Chapter 4 - SME Corporation Malaysia

National SME Development Council
SME ANNUAL REPORT 2009/10
55
CHAPTER 1
The Malaysian Economy
Chapter 4: Strengthening Enabling
Infrastructure
58 Performance of Key Programmes in 2009
Box Article: Homestay to Help Propel Tourism 60
64 Programmes in 2010

CHAPTER 1
56 National SME Development Council SME ANNUAL REPORT 2009/10
The Malaysian Economy

National SME Development Council
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CHAPTER 4
Strengthening Enabling
Infrastructure
An enabling operating environment
complemented by appropriate and
adequate infrastructure is an important
factor in supporting the growth of SMEs.
Thus, the Government continues to focus
on addressing the gaps and enhancing
further the physical and non-physical or
soft infrastructure to create a conducive
business environment for SMEs to prosper
and to compete in the global market.
Strengthening Enabling Infrastructure

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58 National SME Development Council SME ANNUAL REPORT 2009/10
Strengthening Enabling Infrastructure
Performance of Key Programmes in 2009
Programmes under the enabling infrastructure are broadly divided into three
areas, namely physical, information and regulatory infrastructure. In 2009, a
total of 22 programmes with a financial commitment of RM70.5 million were
implemented towards strengthening the enabling infrastructure for SMEs.
These programmes benefited a total of 278,200 SMEs throughout the year
Strengthening Enabling Infrastructure
Physical Information Regulatory
Slightly more than half of the programmes implemented in 2009 (55%, 12
programmes) were devoted towards enhancing the physical infrastructure
for SMEs, while information and regulatory infrastructure accounted for the
remaining seven programmes and three programmes respectively.

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Strengthening Enabling Infrastructure
Physical Infrastructure
In the pursuit of enhancing the
physical environment for SMEs to
operate, the Government remains
committed in setting up of business
premises, factories, industrial parks
and incubators. These initiatives
would include development, upgrade
or improvement of an area of land,
building or other fixed structures for
SMEs to operate, or the setting-up of
facilities such as distribution centres
and central processing centres to
support, facilitate and improve
business operations and activities
by SMEs.
In 2009, a total of 12 programmes
were carried out to enhance the
physical infrastructure for SMEs with
a total expenditure of RM68 million,
benefiting more than 1,400 SMEs.
Most of these programmes (50%)
were undertaken by the Ministry of
Rural and Regional Development
(MRRD). Among the programmes
with significant outcomes include
the followings:
• The Business Premises/
Workshop/Factories Infrastructure
Programme with a total
expenditure of RM18 million to
provide better business premises
for more than 200 rural
Bumiputera entrepreneurs
at affordable rates;
• MRRD in collaboration with the
Majlis Amanah Rakyat (MARA),
implemented the Provision of
Business Premises programme to
provide business premises and
factories to increase the number
of Bumiputera entrepreneurs
towards realising the objective
of the Bumiputera Commercial
and Industrial Community (BCIC).
A total of RM39 million was
spent under the programme
to benefit 145 SMEs in 2009;
and
• The programme to upgrade basic
amenities and relevant
infrastructure in kampung areas
under the Homestay Programme
by the Ministry of Tourism
(MOTOUR) to enhance homestay
activities and packages. A total of
RM16.7 million was spent for this
purpose, benefiting 141 homestay
operators nationwide.

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Strengthening Enabling Infrastructure
Homestay brings together the
main attractions of the Malaysian
lifestyle encompassing traditional
dances and songs, local cuisine,
traditional games such as kite
flying, top-spinning, and congkak
as well as cultural and ritual
events such as wedding
ceremony and festive celebration
Homestays to Help Propel Tourism
‘To know Malaysia is to love Malaysia’.
Experiencing a homestay in a
traditional village is perhaps one of
the fastest and easiest ways to get to
know and experience the “true”
Malaysia. With this in mind, the
Ministry of Tourism (MOTOUR)
launched the Homestay Programme
in 1995 as part of the initiatives under
the Rural Tourism Masterplan. The
programme is also popular among
local tourists. Homestay aims to fulfill
the requirements of two target
groups. The first target group is the
rural community, by developing
entrepreneurship and increasing the
source of income. The second target
group is the tourists as the Homestay
Programme provides a unique
offering to experience life in a
Malaysian village, and thus bringing
them closer to the local culture which
in turns translates into greater
appreciation of Malaysia’s rich
heritage and diversity.
Premised on the concept of lifestyle
tourism, Homestay brings together
the main attractions of the Malaysian
lifestyle encompassing traditional
dances and songs, local cuisine,
traditional games such as kite flying,
top-spinning, and congkak as well as
cultural and ritual events such as
wedding ceremony and festive
celebration. The lucky few will also
have the opportunity to experience
rural economic activities such as
tapping rubber, planting/harvesting
paddy, harvesting seasonal fruits,
plucking coconuts and many more
exciting activities!
Over the years, the Homestay
programme has successfully
popularised rural tourism as another
attraction in Malaysia. Since its
inception, the number of homestay
registered with MOTOUR has grown
from merely 2 in 1996 to 141 in 2009
with a total of 3,283 house operators

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CHAPTER 4
and some 4,414 rooms. Meanwhile, the number of tourists staying at the
homestays has grown more than a five-fold increase from a total of 31,883
tourists in 2006 to 161,561 in 2009, of which 80% were domestic tourists.
This translates to an increase of 71% in revenue generated from homestay
programmes in 2009 to RM10.9 million (2008: RM6.4 million). Pahang topped
the list by bringing in revenue of RM2.5 million, followed by Selangor (RM2.3
million) and Negeri Sembilan (RM1.2 million). Among the states, the highest
number of homestay operators is in East Malaysia with 19 operators in Sabah
and 18 in Sarawak, followed by Selangor and Johor with 15 operators each.
In promoting homestays, MOTOUR has implemented several strategies
including enhancement through re-branding of the Programme. These
strategies include:
Strengthening Enabling Infrastructure
Tightening registrations
of Homestay
Inspection of Homestay
Selection of best
Homestay by state
Twinning Programmes
Micro Enterprises
Homestay
Railway Tourism
E-marketing promotions
- To focus efforts on increasing the capability
of existing Homestay operators
- To ensure that homestay operators comply
with the desired standards and quality, by
conducting inspection once in three years
- To acknowledge excellence. MOTOUR will
identify the top three Homestays in each
state for specific training and as the role
model
- To establish linkages with other countries
that implement Homestay
- To diversify the activities and income of
Homestay operators
- To promote homestays via Malaysia’s
network i.e. the Singapore - Kelantan route
to encourage inbound visitors from
Singapore
- To explore new avenues for promotion of
Homestay via mobile alerts and blasts
Throughout 2009, MOTOUR was
also engaged in a series of initiatives
designed to bring the programme to
a higher level. This includes exploring
into other activities that could be
offered to the tourists as well as
organising basic and specific training
courses for Homestay operators such
as Malaysia Welcomes the World
(MWW) Programme, training in
reflexology as well as organising
seminars, visits and overseas
courses on Homestay.
The initiative of the participants in the
Homestay Programme to undergo
training has resulted in them not only
being able to understand and cater to
the needs and requirements of
tourists, but empowered them with
the right knowledge and people skills
to manage their guests. One clear
example of how the Homestay
Programme has enhanced
communities in the rural areas is in
the success enjoyed by Kampung
Kuala Medang in Hulu Jelai, Pahang
which is today one of the more

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Strengthening Enabling Infrastructure
popular Homestays in the country.
Taking advantage of its natural
endowment blessed with rivers,
waterfalls, a naturally preserved forest
and caves, the villagers invested in
marketing strategies that include the
printing of brochures, flyers, short
video clips and even to the extent of
sponsoring stays for travel journalists
and travel agents to boost the
popularity of Kampung Kuala
Medang. A great deal of time, effort
and funds were also invested in
upgrading the basic public amenities,
improving the presentation of the
village and enhancing the quality of
services offered to visitors.
From a village that had traditionally
relied on farming, rubber tapping and
growing of fruits, tourism has now
become a big business and
supported the community in
Kampung Kuala Medang with a
stable and promising source of
additional income. In 2009, Kampung
Kuala Medang attracted some 4,000
tourists and in the process generated
RM500,000 in revenue for the 71
participants of the Homestay
Programme. This is a commendable
performance considering the fact that
the village alone accounted for 20%
of the total revenue of RM2.5 million
derived from the Homestay
Programme in the entire of Pahang.
The number of visitors to Kampung
Kuala Medang also accounted for
26% of the total 15,000 tourists who
visited some 29 Homestays in
Pahang.

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Regulatory Infrastructure
In order to ensure a comprehensive
approach in strengthening enabling
infrastructure for SMEs, the
Government has also put in place a
supportive regulatory infrastructure
that would spur the growth of SMEs.
These include the formulation and
revision of guidelines, standards and
requirements governing the
operations and activities of SMEs.
Strengthening Enabling Infrastructure
Information Infrastructure
In an increasingly competitive business landscape, SMEs need to equip
themselves with updated information and to conduct market intelligence on a
real time basis. Sharing of knowledge, experience and technical expertise
would not only enhance the growth potential of SMEs but also help businesses
to remain relevant with the changing times. For this purpose, the Government
continued to develop policies and programmes to upgrade, develop and
improve management of information by Ministries and Agencies involved in
SME development. This initiative will also include the development and
enhancement of the on-line infrastructure available to SMEs towards improving
their business operations and efficiency.
A total of seven programmes were carried out to enhance the information
infrastructure in 2009 and these among others include:
• The Knowledge Sharing programme implemented by the Ministry of
Plantation, Industries and Commodities (MPIC) via the Malaysian Palm Oil
Board’s (MPOB) website which attracted close to 275,600 visitors during
the year. The programme aims to make the website as an effective tool and
platform to increase awareness on MPOB activities and to promote
knowledge sharing amongst industry players;
A total of three programmes were
implemented in 2009 aimed at
further strengthening the regulatory
infrastructure with a total cost of
RM2.7 million which had benefited
241 SMEs. These among others
include the Development of Malaysian
Standards programme by MOSTI
which aimed at promoting SMEs’
competitiveness through adoption of
Malaysian standards. Meanwhile,
Ministry of Housing and Local
Government (MHLG) also undertook
the Nursery Accreditation programme
and a Study on Industry Status and
Planting Material Standards aimed
at further enhancing the quality of
the products and services in the
landscape industry.
• The Assessment of Vendors Programme and the Vendor e-registration
programme by the Ministry of Energy, Green Technology and Water
(MEGTW) in collaboration with Tenaga Nasional Berhad (TNB); and
• The development of the SME Business Portal Programme by the Ministry of
Science, Technology and Innovation (MOSTI) through MIMOS Berhad to
support the development of SMEs in K-Based industries.

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Strengthening Enabling Infrastructure
Programmes in 2010
In 2010, the Government has
allocated a total of RM193 million
to further strengthen the enabling
infrastructure for SMEs through the
implementation of 28 programmes.
The programmes will continue to
focus on three key areas under the
strategic thrust, namely physical,
regulatory and information
infrastructure. The programmes are
expected to benefit about 8,000
SMEs across all economic sectors.
Physical Infrastructure
More than 80% of the programmes
in 2010 are aimed at strengthening
the physical infrastructure for SMEs.
These involve programmes to
develop, upgrade and/or improve
SMEs’ access to business premises,
business centres, industrial lots and
halal parks which are targeted to
benefit 3,000 SMEs.
The majority of the programmes
are by MRRD which among others
include the Provision of Business
Premises programme implemented
through the Department of Orang
Asli Affairs (JHEOA) with the target
to establish eight new business
premises and workshops that will
benefit 1,200 participants. Meanwhile,
as an effort to continuously increase
the number of Bumiputera
entrepreneurs, MRRD in collaboration
with MARA will create a total of 526
business premises under the
Provision of Business Premises
programme. MRRD will also build
184 business premises under the
Business Premises/Workshops/
Factories Infrastructure Programme
for rural Bumiputera entrepreneurs to
operate at affordable rental rates.
Meanwhile, the Factory Assistance
Scheme (Skim Kilang SME Bank)
implemented by the Ministry of
International Trade and Industry (MITI)
through the SME Bank is expected to
provide a total of 422 factory spaces
for rent to new Bumiputera
entrepreneurs in strategic locations.
The programme, with a financial
commitment of RM60 million will
benefit some 611 SMEs, including
the participants of the Entrepreneur
Development Programmes under the
SME Bank. MITI will also undertake
the Collection and Marketing Centre
for Entrepreneur Product (4PU)/
Trading House programme, which
involves the establishment of two
centres to assist SMEs in the
manufacturing sector in terms of
marketing, distributing and enhancing
the quality of their products. The
programme with an allocation of
RM1.2 million is expected to benefit
100 SMEs.
In addition, the Ministry of Finance
(MOF) in collaboration with
Perbadanan Kemajuan Iktisad Negeri
Kelantan (PKINK) will establish 50
manufacturing premises equipped
with high capacity machinery and
equipment for the production of halal
food with a total cost of RM5 million
under the Halal Product Development
Project. Another project by MOF
includes the Cottage Retail Shop
programme in collaboration with the
Urban Development Authority (UDA).
The project aims to create 54 new
business outlets in the cottage
industry with a financial commitment
of RM20 million.
In an effort to spur the growth of
SMEs in Sabah, the Government
through the Ministry of Industrial
Development (MID) will also create
73 new Bumiputera entrepreneurs
under the Provision of Business
Premises for Bumiputera
Entrepreneurs programme. These
entrepreneurs will be offered premises
with rental rates that are 30% below
the market price. The Ministry will
also develop 69 industrial lots for
SMEs in the Sandakan Industrial
Estate, Phase III – SME Zone.