SMEs must innovate to be global

  • Business
  • Saturday, 09 Apr 2011

WHILE there are some Government programmes and initiatives to spur small and medium enterprises (SMEs) to venture overseas, there also exist some pressing issues that need to be resolved for this segment to compete globally.

For example, currently there are limited places in terms of subsidised booths available for SMEs to exhibit in the Malaysia External Trade Development Corp's (Matrade) overseas exhibitions.

The time taken for the disbursement of the Market Development Grant too is rather long, taking six to 12 months, despite the grant being the most popular among SMEs.

There is also a lack of SME dedicated or focused trade missions that cater to the needs of this segment.

Although Matrade has numerous offices overseas, their officers at the moment can only facilitate trade enquiries but not conclude sales orders.

SMI Association of Malaysia national president Chua Tiam Wee says some of the other issues hindering SMEs from venturing abroad include the need to be competitive, compliance with international standards to achieve the quality required, compliance in terms of delivery time to customers, and regulatory requirements on certification and taxation.

SMEs also need to be knowledgeable in forex to hedge their trade as well as in local customs duties/taxation structure and regulatory requirement of import and investments, he says.

Chua says the strengthening of the ringgit and the removal/reduction of various subsidies are giving the SMEs a double whammy in their effiorts to remain competitive in going global.

“We propose that the Government and Bank Negara moderate the pace of these ringgit appreciation and remove or reduce subsidies for this segment to have sufficient time to adapt and take necessary measures to remain competitive when going global.

“SMEs are currently facing competition from cheaper cost producing countries which are often provided with further export rebate incentives by their governments, like China. The issue of availability of workers and approval of foreign workers to meet the workforce shortage is important as otherwise local SMEs will fail to meet orders from overseas,” he says.

The Federation of Malaysian Manufacturers (FMM) chairman for small and medium-size industries committee Tan Sri Soong Siew Hoong says that to facilitate SMEs to market products overseas, the Government needs to set up Malaysian international trading houses or “sogososhas”.

“At the moment, many SMEs do not know how to go about marketing their products abroad and some go through middlemen while others have to bribe their way through. To circumvent this, the Government should set up these trading houses which will also help save time, costs and unnecessary hassle,” Soong adds.

Apart from being innovative, Soong says foreign experts in various fields should be allowed to assist SMEs to value-add their products and services and facilitate expansion.

To this end, he says FMM has asked the relevant authorities to bring in foreign experts to help SMEs upgrade their expertise and technology in various businesses.

Soong says more foreign students majoring in various disciplines in the country should also be encouraged to work in Malaysia to lend expertise to local SMEs.

SMEs also need to have a positive mindset in order to be global players and eliminate the 3C syndrome (complaint, criticise and condemn). Instead they should adopt the 3Ps (positive attitude, practical action plan and persevere) to be successful world-class companies.

Associated Chinese Chambers of Commerce and Industry Malaysia SMEs deputy chairman Koong Lin Loong says one way to help SMEs become global players and be competitive abroad is to create their own brands.

From the chamber's survey, he notices brand consciousness is not the main priority of SMEs when growing their businesses.

“They only think of boosting their bottomlines. They have to be more brand conscious if they are looking for future growth of their businesses. In order to market and distinguish their products overseas, SMEs should be more creative in their own brand identity and capitalise on information communication technology (ICT), which at the moment is still lacking,'' he explains.

SMEs must change their mindset to adopt innovation and try to see things in a different way as well as overcome the fear of failure when expanding abroad, Koong says.

The government, Chua says should emulate countries like Taiwan and Singapore by setting up Malaysian industrial parks or villages in overseas to facilitate expansion as well as forge government-to- government agreement to protect investment overseas.

ISA Innovation Sdn Bhd recently launched justSAMit, the first locally developed cloud-based IT Asset Management solution that enables SMEs to better manage business operations and gain significant cost savings through greater control and visibility over their IT assets.

CEO Lim Fun Jin says SMEs will not only be able to solve their IT asset management needs with this product but also get access to bulk discounts for IT asset purchase which traditionally is only available to larger companies.

Multimedia Development Corp (MDeC) chief operating officer Ng Wan Peng lauds the launching of justSAMit, adding that MDeC will continue to help provide the ideal growth environment for Malaysian ICT SMEs to transform themselves into world-class ICT companies with the ability to strongly compete in the global arena.

This is in line with MSC-Malaysia Phase Three with the goal, starting from 2011, to transform Malaysia into a net ICT exporter, Ng says.

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