role in developing entrepreneurship in malaysia

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

CERTIFIED TO ISO 9001:2000CERT. NO : MY-AR 4977

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


ContentContent

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


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


SME’s Contribution To Malaysian GDPSME’s Contribution To Malaysian GDP


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


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


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


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


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


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


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


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


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


AIM’s ProductsAIM’s Products


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


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%



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


• 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


Specialized Delivery SystemSpecialized Delivery System

Outreaching the Outreaching the poorpoor


Group TrainingGroup Training


Group Recognition TestGroup Recognition Test



Center MeetingCenter Meeting

AIM’s Strategy To AIM’s Strategy To Enhance Enhance

EntrepreneurshipEntrepreneurship


Head UnitHead Unit

Business Developmen

t

Business Developmen

t

ManagerManager

TrainingTraining Information SystemInformation System PromotionPromotion PlanningPlanning

Support Staff

Support Staff

Administration

Administration

28

Strategy 1:Strategy 1:Strengthen Entrepreneur Strengthen Entrepreneur

Development UnitDevelopment Unit


SchemeScheme RMRM

I- Mesra & I- Sri Kandi

100 – 19,900

I-Wawasan 20,000 – 50,000

I- Usahawan 51,000 – 300,000


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.


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


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


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


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

sponsored by AIM or other agencies.CERTIFIED TO ISO 9001:2000

CERT. NO : MY-AR 4977

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


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.


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.


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


Entrepreneurship Development ProgramEntrepreneurship Development Program

Workshop Workshop


Seminar Seminar


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)


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)


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


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


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


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


Success Story (6)

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


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)


Impact of Ikhtiar Loan on Borrowers’ Income (RM)Impact of Ikhtiar Loan on Borrowers’ Income (RM)


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.


ConclusionConclusion

THANK YOUTHANK YOU

www.aim.gov.my


role in developing entrepreneurship in malaysia

Economy & Finance