Yang Berhormat Dato’ Sri Mustapa Mohamed;
Minister of International Trade and Industry Malaysia,
Yang Berbahagia Datuk Ir. Dr. Mohamed Al-Amin Hj Abdul Majid;
Chairman of SME Corporation Malaysia,
Yang Berbahagia Dato’ Hafsah Hashim;
Chief Executive Officer of SME Corp. Malaysia,
Excellencies and Distinguished Guests,
Ladies and Gentlemen,
Assalamualaikum Warahmatullahi Wabarakatuh and Salam 1 Malaysia.
It is indeed a great pleasure to be invited to officiate this prestigious event. I wish to thank MITI and SME Corp. Malaysia for inviting me. I understand this is the 13th annual showcase, organised by SME Corp. Malaysia, and that it has become a permanent feature in the calendar of SMEs both in Malaysia and internationally.
2. I especially wish to thank the organisers for bringing to fruition my thoughts on innovation and creativity with SMEs. The theme — ‘Pioneering Business Transformation through Innovation’ — is most relevant, given our national emphasis on creativity and innovation this year.
3. SMIDEX 2010 provides an important forum for SMEs and other companies to help them identify new market opportunities and forge linkages through business-matching sessions with potential buyers. This event will not only boost the visibility of innovative Malaysian companies, it will also provide a platform to share experiences, best practices and strategies to compete in a globally competitive market. I understand there will also be a pitching session, involving international and local venture capitalists and fund managers. I have been told this is being done in collaboration with MDeC.
Distinguished guests, Ladies and Gentlemen,
4. The era of globalization and trade liberalization has changed the rules of the game. Governments are increasingly engaging in free trade agreements to open market access and put into place mechanisms that facilitate international trade and investments. As consumer purchasing power increases, these agreements stimulate demand for high quality products. Opportunities abound as free trade agreements offer both economic and technological benefits. Companies that deliver the best product at the most competitive price will benefit the most from trade liberalization. The challenge will be our ability to grasp the significance of open markets, to capitalize on innovation and ensure that our companies can compete and sustain their businesses despite increasing competition borne out of these agreements.
5. In the new business environment, there are many uncertainties. Companies need the agility to adapt, and the insight and skills to take advantage of market access opportunities before competitors.
6. Indeed, globalisation and new technologies will accelerate changes required in business models, industrial structures, and employee competencies. Knowledge has become a key driver of economic growth and development internationally. But innovation will provide the tipping point.
7. Countries that make innovation a priority have obtained a competitive edge. We have learnt this from the experience of Asian countries like Korea and Taiwan which have taken their economies to new levels by investing in innovation.
8. We have seen that knowledge and innovation-based societies score high in international business rankings. It’s interesting to note that Scandinavian countries with small populations still have among the highest per capita incomes in the world. Innovation, specialization, and internationalisation of their large scale research facilities have helped them overcome the small size of their domestic economies.
9. My recent visit to the US illustrated other lessons about knowledge and innovation-led economies. Its policies stimulate high-tech ventures in information technology and biotechnology and facilitate the transfer of technology and knowledge to industry.
10. Going forward, innovation will be key in ensuring the high productivity growth that the Malaysian economy would require to attain a high income and developed status by 2020. Typically in many developed countries, SMEs have been the catalyst in initiating innovative ideas. In this regard, Malaysian SMEs have shown a remarkable progress, with real GDP of SMEs consistently expanding at a faster pace than the overall economy since 2004, with an average annual growth rate of 7.7% compared with 5.7% growth in the overall economy.
11. I am also pleased to note that the latest survey findings by SME Corporation Malaysia have shown that the recovery of Malaysian SMEs from the global financial crisis is firmly established. In the first quarter of 2010, SMEs based on 3,264 survey respondents expanded by 13% year-on-year in terms of sales growth. The respondents are expecting a better performance of 20% growth in second quarter of 2010 and a full recovery by the second half year.
Ladies and Gentlemen,
12. Here in Malaysia, the foundation for transformation is our New Economic Model. It supports innovation across all sectors and in everything from industry, education and healthcare, to management and even in our way of thinking. It must be embraced and must encompass all that we do.
13. The New Economic Model offers initiatives to support the transformation of companies, including SMEs. Our approach is embedded in Strategic Reform Initiatives designed to re-energise the private sector, to build a knowledge-based infrastructure and to pursue additional sources of growth. You will be pleased to know that, under the New Economic Model, SMEs role as an internal source of economic growth will be further strengthened. Incentives will be offered to speed the transformation of SMEs that have high potential for innovation.
14. A key success factor is having a knowledge infrastructure that links government, the private sector and academic institutions, so they can work together toward common goals. This approach promotes human capital development and inter-organizational and inter-sectoral knowledge-sharing. It also forges R&D linkages between institutions of higher learning and the private sector.
Ladies and Gentlemen,
15. As Malaysia progresses on the journey toward becoming a high-income nation and an innovation-led economy, we will need the full engagement and participation of all Malaysians. It will be important to ignite the creativity of our people, because creativity provides the foundation for innovation. We also need an eco-system that identifies great ideas and seizes their potential. This is a high priority for the Government.
16. Ideas alone are not enough. In addition to a supportive eco-system to nurture creativity, the entire value chain must be designed to stimulate innovation and bring ideas to market. It is for this purpose that the Government has formed the National Innovation Council. It will rationalise and strengthen our national innovation system across all technological areas.
17. Our National Innovation Agenda, launched in 2007, is already helping to transform Malaysia into an innovation-led economy. It has three main thrusts. The first is a research agenda that targets our areas of competitive advantage and emphasises commercialisation of output. The second involves the development of intellectual capital in science and technology fields. And the final thrust supports our National Innovation System.
18. To move innovation and commercialization forward, the Government has established the National Innovation Centre, which is supported by a network of innovation excellence centres. The Centre coordinates innovation activities and provides an impetus for new product development and commercialisation. It drives innovation across all fields — everything from biotechnology and ICT industry, to animation and agriculture industries.
Distinguished guests, Ladies and Gentlemen,
19. We are aware that an innovation-led economy demands a new breed of SMEs – firms that can foster market and technology-driven innovation and create high-skilled jobs in all economic sectors. To fulfill this vision, the Government is encouraging the development of innovation-led SMEs or in short, InnoCERT SMEs. These are SMEs that are market and customer-focused, have a high percentage of knowledge professionals, and utilise technology and innovation for process and product development. Innovative SMEs can manage new risks associated with technology, funding and the fast-evolving marketplace. In promoting their development, we have put into place initiatives to ensure a conducive environment for these companies to thrive. We are providing fiscal incentives, among others, a higher ceiling and higher margin of financing for 1-InnoCERT SMEs. These will be provided by MIDF.
20. In addition, the Government has identified programmes to harness the innovation potential of SMEs, To better guide and assist these companies, SME Corp. Malaysia, through its One Referral Centre, will provide SMEs with the information they need – about everything from business start-ups to exportation.
21. To complement the National Innovation Agenda, SME development programmes under the 10th Malaysia Plan will focus on developing SMEs that are innovative, competitive and resilient. They can then, in turn, contribute significantly more to the economy. Implementation will be through three strategic thrusts: strengthening the enabling infrastructure; building capacity and capability; and enhancing access to financing. While the focus will be on sectors with high growth potential, programmes for capacity building will be tailored to the varying needs of SMEs along the growth cycle. The previous grant-based assistance programme for SMEs will be converted into soft loans, as we want to reduce their dependency on Government funds.
22. A sound infrastructure is a key enabler for innovation. With this in mind, the government has deployed an advanced infrastructure to help businesses reduce costs, be competitive and fund research and development. Malaysian businesses also need to harness the full power of internet. This means faster and more widely available broadband. We have already taken steps in this area so that, by the end of 2010, 50 percent of Malaysians will have access to broadband. This will position businesses, particularly SMEs, to compete effectively in an increasingly technology-rich, knowledge-based economy.
Ladies and Gentlemen,
23. The investments I have just outlined for you are a testament to the government’s commitment to Malaysia’s small and medium-sized businesses. In tandem with dedicating resources to support and foster entrepreneurial initiatives, the government’s efforts to streamline administrative processes, drive anti-corruption initiatives, and promote education are demonstrating real results on the global business stage. Just last week, for example, Malaysia was ranked for the first time as one of the 10 most competitive countries in the world, as published in the Swiss-based Institute for Management Development’s highly respected World Competitiveness Yearbook.
24. This ranking recognises the significant progress that Malaysia is making to improve the level of government effectiveness and promote entrepreneurship. Specifically, we advanced 10 spots, from 19th in the world to 9th, in the IMD’s assessment of Malaysia’s Government Efficiency. More tellingly, we were ranked ahead of countries such as Switzerland, Canada and Denmark for our efforts to improve Business Efficiency, advancing nine spots from 13th in the world to 4th. This recognition, and other economic, social and business indicators, tells us that our government transformation policies are beginning to deliver the planned results and Malaysian businesses are on the right path to compete in the global economy of tomorrow. Now is the time to take our efforts to the next level and I encourage each of you to play an active part.
25. We see the immense transformational power of technology and innovation, and how they can improve the lives of all Malaysians. The Government has an important role to play by setting the ground rules and providing an environment conducive to innovation. Ours will be the Government that embraces and utilises innovation to achieve our Vision 2020 goal to become a developed nation.
Ladies and Gentlemen,
26. An innovative spirit needs to be nurtured and rewarded. Today, I am delighted that MITI and SME Corp Malaysia are doing just that by offering a total cash prize of RM2 million. These resources will be presented to SME Innovation Award recipients, namely, SMEs that have shown outstanding and credible innovativeness. I am pleased to announce that the category winners will win RM200,000 each, while the Top Most Innovative SME will be awarded a RM1 million cash prize. I hope these will provide both recognition and the motivation to succeed.
27. It is inspiring to see so many talented people, entrepreneurs and world-class innovators here today. In the global economy — where there’s no room for wasted potential — Malaysia needs you to succeed! While research and development don’t offer immediate payoffs, please don’t stop pursuing your dreams. Innovation is a continuous process, so maintain the momentum and push yourselves toward your goals.
28. For Malaysia to compete in the global economy and manage through the business cycles, we have to be a step ahead. It is my fervent hope that, with the right infrastructure, programmes and incentives in place, the Government and the private sector can work together to ensure that Malaysia becomes a more competitive and prosperous nation.
29. On that note, dengan lafaz Bismillairahmanirrahim, it gives me great pleasure to declare “SMIDEX 2010: SME Innovation Showcase” officially open.
Wabillahitaufiq Walhidayah Wassalamualaikum Warahmatullahi Wabarakatuh.