 ISSUES AND CHALLENGES 27 04 • Policy Statement NATIONAL ENTREPRENEURSHIP POLICY 35 • Policy Objectives • Definition and Scope • Policy Targets • Policy Framework

05 — WAY FORWARD 57

05 WAY FORWARD 57 Acknowledgement 60

Appendix 61

Appendix 61 Acronyms 62 References 64 01 NATIONAL ASPIRATIONS WAY FORWARD FOR MALAYSIA 2030 Malaysia aspires to be a developed and prosperous country by 2030. From the 1980s, Malaysia has been recognised as a prosperous country by many due to the national policies favouring business, industrialisation and technology. However, this achievement should not be based on the country’s Gross Domestic Product (GDP) alone. Prosperity is when the development and profit derived from economic growth is “ equally distributed so that all segments of the society can benefit from it. The Government will intensify its effort to ensure that Malaysia This national agenda continues to grow sustainably through an impartial economic distribution. This effort will narrow the economic gap while would result in a united, increasing income and participation in the supply chain. prosperous and dignified The focus will be placed upon the Bumiputera, indigenous communities, households in the low-income bracket (B40) Malaysia which will then make Malaysia the ” and special focus groups such as youths, women and senior citizens to ensure that the country’s wealth can be enjoyed by all. A New Development Model will produce a more structured, progressive, high-value and knowledge-based economy. economic axis in Asia This national agenda would result in a united, prosperous and dignified Malaysia which will then make Malaysia the economic axis in Asia. 2 Seven (7) Strategic Thrusts of Shared Prosperity 1. Restructuring Business and Industry Ecosystem 5. Social Wellbeing A process of rebalancing the business and industry Ensures that the welfare of all segments of society is ecosystem to strengthen and enhance the competitiveness protected and no one is left behind from economic activities and cooperation of small and medium enterprises (SMEs) especially those categorised as economically vulnerable with large companies by increasing technology adoption and B40. and expanding SMEs investment in emerging industries. 6. Regional Inclusion 2. Key Economic Growth Activities (KEGA) To ensure equitable economic development distribution to KEGA is defined as a future economic activity that all states selected based on the strength and uniqueness of demonstrates the potential for rapid growth in line with the area. the country’s aspiration to achieve high value economic development. 7. Social Capital To strengthen the rakyat’s participation in societal activities 3. Transforming Human Capital that will raise the rakyat’s confidence level and trust A knowledgeable, skilled and innovative workforce towards society and national institutions while ensuring is a crucial factor in the development of the country. that the target of Shared Prosperity is achieved and national Recognising the importance of human capital, this strategic unity is strengthened. thrust is developed to enhance the workforce through programmes focussed on professional training, talent development and skills retraining. 4. Labour Market & Compensation of Employees The strengthening of the labour market and the increase in compensation of employees and the rights of local workers in Malaysia are defined as efforts to streamline the distribution of corporate profits or gross operating surplus to ensure workers can be compensated according to productivity. 3 NEW DEVELOPMENT MODEL One of the main objectives of Shared Prosperity is a New Development Model (NDM), which refers to the involvement of all segments of society in contributing towards the country’s socio-economic growth based on knowledge and high societal values. The three main elements of the New Development Model are as follows: SHARED • A progressive and structured economy driven by PROSPERITY innovation and knowledge • Equitable and inclusive economic distribution on all values, class, race and geographic level • Fulfilling current needs without compromising future generations Entrepreneurship is an important and strategic component in driving Malaysia towards becoming a developed and prosperous nation by 2030. Entrepreneurship can also be viewed as a social approach for Malaysia to escape the middle-income trap, while helping it become an economic axis in Asia. EQUITABLE GROWTH Structured and progressive economy driven by knowledge and innovation Entrepreneurship can potentially contribute to the socio- economic development and productivity of Malaysia. A more equitable distribution of income will improve the standard SUSTAINABILITY and quality of life of Malaysians, thus benefitting the Meets present needs without society holistically. Sustainable economic growth should be compromising future generations encouraged through creative, innovative as well as through digital economy. INCLUSIVENESS A fair and inclusive economic distribution at every level of the value chain, class, race and geography 4 The Malaysian Government formed the Ministry of The NEP 2030 was developed to establish a comprehensive Entrepreneur Development (MED) and subsequently renamed strategic direction to develop Malaysia’s entrepreneurship to Ministry of Entrepreneur Development and Cooperatives ecosystem. To be a developed and competitive (MEDAC) in March 2020 to spearhead an integrated national entrepreneurial nation, Malaysia must possess the entrepreneurship development of Malaysia. Since then, the following: MEDAC has been actively preparing a holistic and inclusive ecosystem to support the country’s socio-economic development agenda, which in turn realises Malaysia’s dream High-skilled talent of becoming an entrepreneurial country. 1 MEDAC developed the National Entrepreneurship Framework (NEF) that was launched on 22 November 2018 to identify Innovation-driven the target and initiatives of the Malaysian entrepreneurship 2 development. Following the launch of the NEF, MEDAC conducted several sessions with various stakeholders from government agencies, industry players, the private Collaborative economy sector, and non-government organisations (NGOs) as well 3 as many entrepreneurs through various channels such as public consultations, online feedback, dialogues as well as meetings and workshops. These sessions gathered views and Entrepreneurial community suggestions about entrepreneurship development, which 4 was used as input in the preparation of the NEP 2030. An approximate 6,000 respondents across the country were involved in the entire process. Good governance 5 Market-driven 6 Sustainable development 7 5 02 ENTREPRENEURSHIP LANDSCAPE ENTREPRENEURSHIP LANDSCAPE GLOBAL ENTREPRENEURSHIP LANDSCAPE SCANNING Entrepreneurship is key to a country’s economic growth as it contributes to the increase in GDP, stimulate investments, and Based on global analyses, countries such as the United create job opportunities. In addition, entrepreneurship leads to States of America, United Kingdom, Canada, Germany, innovative development and encourages the increase of the Singapore, Thailand, Vietnam and Indonesia have introduced socioeconomic standards by providing economic opportunities entrepreneurship policies that focus on entrepreneurs and to all segments of the society, especially the marginalised Small & Medium Enterprises (SMEs), with an emphasis group and less fortunate in the labour market. on mainstreaming the entrepreneurship agenda. Several countries have also included the entrepreneurship agenda in On the global level, governments in certain countries are their policies including the macro policies, such as short-term focusing on developing an entrepreneurship ecosystem to development plans, industrial policies and innovation policies. create entrepreneurs with high potential. Efforts to enhance These policies and plans generally outline the basic hurdles in entrepreneurs with the relevant skills are intensified through entrepreneurship, with the aim of providing equal opportunities the introduction of a national-level entrepreneurship policy to for all segments of society, to be involved in entrepreneurship. accustom them to the ever-changing business landscape and disruptive emerging technologies. Developed countries such as Canada, have included their entrepreneurship policies in their innovation action plan However, the biggest challenge faced by governments around and industry strategies to promote a conducive innovative the world is the transition from a “traditional” economy to ecosystem to support their entrepreneurs’ development. a “new” economy. Entrepreneurs must be equipped with ASEAN countries such as Vietnam and Indonesia have 21st century skills, digitalisation of business operations, and specifically placed the entrepreneurship component in their collaborate with other entrepreneurs in order to thrive in this national short-term development plan making it holistic and dynamic environment. all-encompassing. Malaysia has implemented various development programmes that includes financing, research & development (R&D), training and capacity building, infrastructure, technology transfer, market access, social entrepreneurs as well as internationalisation. The NEP 2030 will reinforce and enhance existing initiatives and programmes to boost entrepreneurial activities in Malaysia. 8 CANADA International Policies and Indices 2019 Canadian Innovation UNITED KINGDOM Regarding Global Entrepreneurship Industrial Strategy 2017 Ecosystem Action Plan VIETNAM • 5-year Socio-economic Development Plan from 2016-2020 • Supporting National Innovative Start-up Ecosystem to 2025 Project USA THAILAND United States Small Business The 4th SME Promotion Action Plan Five Year Policy Master Plan 2017-2021 2018-2022 INDONESIA National Medium Term Development MALAYSIA Plan 2015-2019 GERMANY National Future of the German Entrepreneurship SINGAPORE Mittelstand Action Programme Policy 2030 Research, Innovation and Enterprise 2020 Plan Global Entrepreneurship Development Index 2018 Global Ranking /137 1 4 15 3 27 87 94 71 58 Doing Business 2019 Global Ranking /190 8 9 24 22 2 69 73 27 15 Global Competitiveness Report (GCR) 2018 Global Ranking /140 1 8 3 12 2 77 45 38 25 Global Innovation Index (GII) 2018 Global Ranking /126 6 4 9 18 5 45 85 44 35 (ASM Analytics, 2019) 9 The entrepreneurship ecosystem in Malaysia is robust and has seen A Closer Look at Malaysia’s Position on Global continuous improvement from year to Entrepreneurship Indices year. This is reflected in the country’s position on various entrepreneurship global indices such as the Global Entrepreneurship Index (GEI), Global GLOBAL ENTREPRENEURSHIP Competitiveness Report (GCR), Global INDEX 2018 GLOBAL Innovation Index (GII) and Doing Business. INNOVATION 58/137 INDEX 2018 Based on the 2018 GII Report, Malaysia DOING BUSINESS 35/126 GLOBAL 2019 is the second developing country after COMPETITIVENESS REPORT 2018 15/190 China to be in the top 50, beating other developed countries such as Greece, 25/140 Lithuania and Poland. However, upon closer inspection of BUT Malaysia’s position in the sub-indices, achieved the there is a clear gap in Malaysia’s BUT lowest score for entrepreneurship ecosystem especially in BUT ‘Technology ranked Absorption’ terms of knowledge creation and workers, product innovation and technology 75/126 BUT ranked 9% absorption. These gaps are closely tied to in ‘Knowledge ranked 122/190 ‘Product in Innovation’ the legislative and regulatory environment Creation’ 110/140 ‘Starting a 12% that may inhibit growth and development 63/126 in ‘Insolvency Business’ of entrepreneurship in Malaysia. in Regulatory ‘High Growth’ ‘Knowledge Workers’ Framework’ 13% (ASM Analytics, 2019) 10 Inter-Country Comparison of SME’s Contribution to the Economy Malaysia Thailand Vietnam Indonesia Singapore USA Canada UK Germany (2018) (2018) (2016) (2015) (2017) (2017) (2017) (2018) (2018) Contribution to GDP (%) Number of Businesses (%) Jobs Created by SMEs (%) Contributions to Export Value (%) (ASM Analytics, 2019) Most entrepreneurs are SMEs which account for more than In Germany, SME or in their local language which is referred to 90% of the total number of business establishments. SMEs as ‘Mittelstand’, has strong business network and is capable of play an important role in job creation. For example, job creation exporting products and value-added services to international by SMEs in developed countries such as the USA, Germany and markets, besides contributing 68.5% to the total value of Canada reaches 90% in addition to contributing as much as German exports (BMWi, 2019). 50% to GDP. 11 Global Innovation Index 2018 Malaysia has produced ~120,000 research publications since 2013, Malaysia ranked 35 /126 countries with 39% being high-impact. (Source: Global Innovation Index 2018) (Source: Web of Science) BUT BUT In the Global Entrepreneurship Index 2018 In the Global Innovation Index 2018, Scored 12% in “Product Innovation” sub- Malaysia ranked 75 /126 countries in the component and placed 130 /137 countries “Knowledge Creation” sub-component (Source: Global Entrepreneurship Index 2018) INNOVATION KNOWLEDGE (Source: Global Innovation Index 2018) Malaysia is the 24th largest exporter IMD World Talent Ranking 2018 in the world, that trades with 234 countries Malaysia ranked 22 /63 countries (Source: World Trade Organisation) (Source: IMD World Talent Ranking 2018) BUT BUT According to the OECD STI Scoreboard 2017, MARKET TALENT Scored 16% in Start-up Skills under the chapter Participation in In the Global Entrepreneurship Index 2018, Global Value Chain, Malaysia ranked sub-component and placed 99 /137 countries 53 /63 countries (Source: Global Entrepreneurship Index 2018) (Source: OECD STI Scoreboard 2017) (ASM Analytics, 2019) Despite Malaysia being well positioned on global indices in largest exporter in the world but ranked 53rd in global value terms of talent, research, innovation and trade as seen in the chain according to the OECD STI Scoreboard 2017. This means visuals, there are still several shortcomings and gaps that that Malaysian entrepreneurs need to be proactive in forming needed to be addressed. From a trade standpoint, according a strong cooperative network with the global market to to the World Trade Organisation (WTO), Malaysia is the 24th strengthen participation in the global economy. 12 TRANSFORMATION INTO THE NEW ECONOMY DIRECTION Traditional economies all around the world are seeing Transforming from a businesses, governments and entrepreneurs hit hard by Traditional Economy to a New Economy disruptive technologies, innovation changing work processes, and an evolving workforce. The private sector also needs Resource focused Knowledge intensive to realise that entrepreneurship and innovation are two Labour intensive High-skilled talents interlinked elements that drives a country’s economy. Requires control Requires collaboration The New Economy is here to stay, and Malaysia, like other Vertical trust orientation Horizontal trust orientation countries, has to adapt to stay ahead. Mass production Mass customization Globally, entrepreneurship policies not only facilitate the Proximity is important Location less significant process of entrepreneurial culture as a driver of innovation Rigid Flexible and encourage the creation of new jobs, but also outline Capitalist Profit Sharing plans and programs of the country to shift from the traditional economy to the new economy. The New Economy is defined as the rise of knowledge-driven businesses backed by the digital revolution, where technology creates innovations, with an ecosystem of information technology and high-tech companies driving the GDP of a country. The New Economy is collaborative, less reliant on material sources, more knowledge-intensive and requires highly skilled talents. Source: New Economic Opportunities in STI-based Industries to serve Emerging Markets (ASM, 2017) Displacement transformation of the traditional economy into the new economy has been introduced into the entrepreneur development policy and plans of some countries. The At the same time, standard compliance assessment programs transition to the new economy through the uptake of are also being provided to identify the level of enterprise innovation will ensure that entrepreneurs keep pace with readiness for adopting new and disruptive technologies. the digital transformation. Countries such as Singapore and Malaysia is well aware of this, and even though the country has Canada for instance, realise the importance of entrepreneurs implemented various plans, strategies and initiatives involving and businesses transitioning to the new economy, and have digital adoption and technology usage, a more focused introduced initiatives such as digitalisation of licenses and entrepreneurship policy needs to be implemented effectively business registrations to expedite the process of setting up to close the gaps in the existing ecosystem, to produce businesses. entrepreneurs adept in the New Economy. 13 NATIONAL ENTREPRENEURSHIP LANDSCAPE SCANNING In the first quarter of 2019, the Malaysian economy recorded a GDP of RM341.7 billion, GDP Contributions Q1, 2019 a 4.5% increase from the previous quarter. Five sectors contributed towards this number: services, manufacturing, agriculture, construction as well as mining and quarrying. Economic 57.0% activities in Malaysia are generated by SMEs, RM 341.7 SERVICES hawkers, cooperatives, franchise chains, billion • Wholesale and retail trading start-ups, social enterprises as well as online • Information and communications businesses. According to the National Economic Census (2016), there were 920,624 new business 7.6% entities registered in Malaysia, where 907,065 MINING & QUARRYING (98.5%) were SMEs. From this, 693,670 (76.5%) • Crude oil and condensates were micro-enterprises, 192,783 (21.2%) small • Natural gas enterprises and 20,612 (2.3%) medium enterprises. 4.9% CONSTRUCTION • Civil engineering • Special carpentry construction activities 7.2% AGRICULTURE • Oil palm • Livestock 22.1% MANUFACTURING • Electrical, electronic and optical products (Source: Department of Statistics Malaysia, 2019) 14 The digital economy is slated to continue growing of job opportunities in Malaysia. However, most of the job exponentially in line with Malaysia’s enterprise growth. In 2016, opportunities offered by entrepreneurship activities in the digital economy sector contributed 18.2% (RM224 billion) Malaysia are non-skilled and have high reliance on foreign to Malaysia’s GDP and it is projected to grow up to 20% in labour. About 16% of the total number of workers in Malaysia 2020 (DOSM, World Bank). One of the main components of the are foreign labour, most of which are involved in the digital economy is e-commerce, where the growth is projected agriculture, plantation and construction sectors (Labour Force to reach RM110 billion value in 2020. Survey, 2016). The Impact of Entrepreneurship Activities in Malaysia The impact of entrepreneurship activities in Malaysia can be measured by various aspects. Firstly, it strengthens Malaysia’s economy. In 2017, SMEs recorded a higher GDP growth of 7.2% compared to 5.2% in the previous year, which surpasses the overall GDP growth of 5.9%. This has increased the contribution of SMEs towards the overall GDP from 32.2% in 2010 to 37.1% in 2017. Malaysian enterprises have also contributed RM167.4 billion towards export value in 2017 (17.3% of the overall export value). A majority of this export value comes from three main sectors: services (50.4%), manufacturing (47.2%) and agriculture (2.4%). Secondly, entrepreneurship activities in Malaysia empower the socioeconomic standards of various segments of society including women, youths, and the less fortunate. From the standpoint of women’s economic empowerment, 364,052 women entrepreneurs have benefitted from various initiatives and entrepreneurship support such as financial aid, training and business infrastructure throughout 2017. These initiatives and support are crucial in helping 186,930 women-owned enterprises that make up 20.7% of the total number of enterprises in Malaysia. Malaysian enterprises also generate about 9.9 million job opportunities to date, which cover 66% of the total number 15 CURRENT PROGRAMMES AND In fact, entrepreneurship development programmes and initiatives carried out in Malaysia are inclusive and involves INITIATIVES the whole value chain. According to the SME Integrated Action Plan (SMEIPA) Report 2019, RM13.7 billion was spent by various Realising the importance of entrepreneurship towards ministries and agencies to conduct 153 entrepreneurship individuals and communities as well as its contribution development programmes, benefitting 637,808 participants. to the nation, the government has placed an emphasis on entrepreneurship beginning with the New Economic Policy (1971-1990), National Development Policy (1990-2000), National 153 Vision Policy (2001-2010) and the New Economic Model (2011- 2020). Entrepreneurship is also an important element in 40 policies/master plans/action plans/national programmes by various ministries and agencies. Various implementing agencies have also carried out entrepreneurship development 2018 activities. Certainly, these activities demonstrate the RM13.7 government’s commitment to the sector and its players. Entrepreneurship development programmes have been conducted by various allocated for billion government ministries and entrepreneurship 60+ agencies development programmes Entrepreneurship 14 Government ministries & agencies Development coordinated entrepreneurship Organisations (EDO) development programmes 40 Policies / Action Plans / 637,808 Direction Plans participants benefitted from that are related to entrepreneurship development entrepreneurship in programmes Malaysia 16 The diverse range of entrepreneurship development programmes support the development of entrepreneurs by helping to create resilient and sustainable enterprises. They aim to optimise performance and create opportunities for entrepreneurs to grow and improve their businesses through market expansion, innovation and productivity growth. Programmes that have been offered can be categorised according to several focus areas, such as: 1 2 3 4 Funding Research Training and Infrastructure / Grants Capacity Building Business Premises / Equipment 5 6 7 8 Technology Market Social Internationalisation Access Enterprises 17 1 Funding Business or enterprise that intends to expand their business The government also provides tax incentives to promote the further, would require financial support. Accordingly, there are participation of local entrepreneurs such as: various Entrepreneur Development Organisations (EDO) and financial institutions that provide funding and business grants • Tax exemptions for social enterprises to entrepreneurs in Malaysia. • Tax incentives for the green technology sector • Green Investment Tax Allowance (GITA) More than 44 financial support programmes have benefitted 424,115 entrepreneurs in 2018 (SMEIPA, 2019), which oversaw The emergence of new and innovative businesses and the operations, cashflow of the business, business goals and economies have changed the funding landscape, with less human resources. reliance on traditional financing options. There is now greater availability of access to financing through the development of Some examples of financial support institutions in Malaysia non-banking channels and funding platforms, such as: are: • Venture capital Majlis Amanah Rakyat (MARA) and TEKUN Nasional: • Angel investors • Entrepreneur development funds for B40 • Crowdfunding • Investment Account Platform Credit Guarantee Corporation (CGC) • Peer-to-peer loans • Financial support in the form of bank guarantees Malaysian Industrial Development Finance Berhad (MIDF) • Soft loans 18 2 Research Grants Research grant initiatives is another form of funding to promote demand-driven innovation programmes which increase productivity through adding value to existing products in industries/enterprises to meet market demands. The collaboration between entrepreneurs, researchers and industries is crucial to ensure market demands are met. Among the grants that have been introduced are: Commercialisation and Vendor Research Grant (GPPV) • Increases involvement of companies in research and commercialisation to produce high-value added products • Up until 2018, GPPV has produced more than 23 projects Demand-driven Innovation Project by the Public - Private Research Network (PPRN) • Creates a knowledge-friendly ecosystem based on the knowledge generated and distributed accordingly • Creates scientific and technology-based solutions for issues faced by entrepreneurs and industries • PPRN has successfully attracted 549 enterprises to register with 304 projects successfully matched 19 3 Training and Capacity Building Assistance is also offered to entrepreneurs and workers Skilling-up and Mentorship Programmes in terms of talent and ability improvements to help them • Malaysian Global Innovation and Creativity Centre (MaGIC) increase business growth. More than 40 entrepreneurship • Global Accelerator Programme (GAP): offers development programmes that focus on training and capacity assistance to start-ups that have the potential to building have been carried out benefitting more than 130,605 break into the Southeast Asian market participants throughout 2018 (SMEIPA, 2019). Entrepreneur Capacity Building Programmes Among the entrepreneurship policies and programmes offered • Professional Training and Education for Growing are: Entrepreneurs (PROTÉGÉ): develops more youths to become entrepreneurs Higher Learning Institutions (HLI) Entrepreneurship • Entrepreneurship training for students and graduate Policy and Strategic Plan by the Ministry of Education entrepreneurs (MOE) Malaysia • Marketability training for graduates to secure jobs • Introducing and instilling entrepreneurship values into Malaysia’s higher education system • Shifting the mindset of HLI students from being a job-seeker to a job creator Human Resources Training and Intensification Programmes • Institut Koperasi Malaysia (IKM): offers basic entrepreneurship programmes to develop cooperatives in a more comprehensive manner • Institut Keusahawanan Negara (INSKEN): offers more comprehensive and targeted entrepreneurship programmes • INSKEN High Performing Programmes • INSKEN Business Scale Up Programme • INSKEN Start-Up Programme 20 4 Infrastructure / Business Premises / Equipment Entrepreneurship development programmes in Malaysia also SIRIM Berhad cover infrastructure and equipment support, and business • Offers services in Standard Conformity Assessment premises preparations. The right infrastructure ensures an • Infrastructure to calibrate and measure industrial enabling and supportive environment for the growth of SMEs equipment and entrepreneurs. Programmes under this focus area serve to promote entrepreneurship activities through providing access MARA to business premises, facilities and other infrastructure • Rural Premises Transformation Programme by MARA: serves support. to upgrade business premises and infrastructure Some instances of infrastructure and technology development Perbadanan Usahawan Nasional Berhad (PUNB) programmes via relevant agencies are: • PROSPER Property Programme: assists entrepreneurs in obtaining strategic premise for enterprises Malaysia Palm Oil Board (MPOB) • Technology Transfer Seminar and Exhibition: introduces new inventions created through MPOB’s main researches to industry players for adaptation and commercialisation Malaysia Automotive Robotics and IoT Institute (MARii) • Dealer Entrepreneurship Enhancement Programme (DEEP): builds technical capacity of automotive vendors • Organises programmes that focus on technology adaptation related to Industry 4.0 in the automotive sector • Organises workshops on manufacturing of additives and augmented reality 21 5 Technology Entrepreneurs need to be aware of and implement the latest technology to improve the quality of products and services, and to ensure a solid business reputation. The enterprise that does so has an edge over competition and increases their prospect of growth and business opportunities. So far, 28 programmes on technology and innovation adoption have been carried out by the government and benefitted 32,683 local Established in 1992, MTDC is the leading agency involved entrepreneurs (SMEIPA, 2019). in commercialisation and technology transfer, incubation, management of government funds related to technology as well as increasing technology adoption rates in Other agencies and organisations which have carried out local SMEs. Among the initiatives implemented is the similar programmes are SME Corp Malaysia, Malaysian establishment of the Center of Nine Pillars (Co9P) on Agricultural Research and Development Institute (MARDI), November 7, 2018 as a Community Hub for technology SIRIM Berhad, Technology Park Malaysia (TPM) and Malaysia entrepreneurs, technology providers and adopter Technology Development Corporation (MTDC). companies, as well as researchers from university and local research institutions. Since the inception of Co9P, 20 Malaysian international-level technology companies have received funding from MTDC. 22 6 Market Access Access to greater domestic and international markets provides entrepreneurs with new business opportunities Federal Agricultural Marketing Authority (FAMA), and creates potential to increase income and expand their Fisheries Development Authority of Malaysia (LKIM) business. In 2018 alone, 50,197 participants were involved in 27 and MARA programmes under market access (SMEIPA, 2019). • Provides a marketing platform to increase visibility of Malaysian-made products and services in the Among the initiatives carried out by the Malaysian ministries domestic market and agencies to help entrepreneurs expand market access are as follows: These efforts have and will build a strong network between SMEs with larger companies such as Ministry of Tourism, Arts and Culture (MOTAC) through Government Linked Companies (GLCs) and Tourism Malaysia and Kraftangan Malaysia Multinational Companies (MNCs). This will • Promotes and facilitates tourism, arts and culture indirectly encourage local enterprises entrepreneurs to expand the market for their products and to expand and explore new markets. services Ministry of International Trade and Industry (MITI) • Serves as a link in the value chain for entrepreneurship activities 23 7 Social Enterprises A social enterprise is basically a business wanting to create To obtain the status as an accredited social enterprise, an an impact for society and the environment by maximising enterprise must possess at least ONE of the following criteria: profits which benefits to both society and the environment. While maintaining sustainability, MEDAC has introduced the • 51% of their workforce must consist of the underprivileged Social Entrepreneurship Accreditation (SE.A) to verify the • 35% of their business costs goes towards providing status of a social enterprise to enable them to access various income, training, product subsidy or services to the support systems and opportunities to expand their business. underprivileged Once accredited, the organisation will be categorised as an • 35% of the raw materials or production source goes towards Accredited Social Enterprise in an online platform by SE.A achieving environmental goals MEDAC, which allows customers and the public to access • 51% of the profits should be allocated towards achieving information on a social enterprise more efficiently. social/environmental goals 24 8 Internationalisation The multitude of entrepreneurship development programmes • Women Exporters Development Programme (WEDP): offered by the government is proof of its commitment towards provides support that have been tailored specifically to developing the potential of entrepreneurs. This includes assist women-owned enterprises in export activities providing entrepreneurs with access to international market • Youth Exporters Development Programme (YEDP): an networks which will help them to increase the value of their entrepreneurship training programme for youths aged exports. Various internationalisation programmes carried out between 20-40 that are interested in export activities, which by agencies such as SME Corp Malaysia and Malaysia External provides training and specialised courses Trade Development Corporation (MATRADE), to develop enterprises to be more competitive in the global arena. SME Corp Malaysia (in association with MARA, MATRADE and Exim Bank) MATRADE • Galakan Eksport Bumiputera (GEB): to increase the • eTrade: supports local enterprises to be globally competitive number of high-performance Bumiputera-owned SMEs and in major international e-commerce via funding, training and improving their pre-export capabilities, whilst creating a professional advice domestic supply chain of Bumiputera-owned SMEs Even though entrepreneurship and SMEs are the key contributors to the country’s employment opportunities, more efforts are needed to boost the performance of Malaysian entrepreneurs in contributing towards the country’s economic growth. The exis- tence of various entrepreneurship programs across ministries shows the government’s commitment to improving the skills of entrepreneurs. However, a comprehensive policy must be coordinated to refine government strategies in entrepreneurship and setting up targets for future goals. 25 03 ISSUES AND CHALLENGES Malaysia’s goal to achieve the status of an outstanding entrepreneurial nation in 2030 requires an improvement of the entrepreneurship ecosystem in terms of market, policies, funding, support, culture, skills and talent, as well as technology and innovation. Entrepreneurship strategy needs to take into account the transition in driving national entrepreneurship from a demand and opportunity-based entrepreneurship to one that is innovation-based. Eight issues and challenges have been identified that needs to be addressed to ensure a conducive ecosystem is created to empower local entrepreneurs. 1. CULTURE & MINDSET 2. CHANGES IN DEMOGRAPHIC & 8. EDUCATION & SKILLS SOCIOECONOMIC TRENDS 7. CAPABILITIES, SUSTAINABILITY ISSUES & 3. PLANNING, IMPLEMENTATION, AND SCALING OF MICRO, SMALL CHALLENGES AND PERFORMANCE MONITORING AND MEDIUM ENTERPRISES 6. TECHNOLOGY 4. PROCEDURE, POLICY & LAWS 5. ACCESS TO FUNDING 28 CULTURE AND CHANGES IN DEMOGRAPHIC & MINDSET SOCIOECONOMIC TRENDS The economic success of entrepreneurs depends heavily on In a borderless world, business is not limited to local markets their own effort and skills regardless of the various forms only. In fact, a global market that benefits Malaysia’s 32 of government support being made available. Therefore, million population needs to be explored. Local entrepreneurs programmes assisting entrepreneurs need to be carried out must focus on regional markets such as ASEAN that has, in a holistic and strategic manner, to enable businesses to be cumulatively, about 690 million people. This opportunity must independent once the support ends. As such, to be sustainable be explored by local entrepreneurs using the latest digital and successful, entrepreneurs are required to develop a strong tools and technology. entrepreneurial spirit and look for opportunities to grow their business to a higher level. Malaysia is on its way to becoming an ageing nation by 2030. This change will impact labour and productivity and additional This spirit can be achieved if entrepreneurs continuously learn, resources to support this sector of the country’s population show initiatives, are ready to make the leap and change their will be required. To remain productive and profitable, Malaysian mindset from a demand-based business to an opportunity- businesses and entrepreneurs must find alternative ways in based entrepreneurship, and then shifting towards an the form of technology to run their businesses. innovation-based entrepreneurship. This can only be achieved if they are able to shift from a fixed to a growth mindset. More than 7% of Malaysia’s population is aged 65 years and above. This number is expected to increase to 14.5% in 2040 where the Malaysian median age will increase from 28.1 years in 2019 to 38.3 years in 2040. At the same time, megatrends such as the Internet of Things (IoT), big data and zero carbon will change the lifestyles and consumer habits of Malaysians and impact consumers’ expectations. Inability of local entrepreneurs to adapt and adopt technology in their business operations will hinder their potential to compete in a dynamic market. 29 PLANNING, IMPLEMENTATION, PROCEDURES, POLICIES & AND PERFORMANCE MONITORING LAWS The Malaysian government is serious in carrying out the Procedures, policies and laws that do not go hand in hand entrepreneurship agenda holistically, and offers a support with entrepreneurial needs, technology and social growth, will system of over 60 agencies. However, most of the agencies inhibit entrepreneurs from becoming innovative. This is seen as involved in these development programmes sometimes tend a stumbling block for the advancement of local entrepreneurs. to work in silo. Therefore, the effectiveness of this strategy is Therefore, an effective mechanism via partnerships between often questioned: whether it will improve the distribution for ministries, agencies and regulatory bodies needs to be the target groups, or waste resources by duplicating functions formed to allow new business models to be explored with the and tasks. The probability of an overlap of policies between advancement of internet and communication technologies as government ministries and agencies is of great concern. well as the evolution of e-commerce globally. Key performance indicators (KPI) and periodic assessment methods need to be identified and developed to assess entrepreneur performance at every level including individual, group, agency and organisation achievements. This needs to be carried out as existing measurements of achievements mostly look towards the GDP contributions and national exports. Other performance indicators such as the well-being index to show population happiness should also be taken into account to demonstrate an inclusive economic model that embraces the “Shared Prosperity” approach. 30 ACCESS TO TECHNOLOGY FUNDING Funding will always remain at the top of an entrepreneur’s The retail sector, the ‘mom-and-pop’ shops, wholesale mind, whether the organisation is starting operations, or business are seeing customers and consumers spend in a embarking on a new innovation. Working capital is another radical way: buying online. The Internet has flattened and issue that businesses face. Yet, seeking investors, venture democratised consumer spending and changed how business capital and grants remain a holy grail for many entrepreneurs. is conducted in the retail sector. The ‘shop’ is now a mobile This is because of fundamental expectations between funders phone or laptop, literally bringing a whole new world of goods and entrepreneurs. Then there’s also poor entrepreneur to the customer wherever he or she is. There are no signs literacy, which causes strain between the funder and the of e-commerce abating, and Malaysian entrepreneurs must business, for some entrepreneurs do not know how to access catch up. funds, and what types of funding are best suited for their business. Among the challenges faced by enterprises in Malaysia is the moderate technology adoption in which the majority of the The role of Development Financial Institutions (DFI) similar to workforce is semi-skilled. The lack of technology adoption and commercial banks has also made it difficult for entrepreneurs dependency on low skilled workers caused the productivity to obtain financial assistance. This is because entrepreneurs scaling up to stagnate. This impedes local entrepreneurs from face the challenge of overcoming high risk to start a new competing in the global market, thus limiting their market business. In addition, factors such as lack of incentives and share. If this trend continues, the country’s plan to boost interest has deterred many entrepreneurs from venturing into innovation-based entrepreneurship will be affected. new opportunities in the field of entrepreneurship. Therefore, holistic solutions need to be sought to reduce these gaps so According to the Second Quarter 2018 Employment Survey, that funding sources can be optimized for entrepreneurs to from 8,474,000 jobs offered, only 24.3% of the job is in the grow and scale-up their businesses. skilled category while the semi-skilled and low-skilled categories are 62.2% and 13.5% respectively. The percentage of unfilled vacancies is also higher in the semi-skilled job (108,000) which is more than double compared to skilled job vacancies (51,000). 31 CAPABILITIES, SUSTAINABILITY AND SCALING OF MICRO, SMALL AND EDUCATION AND SKILLS MEDIUM ENTERPRISES Entrepreneurs who fail to see their businesses from a supply The biggest issue in education and training is balancing chain perspective may find it difficult to stay competitive, the supply and demand of workers in various sectors. The sustainable, and elevate their business to greater heights. abundance of graduates with only paper qualifications without This situation could be made worse by those who seek to added value makes employers more wary of whom to employ. monopolise the supply chain by controlling supply prices. At the same time, many graduates are stuck in jobs that are Therefore, an innovative solution must be sought after to not related to their qualifications. Highly skilled graduates ensure healthy market competition. should have the imagination and creativity to explore new areas and shift their mindset from being a job-seeker to a What worked before, may already be redundant in today’s job creator. This is significant, especially in today’s highly digital age. Thus, the entrepreneur’s management skills, competitive job market. motivations and ambitions are also important in ensuring the sustainability and scaling of their enterprise. Some In 2018, data shows that unemployment amongst new HLI sellers are content with status quo, with no desire to become graduates was approximately 19.8% (57,411); while the job global entrepreneurs. The challenge for entrepreneurship vacancies for skilled workers and semi-skilled for the second development agencies is to identify high potential quarter of 2018 was approximately 159,000. entrepreneurs to be given the right support in order to avoid wastage of resources. 32 Strategies have been implemented by the Malaysian government to improve the standards of living and socioeconomic standing of the nation. Various policies and rules have been put in place by government ministries and agencies to support the development of entrepreneurship in this country. However, there is still space for improvement. Currently, a majority of entrepreneurship development efforts are spearheaded by the government. Therefore, it is hoped that the private sector and communities can be more active in ensuring the current entrepreneurship ecosystem can be further improved. As such, major factors that influence the entrepreneurship ecosystem needs to be identified by creating improvement strategies to solve the issues and challenges so that Malaysia’s goal to become an entrepreneurial nation in 2030 can be achieved. 33 04 NATIONAL ENTREPRENEURSHIP POLICY 2030 POLICY STATEMENT “Malaysia: An Outstanding Entrepreneurial Nation 2030” The NEP 2030 is a long-term strategic document that was drafted to set the direction for the country’s entrepreneurship development by 2030. To fulfil this aspiration, a dynamic entrepreneurship ecosystem will be established to ensure all segments of the society can benefit from it and explore their potential in entrepreneurship. 36 POLICY OBJECTIVES The NEP 2030’s strategies have taken into account short, medium and long-term factors as well as a timeline to implement effective plans by setting objectives and targets to ensure proper implementation, monitoring and evaluation. The main objectives of this policy are as follows: • To create a holistic and conducive entrepreneurship ecosystem for sustainable, balanced and inclusive socio-economic development in Malaysia • To develop a Malaysian community with an entrepreneurial mindset and culture • To produce quality, viable, resilient and competitive entrepreneurs with a global mindset • To scale up local enterprises and SMEs • To make entrepreneurship as a preferred career of choice 37 DEFINITION AND SCOPE Entrepreneurship is the heart of business. The definition of entrepreneurship will always change as the business landscape evolves, especially in terms of processes, individuals and business entities. The definition of Entrepreneurship, Entrepreneurs and Enterprises in Malaysia, are as follows: Entrepreneurship Entrepreneur Enterprise (Process) (Individual) (Entity) A dynamic process in An individual who takes An entity established by identifying, creating, responsibility and risks to an individual or a group of evaluating and exploiting start and develop businesses individuals to undertake business opportunities. or enterprises by mobilizing business activities with profit resources to generate wealth or non-profit orientation. and/or contribute to the well- being of the nation. 38 POLICY TARGETS The NEP 2030 has outlined mid-term and long-term targets to ensure Malaysia reaches its aspiration of becoming an entrepreneurial nation in 2030. The targets set are: 2018 2025 2030 1. Malaysia’s Position in Global Indices 25 Top 15 Top 10 Top 20 Top Top35 Top20 Top 10 Top30 58 25 15 35 137 140 190 126 GEDI - Global WEF - Global World Bank Global Entrepreneurship Index Competitiveness Index Doing Business Innovation Index (GII) 2. SMEs Contribution to GDP 38.3% 45% 50% 3. SME-generated Job Opportunities 66.2% 72% 80% 4. SME Contribution to Export Value 17.5% 25% 30% 5. Contributions by Cooperative Yield RM40.3billion RM60billion RM100 billion 39 POLICY FRAMEWORK A cultured and entrepreneurial-minded Malaysian society is fundamental to the formation of Malaysia as an entrepreneurial nation. Hence, a collective effort among the government and various parties via the implementation of strategies and initiatives that have been outlined under the NEP 2030 is significant, to materialise a conducive and holistic entrepreneurial ecosystem. The ideal entrepreneurial ecosystem is one that supports all forms of entrepreneurial activities to create a successful entrepreneur. There are 7 elements in this ecosystem that must be established to create a community of entrepreneurs. 1. Market 5. Culture Access to the global market through promotional activities as Creating the entrepreneurial mindset that instills creativity, well as expansion of global network. encourage risk-taking and seizing of opportunities, does not fear failure and forward-looking. 2. Policies Policies are a key component that guide the vision and 6. Skills & Talent direction of entrepreneurship for the nation; government Producing skillful and knowledgeable entrepreneurs via agencies and authorities will provide legal mechanism and structured and certified training programmes. regulate laws that promote healthy, ethical business. 7. Technology & Innovation 3. Funding Instilling innovative elements by creating high value-added Access to structured and dedicated funding for products and services via research and development activities entrepreneurship activities at every level of business through while considering the challenges in disruptive and new various conventional, alternative and collaborative methods. technologies. 4. Support Supporting entrepreneurs and their activities via physical and digital infrastructure and assisting their business through legislation, accounting and technical expertise. 40 ENTREPRENEURSHIP ECOSYSTEM Network • Diaspora network • Collaborations • Multinational companies Market Access • Breaking into the global market • Promoting local products and services Innovation-driven • Research & Development Government • Creating value MARKET • Institutions • Commercialisation • Regulating Framework TECHNOLOGY • Disruptive technologies • Research Institutions & INNOVATION POLICIES 01 • Facilitative Laws 07 02 Human Resources • Skilled • Knowledge-based Financial Models • Serial entrepreneurs SKILLS & 06 03 • Micro loans Training TALENT FUNDING • Angel investors • Structured education • Venture capital system 05 04 • Private equities • Certified and accredited • Alternative funding • Train the trainer CULTURE SUPPORT Norms and Mindset Professional • Risk, errors, and • Legislation failure tolerance • Accounting • Ambitious • Investment banks • Creativity, • Technical experts and advisors experimentation Infrastructure • Collaboration • Digital platform • Transportation and logistics • Incubation centres, cluster • Strategic hub 41 TRE PRENEURSHIP PO L E N L I CY NA 203 ATIO 0 N R E N E U R I A L N AT I O EN TREP N REN EURSHIP ECOS E P Y STE R E NT . Su pp ort . Culture . Skills & Tale nt . T M g e din chn Fun olo . gy icy Y AN D A CT IO N P & Po l L IC L AN In . PO n Ma tio rk va et no ENTREPRENEURIAL COMMUNITY Strategic Thrust 1: Strategic Thrust 2: Strategic Thrust 3: Strategic Thrust 4: Strategic Thrust 5: Strategic Thrust 6: Fostering Optimising Regulatory Stimulating Holistic Accelerating Economic Strengthening Internationalising Entrepreneurship Environment and and Integrated Growth Through Entrepreneurial High Growth Culture Across Access to Funding Entrepreneurship Innovation-Driven Capabilities and Enterprises All Segments of Development Enterprise Performance of MSMEs Malaysian Society 19 STRATEGIES 62 INITIATIVES 42 Six strategies have been created to achieve the targets under NEP 2030. STRATEGIC THRUST 1 STRATEGIC THRUST 2 STRATEGIC THRUST 3 Fostering Entrepreneurship Culture Optimising Regulatory Environment and Stimulating Holistic and Integrated Across All Segments of Malaysian Access to Funding Entrepreneurship Development Society 2 STRATEGIES & 10 INITIATIVES 6 STRATEGIES & 18 INITIATIVES 3 STRATEGIES & 9 INITIATIVES STRATEGIC THRUST 4 STRATEGIC THRUST 5 STRATEGIC THRUST 6 Accelerating Economic Growth Through Strengthening Entrepreneurial Capabilities Internationalising High Growth Innovation-Driven Enterprise and Performance of MSMEs Enterprises 2 STRATEGIES & 6 INITIATIVES 4 STRATEGIES & 14 INITIATIVES 2 STRATEGIES & 5 INITIATIVES 43 STRATEGIC THRUST 1: Fostering Entrepreneurship Culture Across All Segments of Malaysian Society Key question: How to enculturate entrepreneurship among the Malaysian society? Game changer: Making creativity, innovation, taking calculated risks and acting upon opportunities as the foundation of entrepreneurship culture The process of enculturing entrepreneurship is a long-term numbers or communities of quality and highly-skilled commitment. Instilling the entrepreneurial mindset has to entrepreneurs so as to ensure the entrepreneurial ecosystem be done early, and the best way is through education. Getting can be enhanced and improved. Efforts to enculturate students involved at the primary, secondary and tertiary levels entrepreneurship must be done holistically and instilled and society at large will nurture talent with critical thinking among Malaysians so they understand the benefits and skills, attributes and mindset of an entrepreneur. This produce advantages of entrepreneurship. more entrepreneurs who are creative, innovative, not risk adverse and open to exploring opportunities for growth. It is very important for the country to produce as many 44 Strategic Thrust 1 is supported by 2 STRATEGIES and 10 INITIATIVES Strategy A1: Strategy A2: Build Critical Mass of Entrepreneurs Enhance the Implementation of Entrepreneurship 1. Intensify entrepreneurship outreach and awareness Education & Skills programs at national, regional, state and local levels in 1. Embed entrepreneurial culture in education system starting collaboration with all stakeholders. from primary school level until tertiary education. 2. Raise awareness about various entrepreneurship 2. Enhance quality of entrepreneurship training through opportunities including in specific economic sectors and certification and accredited curriculum. high growth areas. 3. Incorporate entrepreneurial apprenticeship programmes in 3. Leverage on media to disseminate information about technical and vocational training (TVET). entrepreneurship and its positive impact on the economy 4. Provide structured entrepreneurship training and support for and society. students and graduate Bumiputera entrepreneurs. 4. Publicly recognise entrepreneurship role models through 5. Enhance stronger collaboration between industry/business awards and other incentives. with education institutions/academia including in the area 5. Promote entrepreneurship as career of choice among youth, of mentoring and training programmes for educators. women and B40 especially amongst Bumiputera. 45 STRATEGIC THRUST 2: Optimising Regulatory Environment and Access to Funding Key Question: How to improve governance, regulations and funding to create a conducive entrepreneurship ecosystem? Game Changer: Agile and facilitative governance, regulations and funding to facilitate entrepreneurial ventures Good and effective governance system will facilitate a Transparency and integrity are also required to ensure a transparent and effective operations management. This in competitive business environment. However, laws and line with the government’s mission to achieve its aspirations regulations should be facilitative and less stringent so that with the principles of fairness, integrity and compliance emerging business sectors have the potential to be explored with the rule of law. In the context of entrepreneurship, a and expanded upon by local entrepreneurs. good governance system will create a favourable condition and environment for starting a business and build strong Inclusive and adequate financing of businesses is crucial confidence among entrepreneurs to continue in this field. in stimulating economic growth and to ensure continued Good governance also reduces bureaucracy and ensures development of entrepreneurship in Malaysia. Alternative smooth completion of projects, as well as ensuring funds will funding platforms and expansion of the existing options need be channelled to eligible recipients fairly. to be provided, which include collateral-free loans and access to more competitive funding channels to support large-scale Regulations and entrepreneurship-related procedures may projects. seem tiresome but are important in making sure business and entrepreneurship management processes are conducted correctly. This also ensures the rights and interests of entrepreneurs are protected. 46 Strategic Thrust 2 is supported by 6 STRATEGIES and 18 INITIATIVES. Strategy B1: Strategy B2: Promote good governance Rationalise Roles and Functions of Entrepreneurship 1. Enhance ICT-based procedures for business registration, Development Organisations (EDOs) reporting and monitoring. 1. Streamline roles and functions of different EDOs for 2. Ensure procedures are applied in a uniform manner to avoid effective and optimum utilisation of resources. corrupt behaviour, favouritism and nepotism. 2. Review various entrepreneurship programs implemented by 3. Promote understanding and increase access of information different EDOs on business procedures, laws and regulations to improve compliance. Strategy B4: Enhance and improve regulatory requirement Strategy B3: for businesses Enhance Monitoring and Assessment of Outcome 1. Review and where appropriate, reduce existing regulatory and Impact requirement that negatively impact efficiency and ease of 1. Establish a national council on entrepreneurship to doing business including at state and local authority levels. evaluate and monitor result, impact and outcome as well as 2. Formulate facilitative regulations to unlock the economic recommend action and policy enhancement. values of new business sector. 2. Establish an entrepreneurship big data and data analytics 3. Balance regulations and standards with sustainable centre that can generate information on matters pertaining development objectives. to entrepreneurship such as programs implemented, 4. Lower the administrative overhead of incorporating and quantity and quality of entrepreneurs, gaps or opportunities, managing a business. as well as existing trends of entrepreneurship activities in 5. Encourage healthy competition by reducing barriers to entry the country. for new businesses. Strategy B6: Strategy B5: Improve access to funding and financial inclusion Reduce the stigma of bankruptcy for entrepreneurs and enterprises 1. Introduce intervention programmes to mitigate the risk of 1. Provide easy access to alternative source of financing bankruptcy. including venture capitals, angel investors and crowd 2. Facilitate re-starts by creating simple process for removal funding. of bankrupt status. 2. Improve access to relevant financial services including collateral-free loans. 3. Revitalise the role of Development Financial Institutions (DFIs). 4. Facilitate access to information about holistic financing ecosystem for different target groups and business life cycle. 47 STRATEGIC THRUST 3: Stimulating Holistic and Integrated Entrepreneurship Development Key Question: How can entrepreneurship lead Malaysia towards achieving the vision of Shared Prosperity? Game Changer: Improving the country’s socioeconomic status by allowing all segments of society access to entrepreneurship. Entrepreneurship is for everyone. It is not for just a certain group challenge their comfort zone by setting high goals towards of individuals. By ensuring a holistic and cohesive growth international markets. of entrepreneurship, the government’s aim of restructuring society through the Shared Prosperity Vision (SPV) will be Cooperatives and social entreprises can also be utilised to achieved. Through entrepreneurial activities, income gap stimulate and encourage entrepreneurship among Malaysians. between the people can be bridged with additional income Cooperatives which provide shareholder dividends would be generation and creation of new job opportunities, hence a great option for lower income groups and those who live in contributing towards the country’s socio-economic growth. rural areas. Social enterprises on the other hand, is a different type of entrepreneurship that is not only profit oriented but The government has always encouraged Malaysians in focuses mostly on social impact and environmental issues. entrepreneurship activities, especially the B40, people These two models’ primary focus are on the well-being of a with disabilities, our indigenous people, women, youth and community, and inclusivity. Bumiputera. There are government agencies focusing on this particular demographic, to economically empower them by The SPV can only be realised when economic growth and providing them support and various platforms in the forms wealth benefits the marginalised, so their needs and well- of programmes, incentives and entrepreneurship training, being are taken care of. When this vision is materialised, to get them interested in entrepreneurship. ‘They are also the whole country benefits as no one will be left behind in encouraged to be more proactive in growing their business and Malaysia’s growth. 48 Strategic Thrust 3 is supported by 3 STRATEGIES and 9 INITIATIVES. Strategy C1: Strategy C2: Support entrepreneurial endeavor of Bumiputera, special Cooperatives as a driver to inclusive focus groups & the disadvantaged socio-economic development 1. Intensify outreach programmes to disadvantaged groups 1. Intensify cooperative movement for low income households including low income households (B40), rural communities, (B40) and rural communities, including promoting the disadvantaged people. establishment of community-based cooperatives. 2. Targeted assistance and intervention programs to boost 2. Enhance capacity and capabilities of cooperatives in main entrepreneurial capability and skills of Bumiputera, economic sectors through wider access to programmes, disadvantaged groups and special focus groups including assistance and business opportunities at par with SMEs. women, youth, senior citizen and Orang Asli/Asal 3. Transform the cooperative ecosystem landscape by community. undertaking a structural reform of agencies related to 3. Create “incubation spaces” in potential rural and cooperatives and liberalising the regulatory framework for economically depressed areas for aspiring new cooperatives. entrepreneurs. Strategy C3: Promote social entrepreneurship 1. Promote awareness and better understanding of social entrepreneurship through stronger community building. 2. Provide on-going support and capacity development programmes for social entrepreneurs to expand their market and business opportunities as well as scalability and sustainability of their enterprises. 3. Encourage Inclusive Business (IB) model approach to benefit low income communities by including them in the value chain of big companies such as LLCs and MNCs. 49 STRATEGIC THRUST 4: Accelerating Economic Growth Through Innovation Driven Enterprises Key Question: How can economic growth be driven by innovation-driven enterprises? Game Changer: By increasing collaborations between entrepreneurs, innovators and researchers in forming, developing and expanding enterprises. Innovation is one of the main elements in driving a country’s meet the needs of the industry. The synergy that is generated economy. Innovative products and services add value and from this action is significant in ensuring that the domestic competitiveness in the market. However, such products must market will have added value product and create practical be supported with an innovative ecosystem that is dynamic innovations and will be well received by the market. as well. The current ecosystem needs to be restructured and improved to stay relevant and meet the demands of In order to elevate the country’s economy to a higher level, the economy in the future. Technology and the adoption of and matches with current and future trends, Malaysia must digital economy will in turn create a management system for observe and explore new economic sectors that have massive entrepreneurship and operations that is current and effective, potential. Some of the sectors that have been identified are as well as increase the quality of the products and lessen the the rail industry, medical supplies, aerospace, the automotive, dependence on labour. digital economy, biotechnology and renewable energy. There must be support to increase entrepreneurs to be active in the Communication and collaboration among entrepreneurs, identified sectors. This will then produce innovative products innovators and researchers are key to enhancing the that are globally competitive and spur the country’s economic commercialisation of local products that are innovative and growth to greater heights. 50 Strategic Thrust 4 is supported by 2 STRATEGIES and 6 INITIATIVES. Strategy D1: Strategy D2: Support the high growth and innovation-driven Facilitate technology exchange and innovation process enterprise 1. Enable R&D uptake and research collaboration between 1. Ramping up creation of high growth and innovative firms industry/SMEs and academia/research institutions. through targeted assistance in the 9 pillars of Industry 2. Build networks in knowledge-intensive sectors with leading 4.0 including automation, digitalisation and artificial technology and science experts and academics from around intelligence. the world. 2. Strengthen the start-up ecosystem towards future 3. Develop market friendly university-industry collaborations industries by creating an entrepreneurial cluster and to diffuse innovation. building up the capacity of financial sector to meet the specific needs of innovation-driven and high-technology start-ups. 3. Provide performance-based loans and incentives for innovation including the use of Intellectual Properties (IPs) as collateral. 51 STRATEGIC THRUST 5: Strengthening Entrepreneurial Capabilities and Performance of Micro, Small and Medium Enterprises (MSMEs) Key Question: How can the competitiveness of micro, small, and medium enterprises (MSMEs) be improved? Game Changer: By elevating MSMEs to higher level with initiatives that add value and innovation of processes, products and services MSMEs in Malaysia tend to operate on the traditional business A diversified market access will allow MSMEs’ selected model, which hampers their growth and success. They need products and services to be marketed through retail stores, to equip themselves with the skills and capabilities necessary minimarkets, supermarkets and even hypermarkets as well as to elevate themselves. MSMEs are now facing unprecedented e-commerce platforms. Products and services need to meet challenges such as the digital economy, and an evolving international standards in manufacturing capacity, funding, workforce that focuses on working remotely as well as product quality, packaging, labelling, and sales performance. achieving work-life balance, automation, which threatens the MSMEs must ensure that their products are able to compete livelihoods of employees. with the more established products in a strong market. From a technical standpoint, MSMEs have a greater An MSME’s capability and performance depends on a advantage in adapting and responding quickly to business and strong value chain, to ensure its sustainability. In Malaysia, technological changes, due to their relatively small operation. Government Linked Companies (GLCs) have utilised their Thus, to meet NEP 2030 goals, targeted support programmes vendor development programmes to advance local enterprises and structured trainings are a must. Entrepreneurship via their value chain. Apart from that, government acquisition trainings offered to MSMEs need to go beyond business platforms will encourage business to build capacity and management and should include specialised skills training in capability to scale up their businesses and enter the marketing and branding techniques, innovation-based product international markets. development and expansion of business using e-commerce platforms. 52 Strategic Thrust 5 is supported by 4 STRATEGIES and 14 INITIATIVES. Strategy E1: Strategy E2: Strengthen the implementation of the Vendors’ Enhance entrepreneurship skills and capabilities Development Programme (VDP) of MSMEs 1. Increase participation of new anchors from GLCs, MNCs, 1. Provide training and development programs related to PLCs, vendor champions and private companies. Industry 4.0, strategic management, certification, marketing 2. Create multiple-tiered vendors among Bumiputera. and branding, packaging, product development and 3. Expand key potential areas from high-growth industry e-commerce. sectors such as aerospace, automotive, rail, renewable 2. Provide targeted support and facilitation for MSMEs to energy, medical devices, biotechnology and halal industry. venture into new and high potential sectors. 3. Enhance capacity building programmes that emphasise on Strategy E3: competitive mindset and internationalisation strategy. Provision of targeted support for market access 4. Provide financial literacy programmes particularly for micro especially for Bumiputera MSMEs and small enterprises. 1. Provide access to various e-commerce platforms for MSMEs to promote and market their products. Strategy E4: 2. Intensify product access for MSMEs into wholesale and Strengthening supply chain management retail outlets. 1. Breaking the monopoly of certain industries through 3. Leverage on government procurement to prioritise on local intervention programmes. product and services. 2. Improving the logistics, physical and digital infrastructures 4. Facilitate regulatory compliance, certification and through public-private partnership. accreditation for MSMEs. 5. Intensify promotion of local products and services at strategic locations and entry points. 53 STRATEGIC THRUST 6: Internationalising High Growth Enterprises Key Question: How to increase the visibility of local enterprises in the global market? Game Changer: Through strategic cooperation networks between local and international entrepreneurs and through global standards and quality compliance Local entrepreneurs can no longer just focus on the domestic on high-growth enterprises that have the potential to spread market; they must have a global presence to stay relevant their wings in global markets. High growth enterprises which and competitive. This is because the domestic market in have been identified must increase their market network Malaysia is relatively smaller than other countries and caters and product marketability to a higher degree and become an to the country’s population size and local demands. Hence, a important contributor to the country’s economic strength. saturated market with static and immobile demand patterns makes breaking into the global market a necessity. Access to The network and collaboration in business at the global level the global market allows enterprises to expand their business is also important to accelerate the development capacity into international market and allows them to explore other of high growth enterprises in Malaysia. The relationships new sectors or economies with high potential. that have been built through Malaysia’s involvement in many international organisations and associations such as ASEAN However, to meet the demands of the global market, an and the Asia-Pacific Economic Cooperation (APEC) will be enterprise needs to be equipped with strong operations strengthened through support and joint ventures from the management, a skilled workforce, and strong marketing aspects of infrastructure, labour mobility, apart from research and branding strategies to offer large scale and high-quality collaborations and innovation. products. This internationalisation strategy should be focused 54 Strategic Thrust 6 is supported by 2 STRATEGIES and 5 INITIATIVES Strategy F1: Strategy F2: Facilitate access for local enterprise especially Promote networking and business collaboration Bumiputera to international markets 1. Escalate Government-to-Government (G2G) partnership 1. Provide market intelligence and advisory services on inter- as well as multilateral and bilateral collaboration among national markets. local SMEs with ASEAN and APEC member states to create 2. Create a global alternative financing network to support synergies and address trade barriers. local entrepreneurs who wants to venture into international 2. Stimulate private sector-led initiatives through industry markets. chambers and organisations. 3. Facilitate compliance of international standard and quality to enable local enterprise to heavily involve in the global value chain. 55 05 WAY FORWARD The National Entrepreneurship Policy (NEP 2030) is a guideline • Opening up business opportunities for entrepreneurship featuring a sustainable entrepreneurship ecosystem to to all segments of Malaysian society to ensure an achieve Malaysia’s target of becoming an entrepreneurial inclusive economic transformation in elevating Malaysia’s nation in 2030. The NEP 2030 is carried out according to six socioeconomic status. Strategic Thrusts supported by 19 Strategies and 62 Initiatives • Empowering the innovation ecosystem among stakeholders that are relevant in driving Malaysia’s development agenda to including entrepreneurs, innovators, researchers, as well stay competitive in the global economic arena. as public and private institutions to form, develop and grow innovation-based entrepreneurship. Forming a Malaysian society that is cultured and geared • Bringing MSMEs to a new level in the global market supply towards entrepreneurship is the basis of turning Malaysia chain via a variety of products and services. • Creating high-growth enterprises that can compete in the into an entrepreneurial country by 2030. Enculturing global market through a two-way smart sharing driven by entrepreneurship can be done through 6 strategic thrusts the private sector. under the NEP 2030, which will be the catalyst towards transforming the economy to be inclusive, progressive, The road to transformation to realise an entrepreneurial nation knowledge driven and innovative. The transformative by 2030 begins from an effective collaboration, established outcomes aspired under the 6 strategic thrusts are: coordination, commitment and support from all parties • Making creativity, innovation, taking calculated risks involved. Attention must be given to efforts building up public- and acting upon opportunities as the foundation of private partnerships collectively. The NEP 2030 framework will entrepreneurship culture. enable all stakeholders to act effectively as drivers in turning • Flexible and facilitative governance, regulation and funding Malaysia as an economic axis for Asia and globally, with its to facilitate exploration into entrepreneurship. people as part of this growth. 58 The Ministry of Entrepreneur Development and Cooperatives (MEDAC) acts as the main agency to coordinate the achievements and efficacy of entrepreneurship initiatives that are carried out by various government ministries and agencies. This coordination is important to ensure that the efficacies of these initiatives contribute and supports the achievements of the five objectives under the NEP. This will realise the concept of Shared Prosperity that was translated through the creation of “Malaysia: An Outstanding Entrepreneurial Nation 2030”. 59 ACKNOWLEDGEMENT Entrepreneur Development Advisory Council (EDAC) AGENCIES Ministry of Entrepreneur Development and Cooperatives Academy of Sciences Malaysia (ASM) Ministry of Youth and Sports Central Bank of Malaysia Economic Planning Unit (EPU) Credit Guarantee Corporation Malaysia Bhd Ministry of Plantation Industries and Commodities Department of Islamic Affairs Malaysia (JAKIM) Ministry of Finance Department of Statistics Malaysia (DOSM) Ministry of Health Veterinary Services Department Ministry of Communications and Multimedia Malaysia Digital Economy Corporation (MDEC) Ministry of Tourism, Arts and Culture Malaysian Technology Development Corporation (MTDC) Ministry of Rural Development National University of Malaysia (UKM) Ministry of Women, Family and Community Development Universiti Malaysia Kelantan (UMK) Ministry of Education Universiti Teknologi MARA (UiTM) Ministry of International Trade and Industry Ministry of Domestic Trade and Consumer Affairs And to all the respondents to our online public consultation Ministry of Agriculture and Food Industries from the industry, organisations and chambers of commerce. Ministry of Housing and Local Government Ministry of Human Resources Ministry of Science, Technology and Innovation Ministry of Federal Territories Implementation Coordination Unit, Prime Minister’s Office Sarawak Ministry of Industrial and Entrepreneur Development Sabah Ministry of Industrial Development 60 APPENDIX 40 Policy Plans/Master Plans/Action Plans/Roadmap related to entrepreneurship in Malaysia. MINISTRY OF YOUTH AND SPORTS MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY National Youth Policy 2015-2035 The Third Industry Master Plan 2006-2020 The Malaysian Aerospace Industry Master Plan 2015- 2030 MINISTRY OF PLANTATION INDUSTRIES AND COMMODITIES The Malaysia Productivity Master Plan 2017 National Biofuel Policy 2006-2020 Industry4WRD 2018-2025 National Timber Industry Policy 2009-2020 National Commodities Policy 2011-2020 MINISTRY OF DOMESTIC TRADE AND CONSUMER AFFAIRS National Intellectual Property Policy 2007 MINISTRY OF COMMUNICATIONS & MULTIMEDIA National Franchise Development Master Plan 2012-2016 National Cyber Security Policy 2006 National Creative Industries Policy 2012 MINISTRY OF AGRICULTURE AND FOOD INDUSTRIES National Strategic E-Commerce Roadmap 2016 The National Agro Food Policy 2011-2020 Multimedia and Communications Plan 2018-2025 MINISTRY OF HOUSING AND LOCAL GOVERNMENT MINISTRY OF TOURISM, ARTS & CULTURE Second National Township Policy 2016 National Community Policy 2019 National Ecotourism Plan 2016-2025 MINISTRY OF HUMAN RESOURCES MINISTRY OF RURAL DEVELOPMENT The Malaysian Workforce Expertise Development and Training Master Plan Rural Development Policy 2019-2030 2008-2020 National Workforce Human Capital Development Blueprint 2018 - 2025 MINISTRY OF ENTREPRENEUR DEVELOPMENT AND COOPERATIVES Talent Road Map 2020 National Cooperatives Policy 2011-2020 SME Masterplan 2012-2020 MINISTRY OF SCIENCE, TECHNOLOGY AND INNOVATION The Malaysian Social Enterprise Action Plan 2015-2020 National Biotechnology Policy 2005-2020 The Commercialisation of Intellectual Property Policy 2009 MINISTRY OF WOMEN, FAMILY AND COMMUNITY DEVELOPMENT National Science, Technology and Innovation Policy 2013-2020 Women’s Development Action Plan 2009 National Internet of Things (IoT) Strategic Roadmap 2014 Single Mothers’ Empowerment Action Plan 2015-2020 National Aerospace Policy 2017-2030 Disability Action Plan 2016-2022 MINISTRY OF ENERGY AND NATURAL RESOURCES MINISTRY OF HIGHER EDUCATION Green Technology Masterplan 2017-2030 Malaysian Education Development Plan (Higher Education) 2015-2025 Entrepreneurship Action Plan of Higher Education Institutions (2016-2020) CENTRAL BANK OF MALAYSIA Financial Sector Plan 2011-2020 MINISTRY OF TRANSPORT The Trade and Logistics Facilitation Master Plan 2015 SECURITIES COMMISSION The Malaysian Shipping Master Plan 2017-2022 Second Capital Markets Masterplan 2010- 2020 61 ACRONYM AI Artificial Intelligence LLC Limited Liability Companies APEC Asia-Pacific Economic Cooperation MaGIC Malaysian Global Innovation & Creativity Centre ASEAN Association of Southeast Asian Nations MARA Majlis Amanah Rakyat ASM Academy of Sciences Malaysia People’s Trust Council B40 Low Income Household MARDI Malaysian Agricultural Research and Development CGC Credit Guarantee Corporation Institute Co9P Centre of Nine Pillars MARii Malaysia Automotive Robotics and IoT Institute DEEP Dealer Entrepreneurship Enhancement Program MATRADE Malaysia External Trade Development Corporation DFI Development Finance Institution MED Ministry of Entrepreneur Development DOSM Department of Statistics Malaysia MEDAC Ministry of Entrepreneur Development and Cooperatives EDO Entrepreneurship Development Organisation MIDF Malaysian Industrial Development Finance Berhad FAMA Federal Agricultural Marketing Authority MITI Ministry of International Trade and Industries G2G Government-to-Government MNC Multinational Corporation GAP Global Accelerator Programme MOE Ministry of Education GCR Global Competitiveness Report MOTAC Ministry of Tourism, Arts and Culture GDP Gross Domestic Product MPOB Malaysia Palm Oil Board GEB Galakan Eksport Bumiputera MSME Micro, Small and Medium Enterprise Bumiputera Export Promotion MTDC Malaysia Technology Development Corporation GEDI The Global Entrepreneurship and Development Institute MTIB Malaysian Timber Industry Board GEI Global Entrepreneurship Index NDM New Development Model GII Global Innovation Index NEF National Entrepreneurship Framework GITA Green Investment Tax Allowance NEP National Entrepreneurship Policy GLCs Government Linked Companies NGO Non-Governmental Bodies GPPV Geran Pengkomersialan dan Penyelidikan Vendor OECD Organisation for Economic Co-operation and Commercialisation and Vendor Research Grant Development HLI Higher Learning Institute OECD STI OECD Science, Technology and Industry IB Inclusive Business PICC Putrajaya International Convention Center ICT Information and Communications Technology PLC Public Listed Company IKM Institut Koperasi Malaysia PPRN Public-Private Research Network Malaysian Institute of Cooperatives PROTÉGÉ Professional Training and Education for Growing INSKEN Institut Keusahawanan Negara Entrepreneurs National Entrepreneurship Institute R&D Research & Development IoT Internet of Things PUNB Perbadanan Usahawan Nasional Berhad IP Intellectual Properties National Entrepreneur Corporation Berhad KEGA Key Economic Growth Activities SE.A Social Entrepreneurship Accreditation KPI Key Performance Index SME Small and Medium-sized Enterprise LKIM Lembaga Kemajuan Ikan Malaysia SMEIPA SME Integrated Action Plan Malaysian Fisheries Development Authority SPV Shared Prosperity Vision 62 TVET Technical and Vocational Education and Training TEKUN TEKUN Nasional TPM Technology Park Malaysia UK United Kingdom USA United States of America VDP Vendors’ Development Programme WEDP Women Exporters Development Programme WEF World Economic Forum WTO World Trade Organisation YEDP Youth Exporters Development Programme 63 REFERENCES Academy of Sciences Malaysia. 2017. 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