role in developing entrepreneurship in malaysia
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AMANAH IKHTIAR MALAYSIA AMANAH IKHTIAR MALAYSIA (AIM)(AIM)
ROLE IN DEVELOPING ROLE IN DEVELOPING ENTREPRENEURSHIP IN ENTREPRENEURSHIP IN
MALAYSIAMALAYSIA
ADFIAP MeetingApril 20-23, 2011
Acapulco Beach Club & Resort Hotel, Kyrenia, North Cyprus
www.aim.gov.my
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1. Introduction2. Macro View On SME In Malaysia3. AIM’s Role in Developing Entrepreneurship
Among Poor and Low Income Households4. AIM’s Micro-Credit Program5. AIM’s Strategy To Enhance
Entrepreneurship6. Success Story7. Impact Studies8. Conclusion
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ContentContent
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Area 330,803 Sq. Km
Temperature 21 C to 32 C
Population 28.3 Million
Ethnic Malay, Chinese, Indian, Other Bumiputera & Others
Labour force 12.2 Million
Employment 11.8 Million
Unemployment 3.6 %
Major Products Rubber, Crude palm oil, Sawlogs, Crude oil & Natural gas
Nominal GDP RM766.3 Billion
Real GDP growth rate
6.0 %
Per capita income RM23,841 (US8,256)
Exchange rate (RM/US)
3.31
Malaysia Background - Malaysia Background - 20102010
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1. Representing 99.2 % of all businesses in Malaysia
2. Contributing 56.4 % of total employment 3. Contributing 31.4% to GDP in 20084. 86.6 % SMEs in services sector, 7.2 % in
manufacturing and 6.2 % in Agriculture sectors.
Macro View On Small and Medium Macro View On Small and Medium Enterprise (SME) In MalaysiaEnterprise (SME) In Malaysia
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SME’s Contribution To Malaysian GDPSME’s Contribution To Malaysian GDP
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1. Strengthening the enabling infrastructure2. Building the capacity and capability of
domestic SMEs3. Enhancing access to financing by SMEs
Three (3) Main Strategic Thrust On SME Three (3) Main Strategic Thrust On SME Development Programs In MalaysiaDevelopment Programs In Malaysia
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Formulation and enactment or review and amendment guidelines, licensing requirement and fiscal incentives governing the operations and activities of SMEs and entrepreneurs
• Developing and enhancing physical infrastructure
• Information management• Regulations and operation
11. Strengthening The Enabling . Strengthening The Enabling InfrastructureInfrastructure
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Policies or programs to enhance the knowledge, skills and ability of SMEs and their employees towards improving their performance, growth and competitive.
Entrepreneur development Human capital development Advisory services Awareness and outreach Technology enhancement Product development Marketing and promotion
2. 2. Building The Capacity And Capability Of Building The Capacity And Capability Of Domestic SMEs Domestic SMEs
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Policies or programmes to ensure adequate access to financing to support the growth and development of SMEs across all sectors Early stage financing Business expansion financing Rehabilitation
3. Enhancing Access To Financing By 3. Enhancing Access To Financing By SMEs SMEs
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Established on 17th September 1987 as a Registered Private NGO and regulated by the Instrument of Trust of Amanah Ikhtiar Malaysia.
Established for the purpose of assisting poor and low income households to lift themselves out of poverty primarily by means of loans to be used for financing income generating activities.
Aim’s Role In Developing EntrepreneurshipAim’s Role In Developing Entrepreneurship Among Poor And Low Income HouseholdsAmong Poor And Low Income Households
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AIM’s Micro credit program acts as a platform to encourage poor household to be entrepreneur by starting as micro entrepreneur and groom them to become small and medium entrepreneurs (SME’s).
Mandated by the Government to produce 4,000 Women Small and Medium Entrepreneurs by end of 2012 under the National Key Result Area
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Aim’s Role In Developing EntrepreneurshipAim’s Role In Developing Entrepreneurship Among Poor And Low Income HouseholdsAmong Poor And Low Income Households
• Exclusive Focus on the Poor and Low Income households
• Specialized Credit Delivery System
• Specially-trained Professional Staff
• Supportive National Framework
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Essence of AIM’s ApproachEssence of AIM’s Approach
• Target Group: Poor and Low Income Women
• Products Micro financing for income generating
activities Micro financing for social/ consumption
purposes Compulsory Saving Welfare Fund
• Lending Methodology Solidarity Group (Grameen Bank Approach) Human Potential Development Social Agenda Development
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AIM’s Micro-Credit ProgramAIM’s Micro-Credit Program
Activity Description Purpose1. Micro-
Financing for income generating activities (Economic Loans)
First loan is up to RM 3,000 (USD 906) continuous loan based on repayment record and discipline. Maximum loan : RM 50,000 (USD 15,106)
To finance income generating activities
2. Educational Loans
For members and their family (including children)
Skill development and children education
3. Multipurpose Loans
Consumption needs including house renovation
Increase well-being
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AIM’s ProductsAIM’s Products
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Activity Description Purpose4. Compulsory
savings/ group fund
Ranging from RM 1 to 15 (USD 0.32 to 4.84)
Group fund loan & savings withdrawal.
5. Welfare Fund (voluntary)
RM 1 per month 1% contribution deducted from economic loan.
Covering natural disaster, fire, hospitalisation, critical illness and death
AIM’s ProductsAIM’s Products
Family Income below poverty line (First time
borrowers)
Agree to form a group of 5
No Collateral, No Guarantor
No Threat of Legal Action
Weekly Repayment
Weekly Center Meeting
Weekly Saving
Loan Covered by “micro-insurance”
Administrative charge
Continuous Loan
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Loan ConditionsLoan Conditions
Achievement As At December 2010Achievement As At December 2010Total Members 253,631
Total Staff 1,576
No of Branches 87
No of Centers 6,604
No of Groups 59,901
Total Disbursement (RM Billion)USD Billion equivalent
4.831.56
Total Loan Outstanding (RM Million)USD Million equivalent
890.61287.29
Repayment Rate (%) 99.5%
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Loan ActivitiesLoan Activities
Sources of Loan Fund Sources of Loan Fund As at Dec 2010As at Dec 2010
No Source of Fund RM Million
1 Federal Government - Soft Loan
738.0
2 Federal Government - Grant
249.0
3 Grant from Donor 19.3
4 Bank Muamalat Malaysia 4.0
TOTAL : 1,010.3
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• Suitable loan conditions• Simple procedures, training and test• Group Formation • Self-chosen loan activities• Collective responsibilities• Small loans and weekly repayment• Strict credit discipline• Close supervision• Availability of subsequent loans• Compulsory savings
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Specialized Delivery SystemSpecialized Delivery System
Outreaching the Outreaching the poorpoor
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Group TrainingGroup Training
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Group Recognition TestGroup Recognition Test
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Center MeetingCenter Meeting
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Center MeetingCenter Meeting
AIM’s Strategy To AIM’s Strategy To Enhance Enhance
EntrepreneurshipEntrepreneurship
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Head UnitHead Unit
Business Developmen
t
Business Developmen
t
ManagerManager
TrainingTraining Information SystemInformation System PromotionPromotion PlanningPlanning
Support Staff
Support Staff
Administration
Administration
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Strategy 1:Strategy 1:Strengthen Entrepreneur Strengthen Entrepreneur
Development UnitDevelopment Unit
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SchemeScheme RMRM
I- Mesra & I- Sri Kandi
100 – 19,900
I-Wawasan 20,000 – 50,000
I- Usahawan 51,000 – 300,000
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Strategy 2:Strategy 2:Introducing New Loan Product (I-Introducing New Loan Product (I-
Usahawan)Usahawan)
1. Develop information system - monitoring and tracking.
2. On web-based - easy access.
3. Include progress information of each member.
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Strategy 3:Strategy 3:Develop Database System for Develop Database System for
AIM EntrepreneurAIM Entrepreneur
1. Develop Training Entrepreneur Module based on AIM’s experience. Module includes:
•Motivation •Financial •Operational and administration •Marketing•Business plan•Business Entity•Accounting •New Business opportunities etc
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Strategy 4:Strategy 4:Holistic and Well Plan Training Holistic and Well Plan Training
ProgramProgram
2. Divide training in 3 stages.
Stage Module Participant Basic Basic
Entrepreneurship Potential entrepreneur
Enhancement
Focus on certain area of business
Micro and Small Entrepreneur
Advance Very focus and market expansion globally
Medium Entrepreneur
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Strategy 4: Cont’dStrategy 4: Cont’dHolistic and Well Plan Training Holistic and Well Plan Training
ProgramProgram
3. Develop traıner training program specially for AIM’s field staff.
4. Various Implementation strategy including short courses, workshop, ‘business coaching’, field exposure, mentor-mentee, seminar and etc.
5. Successful entrepreneurs will be encouraged to participate in training programs.
6. Supporting Agencies also involved in certain areas like branding, packaging and technical knowhow
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Strategy 4: Cont’dStrategy 4: Cont’dHolistic and Well Plan Training Holistic and Well Plan Training
ProgramProgram
1. Launching rebranding programme, taking into account AIM’s role in upgrading the quality of members products.
2. Expanding marketing and increase the sale of members products to high-end market through supermarkets and wholesale markets in Malaysia and abroad. Leveraging on networking among members and MNC’s.
3. Increase sales promotion via internet4. Sharing AIM’s entrepreneur and success
story via mass media.5. Exhibition and sales carnival whether
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Strategy 5:Strategy 5:Planning and Implementing Planning and Implementing Marketing Efforts More Marketing Efforts More Aggressively, Domestic and Aggressively, Domestic and GlobalGlobal
Business transformation is an important strategy to change the size and progress of any business. To achieve this, requires bigger capital, expert mentor, support systems and effective training.
Existing Business
Transformation Capital Required
Retail Shop Mini Market/Supermarket
RM 100- 200k
Stall Restaurant RM 100- 200k
Tailor Shop Boutique and fashion house
RM 51- 100k
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Strategy 6: Strategy 6: Business TransformationBusiness Transformation
1. Establish Entrepreneur Representative Board . Developing the formal structure of organisation for members. Structure have 5 levels i.e. national, regional, branch, block and centre. Function among others;
• Catalyst to develop entrepreneur• Planning, implementing and monitoring• As a network
2.Establish consortium or member’s cooperative. Encourage collaboration among members to market products.
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Strategy 7: Strategy 7: Collaboration and Cooperation Collaboration and Cooperation
Among MembersAmong Members
1. Currently developed jointly with other providers. Applicable to all, however modifications to be made to suit one’s requirement.
2. Encourage members to set up business in-line with the pre-determined standard. Ease monitoring process.
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Strategy 8: Strategy 8: Standardization and RecognitionStandardization and Recognition
Programs: Business Training and Business Coaching Seminars Financial Management Accounting Marketing Sales Carnival Site and Study Visits
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Entrepreneurship Development ProgramEntrepreneurship Development Program
Workshop Workshop
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Seminar Seminar
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Page
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Name Norazah Binti Che EndutBranch SikDate Joined 1992 (18 years)First loan RM500Loan Cycle 8Current loan RM50,000 Cumulative loan RM97,500 Activity Buying and Selling Scrap
rubber Income Before RM 300/monthIncome After RM 30,000/month
Success Story (1)
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Name Mary TangilBranch Sandakan 1Date Joined 09/03/2001First loan RM1,000Loan Cycle 7Current loan RM36,000 Cumulative loan RM137,000 Activity Car Accessories Income Before RM 300/monthIncome After RM 20,000/month
Success Story (2)
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Success Story (3)
Name Zamilah IbrahimBranch BachokDate Joined 06/08/1991First loan RM 500Loan Cycle 12Current loan RM 20,000 Cumulative loan RM 83,300Activity Produce and Process
Herbs Income Before RM 300. /month Income After RM 5,000 /month
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Name Rohani HarunBranch TumpatDate Joined 19/01/1996First loan RM 500Loan Cycle 6Current loan RM 10,000Cumulative loan RM 89,900Activity Salt DistributorIncome Before RM 270/monthIncome After RM 8,000/month
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Success Story (4)
Name Jasmawati Binti HakimBranch Sandakan 1Date Joined 09/03/2001First loan RM1,000 Loan Cycle 13Current loan RM 50,000Cumulative loan RM 382,400 Activity Buying and Selling Used
ClothesIncome Before RM 300 /monthIncome After RM 3,000 /month
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Success Story (5)
NameHajah Nordiana Abd
HamidBranch Sandakan 1Date of Joined 21/03/2002First loan RM1,000Loan Cycle 7Current loan RM 6,000Cumulative loan RM 55,000Activity Buying and Selling Scrap
metalIncome Before RM350 /monthIncome After RM3,000 /month
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Success Story (6)
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Name Salasiah Binti YusofBranch Kuala LangatDate Joined 24/5/2004First loan RM 2,000 Loan Cycle 5Current loan RM 10,000.Cumulative loan RM 35,000Activity Food ProcessingIncome Before RM 600/month Income After RM 1,500/month
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Success Story (7)
0
500
1000
1500
2000
BEFORE LOAN 142 142 198 223 201 321
AFTER LOAN 220 460 457 532 760 1904
IMPACT 1 (1989)
IMPACT 2 (1990)
SERU (1990-
IMPACT 3 (1991-
IMPACT 4 (1994-
IMPACT 5 (2005)
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Impact of Ikhtiar Loan on Borrowers’ Income (RM)Impact of Ikhtiar Loan on Borrowers’ Income (RM)
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OutcomeOutcome
Increase in the household monthly income. The bigger the loan size, the more
chances to uplift the family from poverty (must go through 3 loan cycles at the average of RM 3,000)
Evidence of positive changes in their self-development (self-confidence and responsive)
AIM’s model is rare in the world. AIM gets full government support and funding in line with the wealth associated with a middle income country.
AIM will continue to complement government’s efforts to alleviate poverty and generate high income level among low income households in order to achieve high income country by 2020.
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ConclusionConclusion
THANK YOUTHANK YOU
www.aim.gov.my
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