StarSpecial

THE 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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Funding
for SMEs
By GREGORY BASIL
S
MALL 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 denition of SMEs that
took effect in January this year.
This denition 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
nancing.
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 insucient 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,
nancial institutions.
They should be reasonable
in developing a business case,
especially in their cash ow
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 ocer of
Export - Import Bank of Malaysia
Berhad.
SMEs that have continuous
support from nancial institutions
will be able to chart greater
business heights in terms of
volume through expansion to both
new markets and buyers.
For nancial institutions, SMEs
will remain an important segment
to be served. Understanding the
nature of SMEs will allow nancial
institutions to better suit their
product offerings to SMEs.
Increased competition by
nancial 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 nd
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 rms that carry
out venture investments. In
addition to providing funding,
venture capitalists offer both
their technical and managerial
expertise to and have signicant
inuence on the organisation that
they have invested in.
In recent years, venture capitals
have been gaining momentum in
Malaysia. Two popular venture
capitalist rms 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 denition of an angel
investor is an individual who
provides small start-ups and
SMEs with the necessary funding
for their business with no prot
expectations.
However, some would say
that the denition 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 nancial barriers they face
with relative ease.
With sucient 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 signicantly
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 nancing from
nancial institutions through its
guarantee schemes.
Other examples of funding
include funding from banking
institutions, development
nancial institutions, leasing and
factoring companies and venture
capital companies.
Malaysias current nancial
ecosystem offers SMEs plenty of
funding options through nancial
institutions and development
nancial 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 renancing for trade
nancing, 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 nancing, 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 money
StarSpecial, Sunday 25 May 2014 SME FINANCE 3
W
ITH 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 inuence
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 inuence in this
technology-dependent era.
Not only have these app
developers exemplied 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 oces 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 WhatsApp
Creators 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 Media
Boasting 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 ve 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 rst 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 trac
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
rst ve 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
specic 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 protable move as the company
began earning more prot 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 ocial 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
rst time in the United States
in 2005 before spreading to
countries in South America,
Europe and the Asia Pacic. 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 lm 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.
Ocially, 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 ventures
S
OME 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
nancial 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 nance
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
nancing insurance, overseas
investments and guarantee
facilities, says Datuk Adissadikin
Ali, president and chief executive
ocer 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 Pacic
(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 nancing,
overseas investment
nancing, bank
guarantees, supplier
credits, export of
services, trust receipt,
import nancing,
Malaysia Kitchen
nancing,
letter
of
credit,
forward foreign exchange, vendor
nancing scheme, ADB-EXIM
trade nance programme and
export credit renancing, 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 nance
institutions, directly easing the
process for local goods and service
importers, he adds.
The overseas project, contract
and investment nancing 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 nancial
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 nancing
requirement through the banks
trade nancing facility.
The supplier credit facility
offers both pre-shipment and
post-shipment nancing. Pre-
shipment nancing funds working
capital for the production of goods
while post-shipment nancing
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 renancing
facility, as its name suggests,
provides alternative short-term
pre-shipment and post-shipment
nancing 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 renancing 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-i
l Overseas Investment
Financing-i
l Buyer Financing-i
l Malaysia Kitchen Financing-i
l Term Financing-i
l Supplier Financing-i
l Import Financing-i
l Export Credit Renancing-i
l Bank Guarantee-i
l Letter of Credit-i
l Forward Foreign Exchange-i
l Trust Receipt-i
l IDB CO-Financing
l Export Services-i
l Vendor Financing Scheme-i
l Credit insurance facilities
EXIM Bank offers an array of
facilities under its credit insurance
umbrella, such as exporter trade
credit insurance, bank letter
of credit policy, specic policy,
buyer credit guarantee, bond risk
insurance, indirect exporters
nancing scheme, multi-currency
trade nancing 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
beneciarys 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 beneciaries,
for example Malaysian exporters,
under the ILC, he explains.
Specic 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 nancing 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
nancing 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 5
Sunday 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 champions
the cause of SMEs
S
MALL 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 360
o
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 rst Malaysian
bank to offer advanced online
cash management tools to sole
proprietors and small businesses,
and the rst 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
rst-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 protable 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 nalists pitched their
business ideas to the judges and
the public at the nal 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 Oce 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 signicantly, The Asian
Banker, a company that provides
information for the nancial
services industry, hailed Alliance
Bank as the best SME bank in Asia-
Pacic, Gulf region and Africa of
2013, the rst of such recognition
for a Malaysian bank.
n For more information about
Alliance Banks award-winning
SME solutions, visit
www.alliancebank.com.my
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%.
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 7
Sunday 25 May 2014
8 SME FINANCE StarSpecial, Sunday 25 May 2014
Venue: Kuala Lumpur Convention Centre
SME 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 2014
National Competition
Startup Grind Kuala Lumpur hosts Cheryl Goh
(MyTeksi) - June 26
Venue: Menara PNS Auditorium, Bangsar South City
The fth 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 certied 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.
nFor more information, visit www.smeaccelerate.com
Venue: to be conrmed
Startup 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.
nFor more information, visit
startupgrind.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)
nFor more information and correspondence regarding
CBC 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 sense
By ANUSHIA KANDASIVAM
I
N 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
Pacic region.
In two years, this gure 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 nd 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 specic
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 nd, 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
sucient 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 condent
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 reected in Khayranys
comment that one of the rst
challenges she faced when setting up
her business was gaining the trust
of rst-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 satised 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 trac 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 oine 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.