StarSpecialTHE STAR Sunday 25 May 2014

Facilitating cross-border ventures > 4 Malaysian bank champions the cause of SMEs > 6

SME FINANCE

The right funding gets businesses growing

2 SME FINANCE StarSpecial, Sunday 25 May 2014

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Fundingfor SMEs

By GREGORY BASIL

SMALL and medium enterprises (SMEs) are an integral part of the Malaysian economy. SMEs are to be the key drivers in propelling Malaysia towards its goal of becoming a high-income nation. From 2004 to 2010, the gross domestic product (GDP) of SMEs in Malaysia grew at an average annual rate of 6.8%, which is above the average annual overall GDP growth of 4.9%.

In November last year, Bank Negara Malaysia issued a circular on the new definition of SMEs that took effect in January this year.This definition states that SMEs in the manufacturing sector are required to have a sales turnover that does not exceed RM50mil or not have more than 200 full-time employees while SMEs in the other sectors, including the services sector, are required to have a sales turnover that does not exceed RM20mil or not have more than 75 full-time employees.

In order to transform Malaysia into a high-income nation, the government has come up with a game changer the SME Masterplan 2012-2020 which is expected to spur the growth of SMEs to spearhead the nations aspirations.

SMEs are vital to this transformation as they form the domestic source of growth and are the bedrock of activities in the private sector.

Not without challenges

For SMEs to thrive and expand, there are a number of challenges that they must overcome, such as the adoption of innovation and technology, human capital development, access to markets, compliance to legal and regulatory environments, access to the right infrastructure and access to financing.

Addressing these challenges simultaneously will enable SMEs to achieve their full potential, which is in line with the main purpose of this master plan to tackle these challenges for the further growth of SMEs.

For many SMEs, the main barrier that prevents their growth is insufficient funding. Financial institutions as economic intermediaries play important roles as enablers in facilitating the successful provision of goods and services for other economic entities.

Financial institutions exist to make capital and funding available to support both short-term and long-term business requirements of business entities.

Funding for SMEs

There are various types of funding offered for SMEs in Malaysia.

Funding for SMEs can be provided by a range of agencies,

financial institutions. They should be reasonable

in developing a business case, especially in their cash flow projections and maintaining good governance. This is imperative for SMEs to secure funding and procure credit insurance, says Datuk Adissadikin Ali, president and chief executive officer of Export - Import Bank of Malaysia Berhad.

SMEs that have continuous support from financial institutions will be able to chart greater business heights in terms of volume through expansion to both new markets and buyers.

For financial institutions, SMEs will remain an important segment to be served. Understanding the nature of SMEs will allow financial institutions to better suit their product offerings to SMEs.

Increased competition by financial institutions will mean that SMEs will constantly get better product features, says Adissadikin.

An alternative funding option

Venture capital is becoming an increasingly popular funding option for SMEs. Venture capitals are funds that are provided to start-up companies and SMEs by investors who regard the business as one with potential long-term growth.

Many SMEs that have no access to capital markets will often find venture capitals as a vital source of funding. In general, venture capitals present a high risk for the investor but they also offer opportunities for returns that are above average.

For an SME, obtaining funding from venture capitalists can add a certain amount of prestige to their brand. This is because many venture capitalists back businesses that have potential for fast growth.

Venture capitalists are mainly investment firms that carry out venture investments. In addition to providing funding, venture capitalists offer both their technical and managerial expertise to and have significant influence on the organisation that they have invested in.

In recent years, venture capitals have been gaining momentum in Malaysia. Two popular venture capitalist firms are Cradle Fund Sdn Bhd, which is an agency under the Ministry of Finance, and the Malaysian Venture Capital Management Berhad (Mavcap), which is a wholly owned subsidiary of the Ministry of Finance. Cradle was allocated RM10mil under its Cradle Investment Programme when it was established in 2003 and since then has been allocated an additional RM50mil.

The programme was carried out in an effort to help entrepreneurs secure funding locally and encourage them to continue the business in the country instead of

taking it overseas through foreign investors.

Companies that have received grants from Cradle include CK Agrifeed Sdn Bhd, a research company; Medical Devices Corporation Sdn Bhd, a regionally leading company in manufacturing medical devices; Inteltium Technology Sdn Bhd, a company that specialises in providing customised microprocessors and microcontroller designs; TecForte Sdn Bhd, an ICT security company; and Superceed (M) Sdn Bhd, a hosted contact centre solutions provider.

Meanwhile, Mavcap, Malaysias largest venture capital company, has provided funding to companies such as iGene Sdn Bhd, a company that provides technology solutions for forensic medicine; Ncore Systems Sdn Bhd, a banking and identifying solutions systems company; and SelecTV Sdn Bhd, an interactive television system.

Heaven sent

Another form of investment for SMEs is angel investments. A popular definition of an angel investor is an individual who provides small start-ups and SMEs with the necessary funding for their business with no profit expectations.

However, some would say that the definition of an angel investor is the same as a venture capitalist, except that an angel investor uses personal money for the investment while a venture capitalist provides funds from other sources. Angel investors often carry out these investments to gain returns and as an impetus to economic growth.

They can include friends and family of the business owner and more often than not are former entrepreneurs. The funds they provide could either be a one-off payment or an ongoing one.

There are a myriad of options for SMEs to choose from when it comes to funding. As SMEs play a vital role in the Malaysian economy, the government has taken the necessary steps to ensure that SMEs can overcome the financial barriers they face with relative ease.

With sufficient funding, SMEs can grow their business in many ways. They can employ more manpower and adopt more innovative and technologically savvy tools that will help improve their business. Better funding also allows SMEs to invest more in their research to deliver world-class products and services.

With the SME Masterplan 2012-2020 already in place, it is only a matter of time before the rest of the challenges are ironed out to ensure that SMEs experience steady growth and contribute even more significantly to Malaysias GDP.

including Bank Negara Malaysia, Perbadanan Usahawan Nasional Berhad (National Entrepreneurs Agency), the Credit Guarantee Corporation Malaysia Berhad (CGC), Commerce Asset Ventures Sdn Bhd and Maybank Ventures Sdn Bhd.

The CGC, for example, was set up to play a developmental role in supporting the countrys economic development agenda by assisting marginal but potentially viable SMEs, especially those without collateral or inadequate collateral, to obtain financing from financial institutions through its guarantee schemes.

Other examples of funding include funding from banking institutions, development financial institutions, leasing and factoring companies and venture capital companies.

Malaysias current financial ecosystem offers SMEs plenty of funding options through financial institutions and development financial institutions.

Both commercial and Islamic banks offer a variety of funding options for SMEs, including term loans, leasing, industrial hire purchase for asset acquisitions or business expansion, overdrafts, revolving credit facilities and factoring for working capital, letters of credit, trust receipts, bankers acceptance and export credit refinancing for trade financing, and bank guarantee and shipping guarantee facilities.

Like any other type of business, SMEs require both working capital and capital expenditure to fuel business operations.

However, working capital funding, which is a form of short-term financing, is more in demand by SMEs.

On their part, SMEs will need to carry out research and be resourceful in choosing the right type of funding as well as the pricing structure offered by these

With sufficient funding, SMEs can grow their business in many ways. They can employ more manpower and adopt more innovative and technologically savvy tools that will help improve their business.

Apps-solute way to make moneyStarSpecial, Sunday 25 May 2014 SME FINANCE 3

WITH the advent of smartphones and tablets, mobile applications have allowed individuals and businesses to turn creative and innovative ideas into great business opportunities.

A story like that of Flappy Bird, a mobile gaming app created by Vietnamese student Dong Nguyen during his free time, gains about US$50,000 (RM160,875) a day from various advertisements within a period of just seven months.

The success of Flappy Bird is one example of the many success stories involving mobile applications and start-ups. Many big businesses have also managed to sell their apps for large sums of money.

For example, earlier this year Facebook Inc acquired the mobile messaging app, WhatsApp for US$19bil (RM61bil) and Japan Internet giant Rakuten acquired Viber, another instant-messaging app, for US$900mil (RM3bil).

The success of apps is not only seen in the number of users or amount of money it has generated. Some app developers have expanded their influence to retail, amusement parks and even television. A closer look at three successful app start-ups across three categories games, communication and children apps will exemplify the extent of app popularity and its influence in this technology-dependent era.

Not only have these app developers exemplified innovation and creativity, their vision to

create apps that cater to people in a more convenient, user-friendly and entertaining manner have gained them the international popularity and market value that is so highly valued in the app market these days.

Games

l Rovio Entertainment Rovio, creators of the popular

and globally successful app, Angry Birds, stormed the App Store with Angry Birds, a casual puzzle game. Mobile phone users of all ages found the game both entertaining and addictive, and with an irresistible price of US$0.99 (RM3.19), Rovio quickly gained popularity within a few months of the apps release. It boasts more than one billion downloads and more than 200 million monthly active users.

Since then, Rovio has launched other variations of the Angry Birds app franchise Angry Birds Seasons, Angry Birds Rio, Angry Birds Space, Angry Birds Friends, Amazing Alex, Bad Piggies, Angry Birds Star Wars, Angry Birds Star

Wars II and Angry Birds GO! Angry Birds has also expanded

into entertainment, publishing and licensing as an international brand. Rovio, which is based in Finland, saw international openings of branch offices and is now a fast-growing company that regularly employs new talent through training programmes.

Rovio has also had job openings in numerous Angry Birds attractions, including six activity parks located across Spain, Finland and China.

Recently, Rovio revealed its project to develop an educational programme for children aged between three and six. Named the Angry Birds Playground, the fun-learning style of the curriculum is designed to be implemented and taught by teachers in a school environment, based on the Finnish National Curriculum for Kindergarten and includes both digital content and physical learning materials.

Communication

l WhatsAppCreators of WhatsApp

Messenger, a cross-platform instant messaging service for smartphones, have taken the world by storm with this internationally popular app.

Using the Internet, users can send messages, images, video and audio messages. Founded by Brian Acton and Jan Koum, WhatsApp Inc is based in California and is a small company of about 50 employees, consisting mostly

of engineers. Developing WhatsApp started

as a vision to build a messaging service that would focus on giving the best possible user experience. What makes WhatsApp special is that instead of relying on banner advertisements, game promotions or other features that most messaging apps have, WhatsApp focused on producing a high-quality, simple, fast and personal messaging service.

Today, WhatsApp has 500 million monthly active users and its recent acquisition by Facebook has provided drive for WhatsApp to increase its population of active users to a billion in a year.

Children

l Oceanhouse MediaBoasting licensing

agreements with Dr Seuss Enterprises, Hay House, Mercer Mayer, HarperCollins and Random House, this company has created several mobile apps that are popular among children, including digital books of storybook series such as Little Critter, Dr Seuss and The Berenstain Bears.

Based in California, Oceanhouse Media was founded in 2009 by Michel Kripalani, who drives the company to deliver content in innovative and highly interactive formats. Oceanhouses apps give children new ways to learn by offering high-quality

apps in line with its five stars or no stars core value.

Oceanhouse Media initially introduced features that are now found in digital childrens book apps, including offering different ways to read a story, individual word highlighting and picture or word association techniques. Later, it pioneered the record and share feature, which allowed users to record their own customised narration and share it with other people.

Oceanhouse Media has made popular storybook series like The Berenstain Bears available in digital format.

Flappy Bird.

To date, Oceanhouse Media has released more than 350 mobile apps with 18 having reached the No.1 spot within the Children category on the App Store.

The company has been recognised by Google as being a top developer. It also received the esteemed Parents Choice Gold awards last year for two of its mobile apps.

MANY of the most interesting and popular start-ups have come from university students with little or no experience in starting a business.It is worth paying attention to these successful start-ups because though there may be many that failed, there are also many failed start-ups that were spearheaded by experienced people.

University students have their own set of valuable traits that give them an edge over experienced start-up founders, the most obvious of which is their ability to burn the midnight oil.

Many are not bogged down by too many responsibilities, allowing them to juggle their assignments while working on starting up their company.

In addition, passion combined with a certain amount of naivete of how much time and effort are needed for their start-up project work in their favour.

Many founders of successful start-ups have said that if they had known how much effort and energy it took to succeed, they would not have ventured into the business.

Reddit Quiyk Imgur Give Water

This social networking service-cum-news and entertainment website was founded by Steve Huffman and Alexis Ohanian in June 2005.

Both of them were then 22-year-old graduates from the University of Virginia and received their first funding from Y Combinator, a seed accelerator based in the United States.

The website allows registered members to post texts or direct links on just about any topic.

Users can vote on posts by clicking the up or down arrows, which are known as upvotes and downvotes.

Content that is posted on Reddit is divided into categories called subreddits.

These subreddits can range from self-

improvement to technology.

Reddit has seen a lot of growth since its inception and now employs 28 people.

It has also become the 64th largest website in the world based on rankings by Alexa.com, a company that provides commercial web traffic data.

While still a computer science student at Ohio University in 2009, Alan Schaaf started Imgur, an online image hosting service, as a personal project.

When Schaaf presented Imgur to the Reddit community, they were quick to adopt Imgur simply because it was a simple and quick avenue to share images. In the first five months of its launch, Imgur had already received one million visitors to its page.

Since its inception, the website has gone from relying on donations for web hosting to advertisement displays, sponsored images and self-service advertisements.

Currently, Imgur employs 10 people and has won the Best Bootstrapped Startup award at TechCrunchs 2012 Crunchies Awards, an awards ceremony that celebrates the most compelling start-ups, Internet and technology innovations of the year.

On top of that, Google Trends, a service that displays how often specific key words, subjects and phrases have been searched on Google, has shown that as of last year, Imgur has overtaken similar image hosting sites such as Photobucket, ImageShack and TinyPic and shows no sign of slowing down.

Fresh out of secondary school in 2007, Ben Lewis began selling his own brand of bottled water called Give Water out of his car boot.

Shortly after, Lewis got grocery stores and cafes in his hometown of Pittsburgh to start selling Give Water.

Give Water donates one percentage of every bottle sold to a local charity and customers are free to choose what charity they are donating to based on the bottles label.

For example, when a customer purchases a bottle with a pink label, a percentage of its sale will be donated towards breast cancer research.

A bottle with a blue label, meanwhile, donates a percentage of its sale to charities in local communities that help needy children.

In 2008, Gary Paparella, who was the former executive for Cadbury Schweppes, joined the Give Water team, bringing with him 30 years of experience in the beverage industry.

Hiring Paparella proved to be a profitable move as the company began earning more profit and in keeping with its philosophy has been able to give more than US$50,000 (RM160,600) to various charities.

Quiyk (pronounced quick) is the official supplier of athletic apparel for Quidditch, the game that originates from J.K. Rowlings Harry Potter books, which has now been adapted for play in the real world.

The sport came to life for the first time in the United States in 2005 before spreading to countries in South America, Europe and the Asia Pacific. Even Malaysia has its own Quidditch team.

Quiyk was founded by Emerson College students Eric Wahl and Matt Lowe in the summer of 2010 but it was not until spring 2011 when the actual work on the company began.

Lowe, who is Quiyks co-founder and creative director, is currently pursuing a degree majoring in film production with a minor in entrepreneurship. Wahl, who is also co-founder and production director, is majoring in marketing communications with a minor in business studies.

Officially, Quiyk was launched in November 2011 at the 5th Annual Quidditch World Cup in New York where they almost everything they had in stock. Its website states that Quiyk was born not from necessity but from a desire to create, improve and push the boundaries.

Successful start-ups by amatuers

Give Water.

4 SME FINANCE StarSpecial, Sunday 25 May 2014

EXIM Bank provides credit facilities to finance and support the export and import of goods, services and overseas projects.

Facilitating cross-border venturesSOME of the reasons the Export-Import Bank of Malaysia Berhad (EXIM Bank) came into existence in 1995 were to promote reverse investment and carry out the export of local strategic sectors such as capital goods, infrastructure projects, shipping and value-added manufactured products.

This government-owned financial institution also facilitates the entry of Malaysian companies to new markets, especially non-traditional markets. As an agency under the purview of the Ministry of Finance, EXIM Bank has a mandated role stipulated by the government.

Our mandated role is to provide credit facilities to finance and support the export and import of goods, services and overseas projects. Our emphasis is on non-traditional markets and also the provision of export credit insurance services, export financing insurance, overseas investments and guarantee facilities, says Datuk Adissadikin Ali, president and chief executive officer of EXIM Bank.

We have a wide variety of clients, including large corporations, SMEs, foreign governments and foreign companies. Our services also encompass an extensive range of sectors, including trading, manufacturing and infrastructure, he adds.

Forming alliances

In an effort to boost its business and market outlook, EXIM Bank pursues alliances and collaborates with numerous international associations and multilateral organisations.

To date, we are a member of the Berne Union, which is an international organisation for export credit agencies; a member of the Asian EXIM Banks Forum, an association of nine EXIM Banks in the Asian region; a member of the Aman Union, a professional forum that assembles commercial and non-commercial risks insurers in member countries of the Organisation of the Islamic Conference; and also a member of the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP), says Adissadikin.

In addition, EXIM Bank joins forces with local government agencies, including the

Ministry of International Trade and Industry (Miti), Malaysian External Trade Development Corporation (Matrade), Malaysian Investment Development Authority (Mida), Small and Medium Enterprise Corporation Malaysia (SMECorp) and Construction Industry Development Board Malaysia (CIDB) in its export promotion efforts.

The EXIM Bank offering

There are two main facilities offered by EXIM Bank: banking facilities (conventional facilities and Islamic facilities) and credit insurance (credit insurance facilities and credit takaful facilities).

l Conventional banking facilities

Under conventional banking, we offer a wide range of facilities, such as buyer credits, overseas project contract financing, overseas investment financing, bank

guarantees, supplier credits, export of services, trust receipt,

import financing, Malaysia Kitchen

financing, letter of credit,

forward foreign exchange, vendor financing scheme, ADB-EXIM trade finance programme and export credit refinancing, says Adissadikin.

Buyer credits allow Malaysian exporters and contractors to bid for overseas contracts and tenders. This credit will be provided to foreign buyers and finance institutions, directly easing the process for local goods and service importers, he adds.

The overseas project, contract and investment financing are made available to locally owned and controlled companies as well as Malaysian joint venture companies abroad that bid and carry out projects, contracts or investments abroad.

These facilities offered by EXIM Bank provides financial support to Malaysian investors and contractors who are undertaking infrastructure, manufacturing and other development projects, he says.

Another facility available at EXIM Bank is bank guarantees, which facilitate the issuance of bonds or sureties for overseas contracts such as advance payment bonds and performance bonds that are undertaken by Malaysian contractors. With the bank guarantee, these contractors are able to raise funds overseas.

Through the supplier credit facility that EXIM Bank offers, Malaysian manufacturers, exporters and suppliers of locally made goods are able to support their export trade financing requirement through the banks trade financing facility.

The supplier credit facility offers both pre-shipment and post-shipment financing. Pre-shipment financing funds working capital for the production of goods while post-shipment financing funds the export bill after the shipment has been made.

EXIM Bank also provides export of services and this facility can be used by Malaysian-owned and controlled companies that engage in the provision of services for the global market, including IT services, construction, telecommunications, management and other technical professional services.

The export credit refinancing facility, as its name suggests, provides alternative short-term pre-shipment and post-shipment financing to both direct and indirect exporters to promote the export of manufactured products, agriculture products and primary commodities.

The scheme is available at a competitive interest rate to manufacturers and trading companies with the export credit refinancing credit line duly established with any participating commercial bank, explains Adissadikin.

EXIM Bank also offers an extensive range of facilities under its Islamic banking sector. Below is a list of its offerings: l Overseas Project/Contract Financing-il Overseas Investment Financing-il Buyer Financing-il Malaysia Kitchen Financing-il Term Financing-il Supplier Financing-il Import Financing-il Export Credit Refinancing-il Bank Guarantee-il Letter of Credit-il Forward Foreign Exchange-il Trust Receipt-il IDB CO-Financingl Export Services-il Vendor Financing Scheme-i

l Credit insurance facilitiesEXIM Bank offers an array of

facilities under its credit insurance umbrella, such as exporter trade credit insurance, bank letter

of credit policy, specific policy, buyer credit guarantee, bond risk insurance, indirect exporters financing scheme, multi-currency trade financing scheme, bankers trade credit insurance and overseas investment insurance.

The exporter trade credit insurance is an insurance policy that is an all-round protection for regular exporters from the losses they incur when buyers refuse to make payments, says Adissadikin.

The bank letter of credit policy is a facility offered by EXIM Bank to assist businesses in securing payments of the irrevocable letter of credit (ILC), which is the correspondence issued by a bank guaranteeing payment for goods and services purchased by the one requesting the letter to the beneficiarys bank.

The bank letter of credit policy covers participating banks that negotiate ILCs issued by foreign banks against the foreign issuing banks failure to reimburse payments to the beneficiaries, for example Malaysian exporters, under the ILC, he explains.

Specific policy is a type of credit insurance that insures Malaysian exporters who undertake contracts for the export of capital goods, turnkey projects and construction work or render their services abroad against the risk of not receiving payments from the overseas buyer or contract rewarder.

The bank also facilitates Malaysian exporters in assisting overseas buyers to secure long-term financing with a lender through its buyer credit guarantee programme.

The programme works with the Malaysian exporter being paid as if he has a cash contract while the overseas buyer has time to pay off the contract through the financing that is secured from the lender. The buyer credit guarantee programme is backed by EXIM Banks guarantee, explains Adissadikin.

Another facility offered under EXIM Banks credit insurance facilities is overseas investment insurance, which is also known as political risk insurance.

This insurance policy covers the risk of non-commercial losses suffered by businesses established abroad by Malaysian companies. These risks include restrictions, transfers, wars, civil disturbances, breaches of contracts and the rights of ownership.

With these extensive facilities offered by EXIM Bank, it will certainly achieve its goal of becoming one of Malaysias leading import-export facilitators.

There will, no doubt, be obstacles along the way but with Adissadikin at its helm, EXIM Bank will achieve greater heights.

n For more information, visit www.exim.com.my

Exporters Trade Credit Takaful (Export/Domestic) Bankers Trade Credit Takaful Specific Takaful Overseas Investment Takaful

Credit Takaful facilities offered by EXIM Bank:

Datuk Adissadikin Ali, president and chief executive officer of EXIM Bank.

StarSpecial 5Sunday 25 May 2014

6 SME FINANCE StarSpecial, Sunday 25 May 2014

Representing Alliance Bank at the Trailblazer Awards was Steve Miller (right), executive vice-president and head of group business banking of Alliance Bank, with Ruben Kempener, APAC regional director or Timetric.

Alliance Bank recently hosted the Alliance Bank Durian Fiesta 2013 for its business banking customers at the R&R Cafe, Kuala Lumpur Golf and Country Club.

Malaysian bank championsthe cause of SMEsSMALL and medium enterprises (SMEs) in Malaysia play a vital role in the nations growth.

Representing 98.5% of the companies in Malaysia, SMEs contribute to 31% of the countrys gross domestic product (GDP) and are responsible for 59% of employment.

To support the business needs of SMEs, Alliance Bank has undertaken a number of key initiatives to enhance its customer value proposition and relationship model that will serve this segment better.

Alliance Banks value proposition, anchored in the philosophy of helping its customers succeed, offers holistic solutions to businesses at every stage of their growth.

The banks relationship management model is based on the fundamentals of creating personalised, long-term business relationships through the different life-stages of an SME business.

Alliance Banks loyalty marketing efforts are focused on activities that add value to the business owner, be it through a series of regular business seminars, ad-hoc conferences on relevant business issues or customer appreciation engagements.

Clients have acknowledged Alliance Bank as their long-term trusted partner in growth. For the past two years, Alliance Bank has consistently recorded high scores in customer loyalty surveys. In fact, more than 80% of its customers would recommend Alliance Bank to other SMEs.

The BizSmart option

The Alliance Bank BizSmart is the foundation of its business philosophy to leverage on the power of smart technology, business collaboration and learning. It comprises three key components Alliance BizSmart Online Banking, Alliance BizSmart Community and Alliance BizSmart Academy.

This 360o proposition helps customers accelerate their business in terms of business support, business networking, advisory as well as formal and informal learning.

In 2012, Alliance Bank raised the bar by introducing two new concepts.

It was the first Malaysian bank to offer advanced online cash management tools to sole proprietors and small businesses, and the first Asean bank to offer SMEs the option of having a picture of their management team or directors on the card face of their business credit card.

Since its launch, the BizSmart Online Banking has experienced more than six-fold growth in the number of online banking sign-ups per month and recorded the highest usage of online banking (20%) within the SME segment, a great leap from the industrys

average of 6%. Last year, Alliance Bank

introduced BizSmart Academy, a first-of-its-kind business academy that aims to inspire and nurture a new generation of young businesses in Malaysia.

It features an online resource centre, www.BizSmart.com.my, where businesses can access information that can empower them to achive profitable and sustainable growth.

Existing customers can also sign up for business seminars via the online website.

SME Innovation Challenge

Coinciding with the launch of its BizSmart Academy last year, Alliance Bank introduced the inaugural SME Innovation Challenge 2013 and invited young businesses who had been operating for less than three years to submit their business plans for consideration.

Alliance Bank received

more than 200 entries from businesses in the country, from which 13 young entrepreneurs were selected to participate in the challenge. The Innovation Challenge involved business coaching sessions based on the Blue Ocean Strategy, which is a business strategy based on a book written by Rene Mauborgne and W. Chan Kim.

The coaching sessions mentored top business leaders such as Tan Sri Datuk Sri Liew Kee Sin, executive director of Eco World Development Group Bhd, and provided opportunities for business networking as well as numerous branding and marketing opportunities for participating companies.

Three finalists pitched their business ideas to the judges and the public at the final stage of the challenge to garner votes through social media.

In the end, Christy Ng Sdn Bhd (Christy Ng Shoes) was named the Grand Prize Winner and walked

away with the RM250,000 grant. It also received complimentary

Microsoft Office 365 subscription, a visit to the Microsofts Centre of Excellence in the United States, a year-long recruitment services package from jobsDB Group, an exclusive radio interview on BFM and a featured article in a mainstream publication. First runner-up TBA Resources Sdn Bhd (TextbookAsia) received a funding of RM100,000.

There are plans to expand the SME Innovation Challenge to make it more meaningful to its participants by having structured and informal learning this year.

It will not only be bigger in terms of scope but also in terms of reach as we are hoping to receive quality applications from businesses located beyond the Klang Valley, says Steve Miller, executive vice-president, head of group business banking, Alliance Bank. The SME Innovation Challenge is expected to kick off around the third quarter of this year.

Awards and accolades

The work that Alliance Bank has done for SMEs has not gone unnoticed.

Alliance Bank was awarded the Retail Banker International Asia Trailblazers Excellence in SME Banking 2014 award for two consecutive years, named Asias Most Customer Friendly Bank 2014 by IDC Financial Insights and Best SME Bank in Malaysia by UK-based Global Banking & Finance Review for outstanding efforts in serving the Malaysian business community.

More significantly, The Asian Banker, a company that provides information for the financial services industry, hailed Alliance Bank as the best SME bank in Asia-Pacific, Gulf region and Africa of 2013, the first of such recognition for a Malaysian bank.

n For more information about Alliance Banks award-winning SME solutions, visitwww.alliancebank.com.my

Since its launch, the BizSmart Online Bankinghas experienced more than six-foldgrowth in the number ofonline banking sign-ups per month and recorded the highest usage of online banking (20%) withinthe SME segment,a great leap from the industrys average of 6%.

Sng Seow Wah (second from left), group CEO of Alliance Bank and Steve Miller (third from left), executive vice-president and head of group business banking of Alliance Bank, receiving the Asias Most Customer Friendly Bank award at the Financial Insights Innovation Awards 2014. With them are Phillippe de Marcillac (left), executive vice-president, International Business Unites, IDC Financial Insights and Dr Raymond Kwong, CEO of Silverlake Axis.

StarSpecial 7Sunday 25 May 2014

8 SME FINANCE StarSpecial, Sunday 25 May 2014

Venue: Kuala Lumpur Convention CentreSME Corp is organising the 17th SME annual showcase, SMIDEX 2014, with the theme SMEs Connecting the Dots. It will bring together SMEs, large companies and multi-national corporations to provide SMEs with a world-class interactive platform for networking opportunities. Participants can expect exhibitions of products and services, business matching sessions as well as form and product launches and presentations. It will also provide an avenue for exchange of information and ideas on technology and innovation.

n For more information, visit www.smidex.my

SMIDEX 2014 - June 4 to 6

SME-Accelerate: Funding for SMEs - June 12

Creative Business Cup Malaysia 2014National Competition

Startup Grind Kuala Lumpur hosts Cheryl Goh (MyTeksi) - June 26

Venue: Menara PNS Auditorium, Bangsar South CityThe fifth series of SME-Accelerate: Funding for SMEs reveals the how-to and strategies that will boost participants chances of attracting investors to fund their business. Maresa Ng, entrepreneur and certified business coach, will be featured as the keynote speaker. The sessions in this full-day event include topics such as How to create capital-raising campaigns for early growth, How to ready your business for the right funding and How to crowd fund your next project or start-up. The presenters include Sajeet Soudagar, the CEO of Knight Capital Group, and Andrew Wong of MAD Incubator.

n For more information, visit www.smeaccelerate.com

Venue: to be confirmedStartup Grind is a global start-up community designed to educate, inspire and connect entrepreneurs. An event is organised each month in more than 50 cities and 20 countries, featuring successful local founders, innovators, educators and investors who share their stories and lessons. It also provides the opportunity for entrepreneurs to connect with other start-ups and build a support network. Cheryl Goh, who is behind MyTeksis successful marketing strategy, will be sharing her story.

n For more information, visitstartupgrind.com/kuala-lumpur

Creative individuals and entrepreneurs are invited to take part in the Creative Business Cup (CBC), which is aimed to improve the business skills and the number of successful businesses in the creative industries. The competition is a platform for individuals to showcase creative competencies and to inspire entrepreneurship. The national host and organiser, StartupMalaysia.org, is looking for new and revolutionary business ideas with strong market potential. At least one of the people in a team must have an education or background in a creative industry.Important dates: Nominate your team by June 5 Upload your pitch by June 16 National participation selection announced on June 23 National participants submit business concept description by July 1 National competition on July 11 National winner attends Global Award Show in Copenhagen from Nov 17 to 19 (excluding airfare and lodging)

n For more information and correspondence regardingCBC 2014, e-mail linda@startupmalaysia.org.

Inspiring innovation,building connections THE business sector is a rapidly changing environment and businesses have to constantly keep up and progress to remain relevant to the market.

In an era where start-ups have become widespread, it is even more important now for entrepreneurs to enhance their business skills and knowledge to ensure that their businesses remain successful.

Conferences, workshops and seminars are therefore valuable as events such as these provide the environment to get updated information, learn and share as well as network with like-minded individuals. Interactions in shared spaces bring fruitful results not just to the businesses but also to personal growth and development.

Listed below are a few events scheduled for the coming month in the heart of the Klang Valley.

When fashion makes good business senseBy ANUSHIA KANDASIVAM

IN this modern technological age, a person does not even need to leave the house to buy food, clothes, or anything else they may need. This direct business-to-consumer way of commerce is no longer just a trend; it is a mainstream practice that almost everyone, from teenagers to housewives, participates in.

According to the statistics, 42% of the worlds Internet users live in Asia and it is projected that 36.5% of this years business-to-consumer purchasing will take place in the Asia Pacific region.

In two years, this figure is projected to reach 37.9%.

It is no surprise then that online businesses are doing very well in Malaysia, especially fashion retailers. Online retailers are numerous and it is possible to find something to meet every need.

There are the online arms of well-known fashion brands, and then there are well-established online-only fashion retailers that ship internationally, from the high-end, such as Net-a-Porter, to the more affordable, such as Asos.

A survey conducted in December last year by ecommercemilo.com on Internet users shows that of online shoppers in Malaysia who buy from local websites, fashion shoppers make up the second largest community (50% of online shoppers) after those that shop for electronics online (61%). Fashion shoppers make up 27% of online shoppers that buy from foreign websites. In response to this demand, 46% of online retailers sell fashion and accessories.

Now, more and more local online fashion retailers are sprouting up, from those that sell affordable China- or Korean-made dresses and accessories to those that showcase locally designed fashion. These online shops cater for a wide variety of customers men and women, young and mature with an array of fashion preferences sporty, elegant, modest or hipster.

They range in size from large retailers that are in the mainstream, such as Zalora, to small one-man businesses that cater for specific fashion needs and can only be found through word of mouth.

Distinguishing yourself

Fashion start-ups are sprouting up almost every month, so ensuring a decent customer base and distinguishing the website or the brand from all the others out there is vital. While cheap and cheerful products are easy to find, good

quality is not guaranteed; low prices often mean low quality clothes that are made of cheap-looking synthetic materials.

Keeping prices low while ensuring good quality products helps the online fashion retailer stand out from the rest, says Khayrany Fadzlyny Hussin, founder of KFHijabi, a local online retail store that sells headscarves and clothes.

It is important to sell quality clothes while ensuring the prices are sufficient for good business and at the same time affordable for everyone, she says.

Other businesses rely on creating a unique brand that customers can easily identify.

Local online shoe retailer 7 Ltd, for example, creates its own designs and relies on local skills to hand make its shoes.

Our shoes are made from cruelty-free products and designed to be comfortable and safe. We are also a brand that is by ladies for ladies, so we personally try on each design sample to ensure the shoes are comfortable before we proceed to production.

Equally important to this is the brands core mission of making a positive social impact. I am confident that there is a growing local market for socially conscious purchases, says Joan Shunmugam, the companys founder.

Taking these steps to make the brand memorable and provide customer satisfaction also mean addressing one of the biggest challenges online start-ups face gaining customers trust.

According to the same ecommercemilo.com survey, though the number of Internet users who shop online is high 91% those who do not state that trust is the biggest issue preventing them from shopping online.

Forty-two per cent of those who do not shop online do not trust products that they cannot touch and feel and 35% do not trust the retailer.

This is reflected in Khayranys comment that one of the first challenges she faced when setting up her business was gaining the trust of first-time customers who were doubtful they would receive their purchases after making payment.

The only way to overcome this challenge is to be trustworthy deliver what is promised and ensure the customer is satisfied with the transaction in every way.

A great shopping experience for the customer is important as ultimately customers become a brands best marketing tool, adds Joan.

Reaching the customer

Once the business is started, marketing and increasing sales are the main on-going challenges that retailers face. Sixty-four per cent of Malaysian online retailers surveyed by ecommercemilo.com in January this year stated that increasing sales was their biggest challenge, followed by getting traffic to their site (51%) and marketing communication (37%).

Social media plays a big role in gaining customers, and not just in terms of advertising. In the same survey, 74% of retailers that were not selling online but planned to start their online sales on social media sites such as Facebook. Compared to this, only 49% planned to start the business directly from their own online webstore.

Facebook and other social media sites are the easiest way to get started, though nowadays designing and launching a webstore have been made easy with ecommerce website solutions such as Shopify and webShaper that provide retailers the tools to create an online store and also host the webstores.

Social media certainly helped us, says Joan, explaining that 7 Ltd started out on Facebook. The brand gained popularity through word-of-mouth and our offline pre-website-launch sales have been encouraging.

For a small business such as mine, using a platform that customers can easily access and that is easy to use is essential. I found that the majority of my customers use Facebook or Instagram to browse my products, so these are the platforms I use the most to attract more customers, adds Khayrany, who is a sole proprietor.

Keeping the business going

Though funding is quite easily available for SMEs and start-ups in Malaysia, neither of the businesses quoted here chose to go down that path. Instead, they used personal funds or angel investors to start the businesses.

With this initial injection of funds, both businesses are doing well and steadily growing in terms of customer base and products. Though the Malaysian online fashion retail scene is competitive, the competition is healthy.

Fashion is constantly changing, and we have to stay one step ahead of the customers demands, says Khayrany.

Joan adds that as long as the designs offered by online fashion retailers are fresh and appealing with a good price, the competition in the industry will continue to be robust.

Making the brand memorable and providing customer satisfaction help garner the customers trust.

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