Impact will depend on execution of programme `
KUALA LUMPUR: The RM40bil Semarak Niaga Keluarga Malaysia programme is seen as timely in helping businesses to recover, although its impact would depend on execution and approval processes, according to economists. `
The programme, launched yesterday by Prime Minister Datuk Seri Ismail Sabri Yaakob, aims to increase access to financing for businesses especially micro, small and medium enterprises (MSMEs) and the informal sector. `
The programme comprises direct loans, financing guarantees and equity injections. `
Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the programme is quite timely, as the global economy will take some time to recover. `
Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the programme is quite timely, as the global economy will take some time to recover. `
“This economic disruption is unlike the previous ones such as the 2008 global financial crisis. Governments around the world are still hesitant about reopening their borders and economies,” he noted. `
Regarding government debt and fiscal sustainability, he said the programme involves various government agencies and development financial institutions (DFIs). `
“I don’t think there is direct financing from the government except if there are financing guarantees involved. While the DFIs have a mandate to support the government’s agenda in terms of promoting the growth of MSMEs, the DFIs also exercise their own due diligence to mitigate risk,” he said. `
Afzanizam added that the financial impact of the increased access to financing would also depend on “how quickly the funds are disbursed”. ` “This should help the Micro, Small, Medium Enterprises to recover faster, especially as the government has signalled that there would not be any more lockdowns. We can expect better prospects, going forward, for MSMEs involved in tourism and consumer spending-related activities,” he said. `
Afzanizam also noted that many industries were facing issues such as inflationary pressures due to higher raw material prices, difficulties in getting workers and logistical delays. `
“The better access to financing will certainly help businesses manage their working capital and boost their liquidity position,” he said.
`Meanwhile, Centre for Market Education CEO Dr Carmelo Ferlito told StarBiz he had mixed views about the programme.
`
Centre for Market Education CEO Dr Carmelo Ferlito told StarBiz he had mixed views about the programme.
“From one side, the programme is an open recognition that lockdowns harmed the economy more than the benefits they provided (if any). In this sense, the government’s attempt to support businesses in general and SMEs in particular is welcomed,” he said. `
However, Ferlito said he is concerned about the potential unintended consequences such as inflation. `
“In a nutshell, easy credit or financing can only further stress the inflationary pressures currently at play. Just to give you some figures: given 100 the values of 2019, at the end of 2021, gross domestic product was 97.33 (so, below the 2019 level); however, M1 (the basic monetary aggregate) was 127.78, consumer price index 101.8 and producer price index 107.64. `
“So, further money injections in the form of zero-interest loans and other refinancing initiatives can only add pressure on pressure,” he explained. `
Ferlito said another concern is that economic initiatives may be initiated only because of the financial support rather than on the basis of a sound economic plan. `
On fiscal sustainability, Ferlito said a less risky way to address the needs of businesses is through more favourable tax schemes and incentives rather than ambitious financing programmes, which present risks for inflation, sustainability (for banks too) and in general, for the overall cyclical dynamic of the national economy. `
SME Association of Malaysia national secretary-general Chin Chee Seong said: “This programme is very much welcomed. For businesses to revive and to help in their cashflow, it is important for them to have fresh loans with lower interest and longer repayment periods.” `
Chin said one issue he foresees is that the loans and micro credit schemes may be “taken up very fast” and may not reach the businesses in dire need of such financing. `
“Also, the DFIs should be less stringent in assessing the loan applications and lower the bar for loan approvals,” he said.
Talk on trade: (from left) Interbase Resouces Sdn Bhd MD and
Lelong.com.my co-founder Richard Tan, Chong and SME Association of
Malaysia national deputy president Ong Chee Tat during a panel
discussion on Global is the New Local: The Changing International Trade
Patterns of Small Businesses in Asia Pacific, organised by FedEx.
More SME seen to be embracing technology
WHILE its been a constant lament that local small and medium-sized enterprises (SMEs) are not embracing digital technology, a new survey seems to suggest otherwise.
A recent FedEx-commissioned study on trends being adopted by SMEs in Asia Pacific (Apac) has revealed a high adoption of new technologies among local SMEs.
According to the study, Malaysia ranks fourth (among nine Apac countries surveyed) in digital platform implementation and third in adopting Industry 4.0 technologies.
Entitled “Global is the New Local: The Changing International Trade Patterns of Small Businesses in Asia Pacific”, the research revealed that an average of 88% of Malaysian SMEs are adopting digital economy platforms, such as e-commerce, mobile-commerce and social-commerce platforms.
FedEx Malaysia managing director S.C. Chong says it is critical for SMEs to take advantage of technological advancements as a catalyst to enter into new markets, improve customer service support and experience, and provide a more efficient end-to-end customer journey.
“SMEs are the engine of growth and form the backbone of Malaysia’s economy,” he says during a briefing on the survey, last week.
Chong adds that it is encouraging to see SMEs taking the initiative to grow their business through the adoption of new technologies, infrastructure-building, and expansion into international markets.
Citing the survey, he says that 61% of local SMEs are optimistic that the e-commerce platforms will help contribute to increased revenue growth in the next 12 months.
“The study also found that 69% of Malaysian SMEs have incorporated Industry 4.0 technologies into their operations such as mobile payments, automation software and big data / analytics in particular.”
Industrial Revolution 4.0 refers to the paradigm that machines are now able to autonomously adapt and coordinate their tasks to meet human needs.
The survey also shows a significantly high adoption rate of mobile payments among Malaysian SMEs at 90% (higher than the Apac SME average of 73%), with automation software and big data / analytics among the top Industry 4.0 technologies being used by SMEs at 84% and 77% respectively.
In addition, the survey also showed that 78% of respondents agreed that Industry 4.0 technologies have enhanced efficiencies in the supply chain and distribution channels, while helping reduce challenges brought by cross-border payments.
The results of the survey were based on interviews with 4,543 senior executives of SMEs in nine markets in Apac between March and April 2018. The markets included in the research were China, Hong Kong, Japan, Malaysia, Philippines, Singapore, South Korea, Taiwan, and Vietnam.
The interviews were split equally by market with a representative mix of company sizes: micro (one to nine full-time employees), small (10 to 49 full-time employees) and medium (50 to 249 full-time employees).
Each market had an average of 500 respondents.
SME Association of Malaysia national deputy president Ong Chee Tat says SMEs and Industry 4.0 are key components towards the growth of the nation, as Malaysia works towards achieving a high-income economy.
“While technology may have reduced the gap between SMEs and larger industry players, SMEs still face various challenges in the adoption of the latest trends or tools in technology. Most SMEs may find that they lack sufficient finances, knowledge or workforce talent to adopt these new technologies.
“As such, we (the SME Association) are cognisant of the barriers to technology-adoption and continue to guide, empower and support SMEs by providing strategic advice or counsel and initiating networking platforms to facilitate knowledge exchange.”
Ong says that the SME Association is currently looking to set up an SME Academy to help provide training for local start-ups.
“We hope to be able to launch this academy by this year,” he says.
The survey also revealed that 95% of Apac SMEs have made use of digital platforms such as e-commerce (82%), mobile-commerce (72%) or social-commerce (74%) in their business operations.
“In Malaysia, the top social media platforms are Facebook, WhatsApp and Instagram,” says Ong.
According to the survey, the top social media platform used in Apac markets is Facebook, with the exception of China (WeChat) and Taiwan (Line).
In comparison, Malaysia has an overall higher adoption rate of e-commerce (90%), mobile-commerce (87%) and social-commerce (86%) compared to other markets in Apac.
Also, the survey says 61% of Malaysian SMEs expressed confidence that the digital economy will help reduce barriers to finding global customers beyond Apac.
Chong says the finding is strongly supported by Malaysia having 146% mobile penetration, 22 million internet users, 18 million active social media users, and seven million online shoppers, leading to Malaysia ranking 31st among the most tech-ready countries around the world.
Meanwhile, Interbase Resouces Sdn Bhd managing director and Lelong.com.my co-founder Richard Tan says that by educating SMEs and raising their awareness on the digital economy, there will be a rise in brick-and-mortar SMEs having an online presence to augment and complement their business.
“At Lelong.my, our integrated online platform which comes with services such as e-payment solutions and digital storefronts, has allowed us to extend our reach to capture the younger generation of increasingly digital savvy customers and merchants.
“As an online retail platform, we continuously evolve and transform ourselves to ensure that we fully understand the consumer journey and experiences to make it a seamless, pleasant one.”
He also says that the rise in digital platforms will not result in brick-and-mortar outlets becoming obsolete.
“I believe they will complement each other,” he says, adding that this is why it’s important for companies to have both a physical and online presence.
“I might see a product at a store somewhere, but may decide to purchase the item off of the company’s website. On the flipside, I might see something online that I might like, but would want to physically see it first, before deciding to buy.”
Tan emphasises that it is in a situation like this that SMEs need to have a presence online.
“You need to have your content displayed on the Internet. If people can’t find your product on the web, they may just decide not to buy it at all. That’s the behaviour of the new group of consumers today.
“You have to digitize your content.”
Chong admits that having products and services accessible via the web nowadays is a given.
“However, there are still products and services that you can’t get online. But it’s important to be able to have your product on the web, so that people can learn about it and either buy it or choose to view it physically at your store.”
Growth opportunities
In conjunction with the recent “Take E-Commerce to the Next Level” conference by DHL Express Malaysia, the logistics firm said in a statement last week that there is great potential for Malaysian SMEs to grow their business overseas through e-commerce.
“By 2020, it is expected that one out of five e-commerce dollars will be generated through cross-border trade. Business to consumer (B2C) e-commerce has grown at a faster pace than most other industry sectors in recent years, with premium cross-border shipments growing from 10% to more than 20% of the volumes of DHL Express.
“This is further boosted by various incentives the government has provided to ensure that the local e-commerce sector has the potential to lift Malaysia’s total trade to RM2 trillion this year.”
Over 100 local SMEs attended the conference.
Its speakers included those from Amazon Global Selling, Payoneer, Everpeaks, Malaysia Digital Economy Corp (MDEC) and Malaysia External Trade Development Corp (Matrade), who shared their insights on the importance of logistics, digital marketing, payment options and sales methodologies as part of the entire B2C ecosystem.
“These takeaways are meant to better equip local SMEs to meet the increasing demand of customers who seek faster fulfilment and more variety at cost-effective prices,” says DHL Express.
In the same statement, e-commerce conglomerate Amazon encouraged more Malaysian SMEs to expand their business by tapping Amazon’s global reach.
Amazon Singapore’s Amazon global selling head Gijae Seong says: “South-East Asia has quickly grown to be one of the most important regions for Amazon Global Selling.
“In the US alone, Amazon has over 150 million monthly unique visitors. We hope that more local SMEs will consider expanding their business globally on Amazon in the future.”
In addressing the challenges of SMEs to expand its presence on a global level, Matrade transformation and digital trade division director Noraslan Hadi Abdul Kadir points out that Matrade is Malaysia’s national trade promotion agency, and therefore has the mandate to promote local SMEs overseas.
“Our eTRADE Programme offers financial incentive valued at RM5,000 per company, which can be utilised to partially cover the on-boarding cost to be listed on world’s renowned e-Commerce platforms the likes of Amazon.com.
“We hope more SMEs can capitalise on the programme to kick-start their cross-border e-commerce business.”
Boost to property sector
The e-commerce boom is also set to be a boost to the local property market, with the industrial sub-sector being its biggest beneficiary.
According to the Valuation and Property Services Department’s (JPPH) Property Market Report 2017, the industrial sub-sector, though contributed the least to the overall property market last year , plays a significant role generating investments and employment opportunities.
“As Malaysia embraces Industrial Revolution 4.0 and the digital economy, a different ball game is expected of the industrial property sub-sector,” it says.
One initiative that is expected to support the sector’s performance, says JPPH, is the setting up of a Special Border Economic Zone in Bukit Kayu Hitam, which will be the new attraction for both domestic and foreign investors on the northern zone of Malaysia.
“Another is the establishment of a Digital Free Trade Zone (DFTZ), which will see KLIA as the regional gateway. The first phase of DFTZ is foreseen to have 1,500 small and medium enterprises participate in the digital economy and is expected to attract RM700mil worth of investment and create 2,500 job opportunities.
“On the same note, Cyberjaya will be transformed into a global technology hub and a smart city.”
In November, CIMB Research in a report said the industrial segment has a strong growth trajectory through acquisitions and organic growth, given the tight industrial space supply.
“Demand for new high-quality industrial assets will transform the segment, which has led to several new mega-distribution centres that carry high price tags as retailers start turning to logistics.
“Notably, UK-based retailer Marks & Spencer is building a 900,000-sq-ft distribution centre with one million products processing capability per day and will consolidate its 110 warehouses into just four.”
The sector is also expected to be bolstered by the growth of the e-commerce segment.
The growth in e-commerce, which in turn is spurring the online retailers sector, will lead to demand for larger warehouse spaces.
According to JPPH’s Property Market Report 2017, the industrial property sub-sector recorded 5,725 transactions worth RM11.64bil in 017.
“Compared with last year, the market volume increased by a marginal 2.1% but value declined by 3.1%. Most states recorded contractions in market activity but the commendable growth in Selangor and Johor at 19.5% and 9.5% respectively helped support the overall marginal growth.
“These two states accounted for 34.2% and 14% of the total market activity respectively. By type, vacant plots formed 31% of the total transactions, followed by terraced factory with 28.7% market share.”
JPPH says the industrial overhang remained minimal though the volume kept growing since 2016.
“There were 999 units worth RM1.51bil in 2017, showing an increase of 11.4% and 27.1% in volume and value respectively. Johor also took the lead in the industrial overhang with 40.7% (407 units) of the national total.”
JPPH adds that the industrial development front was less active as shown by the marginal increase of 0.4% in completion to record 1,851 units, whilst starts and new planned supply decreased by 20.7% and 34.3% respectively to 850 units and 710 units.
“As at year-end, there were 113,173 existing industrial units, with another 5,675 units in the incoming supply and 7,513 units in the planned supply.
“Prices of industrial property were stable across the board. One and a-half storey semi-detached factories in the Petaling District fetched between RM4.1mil to RM5.7mil. In Johor Bahru, similar factories in Taman Perindustrian Cemerlang ranged from RM2.3mil to RM2.7mil.”
As for the other property sub-sectors, the residential property market recorded 194,684 transactions worth RM68.47bil in 2017, which were 4.1% lower in volume compared with 2016, but they increased by a marginal 4.4% in value.
By price range, demand continued to be in the RM200,000 and below price points, accounting for nearly 45% of the residential market volume.
Last year saw 77,570 units of new launches, higher than those recorded in 2015 (58,411 units) and 2016 (52,713 units).
Kuala Lumpur recorded the highest number of launches in the country with more than 22,000 units. Its sales performance was at a low 19.5%, followed by Selangor with 13,522 units and Johor, 7,926 units.
The commercial property segment, meanwhile, continued to decline but at a modest rate, says JPPH. There were 22,162 transactions recorded worth RM25.44bil in 2017, down by 6.7% in volume and 29.2% in value compared with 2016.
The retail sub-segment’s performance was stable at 81.3% in 2017 compared with 81.4% in 2016, recording an annual take-up of more than 6.78 million sq ft.
Kuala Lumpur, Selangor, Johor and Penang saw a significant take-up rate as their newly completed shopping complexes secured commendable occupancy.
Johor was leading with nearly 2.82 million sq ft followed by Selangor (1.17 million sq ft), Kuala Lumpur (1.01 million sq ft) and Penang (778,833 sq ft).
Talk on trade: (from left) Interbase Resouces Sdn Bhd MD and Lelong.com.my co-founder Richard Tan, Chong and SME Association of Malaysia national deputy president Ong Chee Tat during a panel discussion on Global is the New Local: The Changing International Trade Patterns of Small Businesses in Asia Pacific, organised by FedEx.
More SME seen to be embracing technology
WHILE its been a constant lament that local small and medium-sized enterprises (SMEs) are not embracing digital technology, a new survey seems to suggest otherwise.
A recent FedEx-commissioned study on trends being adopted by SMEs in Asia Pacific (Apac) has revealed a high adoption of new technologies among local SMEs.
According to the study, Malaysia ranks fourth (among nine Apac countries surveyed) in digital platform implementation and third in adopting Industry 4.0 technologies.
Entitled “Global is the New Local: The Changing International Trade Patterns of Small Businesses in Asia Pacific”, the research revealed that an average of 88% of Malaysian SMEs are adopting digital economy platforms, such as e-commerce, mobile-commerce and social-commerce platforms.
FedEx Malaysia managing director S.C. Chong says it is critical for SMEs to take advantage of technological advancements as a catalyst to enter into new markets, improve customer service support and experience, and provide a more efficient end-to-end customer journey.
“SMEs are the engine of growth and form the backbone of Malaysia’s economy,” he says during a briefing on the survey, last week.
Chong adds that it is encouraging to see SMEs taking the initiative to grow their business through the adoption of new technologies, infrastructure-building, and expansion into international markets.
Citing the survey, he says that 61% of local SMEs are optimistic that the e-commerce platforms will help contribute to increased revenue growth in the next 12 months.
“The study also found that 69% of Malaysian SMEs have incorporated Industry 4.0 technologies into their operations such as mobile payments, automation software and big data / analytics in particular.”
Industrial Revolution 4.0 refers to the paradigm that machines are now able to autonomously adapt and coordinate their tasks to meet human needs.
The survey also shows a significantly high adoption rate of mobile payments among Malaysian SMEs at 90% (higher than the Apac SME average of 73%), with automation software and big data / analytics among the top Industry 4.0 technologies being used by SMEs at 84% and 77% respectively.
In addition, the survey also showed that 78% of respondents agreed that Industry 4.0 technologies have enhanced efficiencies in the supply chain and distribution channels, while helping reduce challenges brought by cross-border payments.
The results of the survey were based on interviews with 4,543 senior executives of SMEs in nine markets in Apac between March and April 2018. The markets included in the research were China, Hong Kong, Japan, Malaysia, Philippines, Singapore, South Korea, Taiwan, and Vietnam.
The interviews were split equally by market with a representative mix of company sizes: micro (one to nine full-time employees), small (10 to 49 full-time employees) and medium (50 to 249 full-time employees).
Each market had an average of 500 respondents.
SME Association of Malaysia national deputy president Ong Chee Tat says SMEs and Industry 4.0 are key components towards the growth of the nation, as Malaysia works towards achieving a high-income economy.
“While technology may have reduced the gap between SMEs and larger industry players, SMEs still face various challenges in the adoption of the latest trends or tools in technology. Most SMEs may find that they lack sufficient finances, knowledge or workforce talent to adopt these new technologies.
“As such, we (the SME Association) are cognisant of the barriers to technology-adoption and continue to guide, empower and support SMEs by providing strategic advice or counsel and initiating networking platforms to facilitate knowledge exchange.”
Ong says that the SME Association is currently looking to set up an SME Academy to help provide training for local start-ups.
“We hope to be able to launch this academy by this year,” he says.
The survey also revealed that 95% of Apac SMEs have made use of digital platforms such as e-commerce (82%), mobile-commerce (72%) or social-commerce (74%) in their business operations.
“In Malaysia, the top social media platforms are Facebook, WhatsApp and Instagram,” says Ong.
According to the survey, the top social media platform used in Apac markets is Facebook, with the exception of China (WeChat) and Taiwan (Line).
In comparison, Malaysia has an overall higher adoption rate of e-commerce (90%), mobile-commerce (87%) and social-commerce (86%) compared to other markets in Apac. Also, the survey says 61% of Malaysian SMEs expressed confidence that the digital economy will help reduce barriers to finding global customers beyond Apac.
Chong says the finding is strongly supported by Malaysia having 146% mobile penetration, 22 million internet users, 18 million active social media users, and seven million online shoppers, leading to Malaysia ranking 31st among the most tech-ready countries around the world.
Meanwhile, Interbase Resouces Sdn Bhd managing director and Lelong.com.my co-founder Richard Tan says that by educating SMEs and raising their awareness on the digital economy, there will be a rise in brick-and-mortar SMEs having an online presence to augment and complement their business.
“At Lelong.my, our integrated online platform which comes with services such as e-payment solutions and digital storefronts, has allowed us to extend our reach to capture the younger generation of increasingly digital savvy customers and merchants.
“As an online retail platform, we continuously evolve and transform ourselves to ensure that we fully understand the consumer journey and experiences to make it a seamless, pleasant one.”
He also says that the rise in digital platforms will not result in brick-and-mortar outlets becoming obsolete.
“I believe they will complement each other,” he says, adding that this is why it’s important for companies to have both a physical and online presence.
“I might see a product at a store somewhere, but may decide to purchase the item off of the company’s website. On the flipside, I might see something online that I might like, but would want to physically see it first, before deciding to buy.”
Tan emphasises that it is in a situation like this that SMEs need to have a presence online.
“You need to have your content displayed on the Internet. If people can’t find your product on the web, they may just decide not to buy it at all. That’s the behaviour of the new group of consumers today.
“You have to digitize your content.”
Chong admits that having products and services accessible via the web nowadays is a given.
“However, there are still products and services that you can’t get online. But it’s important to be able to have your product on the web, so that people can learn about it and either buy it or choose to view it physically at your store.”
Growth opportunities
In conjunction with the recent “Take E-Commerce to the Next Level” conference by DHL Express Malaysia, the logistics firm said in a statement last week that there is great potential for Malaysian SMEs to grow their business overseas through e-commerce.
“By 2020, it is expected that one out of five e-commerce dollars will be generated through cross-border trade. Business to consumer (B2C) e-commerce has grown at a faster pace than most other industry sectors in recent years, with premium cross-border shipments growing from 10% to more than 20% of the volumes of DHL Express.
“This is further boosted by various incentives the government has provided to ensure that the local e-commerce sector has the potential to lift Malaysia’s total trade to RM2 trillion this year.”
Over 100 local SMEs attended the conference.
Its speakers included those from Amazon Global Selling, Payoneer, Everpeaks, Malaysia Digital Economy Corp (MDEC) and Malaysia External Trade Development Corp (Matrade), who shared their insights on the importance of logistics, digital marketing, payment options and sales methodologies as part of the entire B2C ecosystem.
“These takeaways are meant to better equip local SMEs to meet the increasing demand of customers who seek faster fulfilment and more variety at cost-effective prices,” says DHL Express.
In the same statement, e-commerce conglomerate Amazon encouraged more Malaysian SMEs to expand their business by tapping Amazon’s global reach.
Amazon Singapore’s Amazon global selling head Gijae Seong says: “South-East Asia has quickly grown to be one of the most important regions for Amazon Global Selling.
“In the US alone, Amazon has over 150 million monthly unique visitors. We hope that more local SMEs will consider expanding their business globally on Amazon in the future.”
In addressing the challenges of SMEs to expand its presence on a global level, Matrade transformation and digital trade division director Noraslan Hadi Abdul Kadir points out that Matrade is Malaysia’s national trade promotion agency, and therefore has the mandate to promote local SMEs overseas.
“Our eTRADE Programme offers financial incentive valued at RM5,000 per company, which can be utilised to partially cover the on-boarding cost to be listed on world’s renowned e-Commerce platforms the likes of Amazon.com.
“We hope more SMEs can capitalise on the programme to kick-start their cross-border e-commerce business.”
Boost to property sector
The e-commerce boom is also set to be a boost to the local property market, with the industrial sub-sector being its biggest beneficiary.
According to the Valuation and Property Services Department’s (JPPH) Property Market Report 2017, the industrial sub-sector, though contributed the least to the overall property market last year , plays a significant role generating investments and employment opportunities.
“As Malaysia embraces Industrial Revolution 4.0 and the digital economy, a different ball game is expected of the industrial property sub-sector,” it says.
One initiative that is expected to support the sector’s performance, says JPPH, is the setting up of a Special Border Economic Zone in Bukit Kayu Hitam, which will be the new attraction for both domestic and foreign investors on the northern zone of Malaysia.
“Another is the establishment of a Digital Free Trade Zone (DFTZ), which will see KLIA as the regional gateway. The first phase of DFTZ is foreseen to have 1,500 small and medium enterprises participate in the digital economy and is expected to attract RM700mil worth of investment and create 2,500 job opportunities.
“On the same note, Cyberjaya will be transformed into a global technology hub and a smart city.”
In November, CIMB Research in a report said the industrial segment has a strong growth trajectory through acquisitions and organic growth, given the tight industrial space supply.
“Demand for new high-quality industrial assets will transform the segment, which has led to several new mega-distribution centres that carry high price tags as retailers start turning to logistics.
“Notably, UK-based retailer Marks & Spencer is building a 900,000-sq-ft distribution centre with one million products processing capability per day and will consolidate its 110 warehouses into just four.”
The sector is also expected to be bolstered by the growth of the e-commerce segment.
The growth in e-commerce, which in turn is spurring the online retailers sector, will lead to demand for larger warehouse spaces.
According to JPPH’s Property Market Report 2017, the industrial property sub-sector recorded 5,725 transactions worth RM11.64bil in 017.
“Compared with last year, the market volume increased by a marginal 2.1% but value declined by 3.1%. Most states recorded contractions in market activity but the commendable growth in Selangor and Johor at 19.5% and 9.5% respectively helped support the overall marginal growth.
“These two states accounted for 34.2% and 14% of the total market activity respectively. By type, vacant plots formed 31% of the total transactions, followed by terraced factory with 28.7% market share.”
JPPH says the industrial overhang remained minimal though the volume kept growing since 2016.
“There were 999 units worth RM1.51bil in 2017, showing an increase of 11.4% and 27.1% in volume and value respectively. Johor also took the lead in the industrial overhang with 40.7% (407 units) of the national total.”
JPPH adds that the industrial development front was less active as shown by the marginal increase of 0.4% in completion to record 1,851 units, whilst starts and new planned supply decreased by 20.7% and 34.3% respectively to 850 units and 710 units.
“As at year-end, there were 113,173 existing industrial units, with another 5,675 units in the incoming supply and 7,513 units in the planned supply.
“Prices of industrial property were stable across the board. One and a-half storey semi-detached factories in the Petaling District fetched between RM4.1mil to RM5.7mil. In Johor Bahru, similar factories in Taman Perindustrian Cemerlang ranged from RM2.3mil to RM2.7mil.”
As for the other property sub-sectors, the residential property market recorded 194,684 transactions worth RM68.47bil in 2017, which were 4.1% lower in volume compared with 2016, but they increased by a marginal 4.4% in value.
By price range, demand continued to be in the RM200,000 and below price points, accounting for nearly 45% of the residential market volume.
Last year saw 77,570 units of new launches, higher than those recorded in 2015 (58,411 units) and 2016 (52,713 units).
Kuala Lumpur recorded the highest number of launches in the country with more than 22,000 units. Its sales performance was at a low 19.5%, followed by Selangor with 13,522 units and Johor, 7,926 units.
The commercial property segment, meanwhile, continued to decline but at a modest rate, says JPPH. There were 22,162 transactions recorded worth RM25.44bil in 2017, down by 6.7% in volume and 29.2% in value compared with 2016.
The retail sub-segment’s performance was stable at 81.3% in 2017 compared with 81.4% in 2016, recording an annual take-up of more than 6.78 million sq ft.
Kuala Lumpur, Selangor, Johor and Penang saw a significant take-up rate as their newly completed shopping complexes secured commendable occupancy.
Johor was leading with nearly 2.82 million sq ft followed by Selangor (1.17 million sq ft), Kuala Lumpur (1.01 million sq ft) and Penang (778,833 sq ft).
Do we need specific initiatives to help female entrepreneurs? Some say no, because men and women face similar obstacles in business. However, there can be no denying that women face challenges not experienced by their male counterparts.
LAST May, the SME Association of Malaysia organised a talk on women entrepreneurship at its regular SME Club get-together. We were worried that the topic would not be interesting, but to our surprise, the event was well received.
About a hundred people participated in the talk.
When we told the SMEs that we were going to have a talk on women entrepreneurship, some of them asked: Why talk about women entrepreneurship? Does it matter? Why bother?
After all, business is a men’s world. The place for women is at home.
Others said there was no need to differentiate women entrepreneurs from entrepreneurs in general, as many of the barriers faced by female-owned SMEs were similar to those faced by male-owned SMEs.
To this, I would say: Yes and no.
While male and female entrepreneurs may face similar constraints in general, women face specific barriers and challenges not experienced by their counterparts.
While women make up about 50% of Malaysia’s population, less than 20% of the SMEs are owned by women. Even though the number for women entrepreneurs is small, it’s nonetheless encouraging as it shows that women no longer buy the stereotype of business being a male domain.
There are several key reasons for women to get into business. Running your own business provides flexibility in managing career and domestic responsibilities.
Also, it gives some degree of personal freedom to women who are dissatisfied with “fixed” employment. Job flexibility, like work hours, office location, environment, and the people they work with, is appealing to many women.
Other reasons for women to start a business include income security and career satisfaction. Some women become entrepreneurs due to some personal circumstances, like being laid off, divorce, or the retirement of their spouse. They start a business to improve or maintain their social or economic status.
Some women who do not have any previous work skills or experience start a business in order to prove that they can be productive and useful.
The majority of women-owned businesses are smaller outifts than those owned by men, and they are mostly concentrated in the service sector (about 90%). Many of these businesses are likely to be unregistered micro-enterprises operating in the home or on temporary premises, with few employees and limited capital for expansion.
Access to financing is one of the biggest challenges. They are less aware of the options relating to loan and grant opportunities. In addition, women usually lack the collateral required compared to men, stemming in part from restrictions on asset ownership.
Women entrepreneurs are also less likely than their male counterparts to have a history of interaction with formal financial systems, lowering their credit-worthiness and potentially raising interest rates on loans assumed.
They also encounter obstacles in accessing opportunities to acquire knowledge and skills that underpin successful entrepreneurship. This may be due to impediments in access to education, training and job experience. These are usually compounded by the demands of domestic responsibilities.
Time constraints further limit women entrepreneurs’ formal networking, which, in turn reduce access to skill and capacity-development opportunities. Formal networks, such as business associations, provide a wealth of information on business opportunities, access to government officials, grants and support programmes, as well as credit credentials and access to loan packages, to name a few.
Good networks provide good access to information and resources. First-hand information allows entrepreneurs to move one step ahead and grab the opportunities. A good pool of resources would help entrepreneurs to survive in bad times and to expand more effectively.
The Government needs to take a proactive role in promoting women entrepreneurs. We need to put in place gender-responsive policies and capacity-building initiatives to address the structural, institutional and socio-cultural inequalities.
It would perhaps be best to start by enhancing their access to finance, which is essential in building a good business foundation.
By Datuk Michael Kang who is the national president of the SME Association of Malaysia.
Mind your finances
Up to 36 of business failures are caused by inadequate financial management, according to a report by the ACCA. —123rf.com
IN GENERAL, more than 50% of startups fail within five years, and up to 36% of business failures are caused by inadequate financial management, according to a report by the Association of Chartered Certified Accountants (ACCA) entitled “Financial management and business success - a guide for entrepreneurs”.
The report says many entrepreneurs are not equipped to make informed and effective decisions about their financial resources.
“Having the right financial capabilities remains vital throughout the life of a business, whether you are just starting out, have an established business or are looking towards a final exit from a firm,” explains Rosana Mirkovic, ACCA’s head of SME policy.
“Businesses are changing and innovating more rapidly than ever, and the financial management needs of organisations must continue to evolve alongside their developments. Recognising the right financial management capabilities is therefore imperative to their success,” she explains.
Mirkovic adds that understanding financial information is vital for offsetting the risk of business failures as it reveals the early warning signs of impending problems.
The report by ACCA addresses the financial literacy skills gap, potentially serving as a guide to those starting their own businesses and are new to financial management.
Business planning plays a critical role at every stage of the business, says the report.
“Preparing a business plan pushes you to identify and assess the opportunities and threats facing your business. It helps ensure that you have an in-depth understanding of your market, the competition and the broader business environment,” it elaborates.
Effective planning takes into account long-term goals, objectives, strategy, tactics and financial review.
ACCA also advises startups to seek good financial advice and involve their accountants or individuals with financial expertise at the planning stage to take full advantage of their expertise in areas such as business planning, raising business finance, tax planning and setting up financial management systems.
Significant financial expertise may be needed to understand and evaluate the different financial options entrepreneurs may have. This includes knowing the company’s financial strength, financing cost, financial flexibility, business control, financial risk, personal finances and business strategy.
“Good financial control offers far more than just keeping track of purchases and sales. Rather than approach financial control as a chore to be left to the bookkeeper, your aim should be to see how the right capabilities can improve your business,” the report advises.
ACCA notes that business owners should gradually develop the capabilities of their in-house financial team.
“Choosing the right solution for your particular business takes careful planning. Your overall investment in financial capabilities — whether you are paying for additional employees, higher salaries for more skilled employees, training costs, use of external providers or upgraded systems — must be affordable and offer value for money,” it adds.
But financial management is at its most powerful when used to drive improvements in business.
Moreover, for many entrepreneurs, it could also lead to a successful business exit. Preparation for a successful exit typically begins far in advance of its final date.
Effective exit planning needs to start early and take into account a whole range of issues like timing, succession, management systems and tax efficiency.
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