Chapter 7

Business Support
System
 The Importance of Business Support
System
 The Malaysian government has very favourable views towards
entrepreneurship development.
 This is reflected in the various initiatives, schemes and incentives
designed to assist the development and growth of entrepreneurial
ventures.
 Most agencies and ministries are given the tasks to facilitate these
developments through various services extended to the entrepreneurs
and enterprises in specific sectors.
 Together, the functions and services rendered can be viewed as a web of
networks that support entrepreneurs to create, develop and grow their
ventures.
 The sustainability of an entrepreneurial venture is very much influenced by
the interplay of elements in the entrepreneurship ecosystem.

 The entrepreneurship ecosystem refers to the network of various

factors such as market, human capital, financial resources, policies,
professional services, support infrastructure, etc.

 Interactions of these networks are crucial in ensuring creation,

development, growth and sustainability of SMEs.

 Hence, the importance of business support system is to ensure the

assistance and facilities reach the specific target group of SMEs.
 Forms of Business Support Systems

 Business support services provided by the government are designed to support the attainment of
the national agenda in the economic development of the country.
 Policies and plans are translated by ministries and implementing agencies into operational
programmes through various channels.
 The programmes or initiatives designed are rendered to entrepreneurs and businesses in the
forms of assistance and facilitation services that are offered by multiple agencies targeting
specific group of SMEs or entrepreneurs.
 Entrepreneurs and businesses benefit from those initiatives and as a result contribute towards
achieving common national economic goals.
 These support services are delivered in various forms and can be identified through three major
groups: infrastructure, financing, and capacity and capability building support services.
 i) Infrastructure Support Services

Business Premise Facilities: Business Incubator Programmes

Business Incubator Programmes are introduced to offer assistance to entrepreneurs to
establish and develop new ventures through comprehensive business assistance.
A business incubator is often referred to as a physical facility provided in order to
encourage entrepreneurship.
Given the support, facility and services, new start-ups have the opportunity to concentrate on
nurturing their ideas or on developing their products or services at this vulnerable stage of the
business life cycle.
Besides the technical support services, assistance for business premises offered by agencies are
also meant to help and encourage new SMEs to situate their businesses at strategic and viable
business location at reasonable costs.
The reasonable rental will allow owners of new SMEs to reduce their start-up capital requirement.
 Depending on the type of incubation programme, a standard tenancy period is
usually specified by the provider.
 This is to allow new SMEs to have sufficient time to establish their businesses and
be independent enough to relocate their business after that incubation period.
 The Science Park & Innovation Centre Association (SPICA) identified five
categories of business incubators or technology parks in Malaysia as follows:
i. Science and technology parks
ii. Technology business incubators
iii. Business incubators
iv. Virtual business incubators
v. Business support centres
 Currently there are over 100 business incubators in Malaysia provided by
government bodies and agencies as well as private bodies.
 Please refer to the following slides for examples of the government initiated
incubation programmes.
 a) Incubation for Manufacturing Sector
SME Bank Factory Complex
SME Bank offers various sizes of factories to new entrepreneurs to house
their manufacturing activities.
These factories are built at strategic locations and are leased at competitive
and affordable rates to new SME owners under the Entrepreneur Premise
Scheme.
The basic occupancy duration is five years and at the end of the tenure,
the entrepreneurs are expected to relocate their factories to other industrial
premises.
The vacant factories are offered to other new aspiring manufacturers to kick-
start their businesses.
 b) Technology-based Industry Incubator
Programmes
SIRIM Incubator Programme
SIRIM Berhad pioneered the business incubation programmes in Malaysia when they
started the programmes with a couple of companies in Shah Alam in 1986.
Today the programmes have been extended to other states including Melaka,
Terengganu, Johor, Sabah, Pahang, Penang, Perak and Sarawak.
Services offered to businesses include business consultation, entrepreneurship
training, pilot plant or production, testing & quality control, research & development
support, technical training and production management.
Kulim High-Tech Park
The Kulim High-Tech Park is the first integrated science park in Malaysia targeting
technology related industries.
Its technology focus includes advanced electronics, mechanical electronics,
telecommunications, semiconductors, optoelectronics, biotechnology, advanced
materials, R&D and emerging technologies.
Malaysian Technology Development Corporation (MTDC)
The MTDC Technology Incubation Centre programme is designed to
strengthen the linkages between universities, research institutions
and industries.
Its main target is to encourage commercialization efforts at universities
and research institutions as well as promoting the formation and
development of technology based ventures.
Several incubation centres are presently operating at local universities,
each with its own scope and area or technology focus. Below are some of
the participating universities and their focus areas:
i.Universiti Putra Malaysia – ICT (MSC)
ii.Universiti Kebangsaan Malaysia – Biotechnology and pharmaceuticals
iii.Universiti Teknologi Malaysia – ICT & Technovation Park
iv.Universiti Malaya – Engineering and electronic
Technology Park Malaysia (TPM) – Incubation and Innovation Centre
Technology Park Malaysia offers various types of business premises to technology
and innovation related ventures.
The focus of TPM is the advancement of engineering, information technology and
biotechnology.
In addition to the business premises, the incubators also have access to other
integrated facilities and services provided by TPM such as its laboratories and ICT
facilities.
TPM also offers land plots for companies to sublease and build their own buildings.
Tenants at TPM also enjoy other facilities such as the conference and meeting rooms
at reasonable rates.
MARA Incubator Programmes
Majlis Amanah Rakyat (MARA) offers several incubator programmes to stimulate the
creation of new enterprises especially among the Bumiputera youth.
Each incubator has its specific target group.
For example, IKM Lumut Incubator Programme is targeting the technical sector such
as automotive, building and furniture.
Incubation for Agriculture Sector
Agriculture has been identified in the 9th Malaysia Plan and the Industrial Master Plan 3
as one of the key potential growth areas to broaden the economic base of the country.
Various areas are gazetted as the Permanent Food Production Park (Taman Kekal
Pengeluaran Makanan, TKPM) through cooperation between State and Federal
governments.
The common objective is to help small holding farmers in food production.
Agriculture Youth Entrepreneur Incubation Programme (DOA)
The Department of Agriculture (DOA) initiated the Agriculture Youth Entrepreneur
Incubation Programme targeting at youth to encourage them to participate in
agricultural business.
This is to support the government agenda on developing agriculture sector.
The main objective of the Agriculture Youth Entrepreneur Incubation Programme
is to create many agriculture entrepreneurs who are skillful and more competitive.
Upon completion of the incubation programme, participants will have the
opportunity to start their commercial agriculture projects at the designated TKPM.
Sabah Agropreneurial Incubator
Sabah Agropreneurial Incubator is an initiative to promote the development of bio-
industry enterprises in Sabah.
The incubator project is aimed at SMEs in the fruit-based processing industry.
 ii) Financial Support Systems

 Business financing has always been identified as one of the main constraints
for business creation, development and growth for SMEs.
 This is a concern that never fails to attract the attention of the government.
 More than 50 financing schemes have been introduced to address particular
needs of SMEs, hence, supporting the development and growth of those
companies.
 The financing schemes are mostly offered in the form of soft loans and
grants that are channeled through various agencies, development, financial
institutions as well as banks.
 Most of the financing schemes are designed to address specific sectors or
specific groups of entrepreneurs.
 Refer to the following table for some of the agencies providing financing
schemes to SMEs:
 iii) Capacity and Capability
Enhancement Services
 Capacity and capability enhancement services are intended
to encourage SMEs to strive for continuous improvement
on their people, products and overall business operations.

 Policies and programmes are designed to improve skills and

knowledge of the people as well as performance of the
enterprises.

 The services provided include assistance for training and

development, marketing and promotion, technical training,
research and development, and information and advisory.
Training and Development Programmes for SMEs
Training and development programmes for SMEs are offered by multiple
ministries and agencies.
For example, the On-the-Job Training Programme promoted by PSMB is
introduced to provide opportunities to SME entrepreneurs to improve skills and
knowledge of their employees with grant assistance.
Agencies such as the Malaysia Productivity Corporation (MPC), Centre for
Instructor and Advanced Skill Training (CIAST), Institut Keusahawanan Negara
(INSKEN), Malaysian Academy of SME & Entrepreneurship Development
(MASMED), Majlis Amanah Rakyat (MARA) and INFRA also offer various types
of soft skills and technical training to assist SME entrepreneurs.
Marketing Assistance
One of the key success factors of a business is to have good and effective
marketing strategies.
Yet, this is one of the biggest challenges facing small and medium
businesses as securing a market requires a lot of hard work.
In an attempt to address this need, the government has devised several
marketing and promotion support services for SMEs.
For example, Federal Agriculture Marketing Authority (FAMA) literally serves
as a marketing agency under the Ministry of Agriculture and Agro-Based
Industry to assist agriculture entrepreneurs to market their products.
The Malaysia External Trade Development Corporation (MATRADE) is the
national trade promotion agency providing assistance to SMEs to penetrate
international market.
Technical Assistance
Technical assistance is offered to SMEs to allow them to enhance their
capacity and capability.
Companies requiring support for technical aspects will need to identify the
specific agencies that specialize in the particular industry.
For example, for technical assistance on halal products SMEs can refer to
Technology Park and the Chemistry Department Malaysia.
If they require technical support on matters related to quality standard, they
can refer to SIRIM Berhad.
For those in the food production industry, perhaps they should refer to
MARDI.
In short, technical assistance is offered to SMEs in all kinds of industries.
Research & Development Facilities
Research institutions such as MARDI, SIRIM, FRIM, as well as research centres at institutions of
higher learning offer research and development services to SMEs.
In most cases, SMEs do not have enough capital to set up their own R&D centres or units.
Hence, the availability of resources at various research centres can be utilized to conduct the
R&D work for them.
Advisory, Extension Services and Information
Dissemination of information to SMEs is done through several channels depending on the target
group as well as the industry involved.
In general, SME Corp is one of the leading agencies that provides advisory services in many
aspects to SMEs.
Besides that, advisory services are also offered by respective agencies under various ministries.
Examples of agencies providing information and advisory services to SMEs are Bio-Tech
Corporation, MTDC, MDEC, LKIM, MATRADE, etc.