MODULE 6: BUSINESS REGULATIONS AND SUPPORT SYSTEMS #3

Financial Assistance For Entrepreneurs


Why financing is needed by entrepreneurs?

• As start-up funds for new ventures
• To sustain existing business, in terms of stability and maintenance
• To develop business expansion, towards a greater potential

Purpose Of Financing

• To increase and strengthen workforce skills
• Entrepreneurial development
• Marketing and promotion
• Product development and quality accreditation
• Development of technology
• Debt restructuring
• General purposes

Types Of Financing

• Soft loans
• Grants
• Equity financing
• Venture capital
• Guarantee scheme
• Tax incentives

Financial Providers In Malaysia (Government)

• Ministry Of Entrepreneurial & Cooperative Development (MECD)

• Ministry Of Science, Technology & Innovation (MOSTI)

MODULE 6: BUSINESS REGULATIONS AND SUPPORT SYSTEMS #2

Infrastructure Facilities.


1. Industrial Estates.

• Developed by State Economic Development Corporations (SEDC), Regional Development Authorities (RDA), port authorities and municipalities.
• In Malaysia, there are currently 200 industrial estates developed, as well as new ones undergoing development.

2. Free Industrial Zones.

• For manufacturing companies producing or assembling products for export purposes.
• Enjoy minimum formalities and duty free benefits in importing raw materials, component parts, machines or equipment.
• Minimal formalities in exporting finished products.

3. Licensed Manufacturing Warehouses.

• To disperse industries in areas where free industrial zones cannot be established, either practically or desirably.
• Upon approval, the company must determined that 80% of items manufactured are meant for export, where its raw materials are mainly imported.

4. Electricity and Water Supplies.

• In Peninsular Malaysia, electricity is supplied by Tenaga Nasional Berhad (TNB). On the other hand, in Sabah and Sarawak, Sabah Electricity Sdn. Bhd. (SESB) and Sarawak Electricity Supply Corporation (SESCO) are the companies responsible for providing sources of electricity, respectively.
• Water supplies are currently provided by private companies in each respective states in Malaysia, according to standards set by World Health Organization (WHO) and the companies, with affordable fees offered.

 

5. Telecommunication Services.

• Major market is handled by Telekom Malaysia Berhad, offering mainly landline connections as well as internet.
• Other providers include Maxis, Celcom and Digi, providing both mobile telecommunication services and broadband internet.
• Telecommunications services have much improved since the launching of three country's satellites; Measat-1, Measat-2 and Tiungsat-1.

6. Sea ports, cargo transportation, railway and highway services.

• Sea ports in Malaysia have been equipped with the latest technologies to handle cargoes meant either for import or export purposes (transportation). 
• Malaysia Highway Authority has outlined and developed potential highways as links to connect major townships and development areas.
• Railway services operated by Keretapi Tanah Melayu Berhad (KTMB) are meant for transporting goods, ranging from grains and machinery.

7. Multimedia Super Corridor (MSC).

• Setup on the purpose to revolutionize technologies to conduct commerce transactions in the digital age.
• Governed by groundbreaking cyberlaws, policies and related practices to maximize the potential of the usage of ICT.
• Attracts multimedia companies either locally or internationally to achieve world class level.

MODULE 6: BUSINESS REGULATIONS AND SUPPORT SYSTEMS #1

Definition Of Business Support System


Assistance given by government or privates agencies, either in form of financial, technical, marketing or advisory, to entrepreneurs for the development of new business venture, or existing business venture.

Approval and Licensing Procedures


1. Manufacturing License.

• Industrial Coordination Act (1975) is applicable.
• For companies having shareholder's funds of 2.5 mil or more, and currently employing 75 or more full-time employees.
• For companies engaging in making, altering, finishing, blending or ornamenting raw materials into finished ones.
• Application is submitted to Malaysian Industrial Development Authority (MIDA).

2. No-objection Letter For Project Location.

• Approval letter obtained from the state government, stating that the project location does not clash with any other projects by both government or private institutions.
• This approval letter should accompany the application of manufacturing license, to be sent to MIDA.

3. Planning Authorization.

• Town and Country Planning Act 172 (1976) is applicable.
• Application should be made towards local municipalities, for the use of lands and building constructions.

4. Building Construction Authorization.

• Street, Drainage and Building Act 133 (1974) is applicable.
• This act states that construction of buildings should only take place after written approval by local municipalities.
• Every plans, drawings or related documents connected to constructions must be submitted by qualified personnel, such as architect, draughtsman or engineer.

5. Certification Of Fitness For Occupation (abbreviated as CO).

• Uniform Building By Laws (1984).
• Written verification by local authorities that the buildings constructed are suitable for workable use.

6. Related Business Licenses.

• Business registrations, permits, signage, factory premises, storage and canteen.
• Applied through the local authorities.

7. Environmental Approval.

• Environment Quality Act (1974).
• Manufacturers are obliged to comply with regulations in controlling industrial activities resulting in new sources of effluents or discharges.
• Environmental related discharging equipment, such as incinerators, chimneys or fuel burning machinery must obtain approvals form Department Of Environment prior to operation.

8. Approval For Occupational Safety and Health.

• Factory and Machinery Act (1967).
• This act states that all machinery and factory related equipment, must obtain approvals from Department Of Occupational Safety and Health, in terms of design and fitness.

9. Excise Licenses and Sales Tax Licenses.

• Excise Act (1976).
• Applied from Royal Customs Of Malaysia.
• Sales Tax Act (1972).
• For local and imported goods manufactured.

Code Of Conducts Of Good Muslim Entrepreneurs During Prophet Muhammad ( pbuh ) Reign

1. Business is secondary when called into crusade
2. Avoid using wealth for self-interest
3. Afraid of accumulated wealth
4. Practice leadership in all entrepreneurial aspects
5. Moderate way of life

Eight Ethics Of A Muslim Entrepreneur

1. Prevent laziness
2. Prevent greediness
3. Eradicate fear
4. Search for legal ventures
5. Avoid forbidden income sources
6. Show gratitude
7. Develop capital and profit
8. Diversify business
9. Avoid squandering
10. Avoid malicious behaviour
11. Paying alms
12. Honest
13. Tawakkal
14. Pray consistenly
15. Patience

Posssession Of Wealth According To Islam

• Allah is the total owner of wealth
• Allah created wealth in abundance and sufficient for all mankind
• Wealth is created and entrusted to mankind

Why Is Motivation Crucial In Islamic Entrepreneurship ?

Motivation is a driving force where an entrepreneur obtains the spirit in developing the potentials of his or her business. Such motivation is crucial in Islam, where this is one of the factors on how you progress your business, since Islam does not focus much on the end result, but rather the means of achieving the result.

There are a few success formula drawn by Al-Qurtubi, that should be referred to by young or new entrepreneurs, such as:

• Halal ( parallel to what has been stated in the Holy Koran and Hadith )
• Qanaah ( gratitude )
• Taufiq ( blessings )
• Saadah ( spiritual happiness )
• Jannah ( reward in the afterlife = the heavens )

In achieving success, Al-Ghazali had proposed few factors, such as:

• Knowledge
• Repentance
• Temptations
• Motivation
• Obstacles
• Handicaps
• Gratitude

Relation Of Human Nature To Entrepreneurship

By human nature, a person who follows the Islamic entrepreneurship model must be a Muslim, where the business done is not based on profit but ibadah or fardu kifayah in overall.

Entrepreneurship As Integral Parts Of Islamic Religion

There is no boundaries between business and religion. Business is done based on guidance from the Holy Koran and Hadith.

Seven Principles Of Islamic Entrepreneurship Model

1. Integral parts of Islamic religion
2. As khalifah who has responsibilities in developing prosperity by creating businesses, where this is classifies as
    ibadah or fardu kifayah
3. Motivation, more on how to achieve rather than the end result
4. Prophet Muhammad ( pbuh ), relates entrepreneurship as 9 out of 10 ways in obtaining rezqi ( sources of
    income
5. Parallel to the Islamic Economic System
6. Rules and regulations based on the Holy Koran and Hadith
7. Code of conducts based on the deeds of Prophet Muhammad ( pbuh )

Islamic Entrepreneurship Model

Importance Of Entrepreneurship To The Malaysian Economy

Entrepreneurship itself is a symbol of steadfastness and achievement. It is important to our economic growth and affects the future in many ways such as:

• Innovative creations create opportunities ( Innovative = Opportunities )

How can we say that innovative creations create opportunities ? Just think, the creation of portable smartphones allows entrepreneurs to communicate virtually with their business even in long distances. These smart phones can be linked to fax machines, computers, servers as well as the internet to facilitate the opportunity for business growth.

• Entrepreneurship provides jobs to graduates, thus expanding the potential of businesses
• Entrepreneurship results in the creation of new businesses, such as small to medium industries that contribute to the local economic growth. These industries provide services that large companies lack due to economical scale. Furthermore, such industries apply 90% of total labor in manufacturing with 26% of total added value

Module 1: Evolution Of Entrepreneurship Theories

Adam Smith ( 1776 )

An entrepreneur is an agent who transforms demand into supply

To read more on Adam Smith, kindly go here: http://en.wikipedia.org/wiki/Adam_Smith

Jean-Baptiste Say ( 1803 )

An entrepreneur is a person who shifts resources for low productivity areas to high productivity areas

To read more on John-Baptiste Say, kindly go here: http://en.wikipedia.org/wiki/Jean-Baptiste_Say

John Stuart Mill ( 1848 )

An entrepreneur is a prime mover in a private enterprise. This is the fourth factor after land, labor and capital

To read more on John Stuart Mill, kindly go here: http://en.wikipedia.org/wiki/John_Stuart_Mill

Carl Menger ( 1871 )

An entrepreneur is an economic agent who transforms resources into products and services with added values

To read more on Carl Menger, kindly go here: http://en.wikipedia.org/wiki/Carl_Menger

Joseph Alois Schumpeter ( 1934 )

An entrepreneur is an innovator and a prime mover that moves through economic boundaries by the process of creative destruction

To read more on Joseph Alois Schumpeter, kindly go here: http://en.wikipedia.org/wiki/Joseph_Schumpeter

Alfred Marshall ( 1936 )

Entrepreneurship is an incremental or evolutionary process. An example of this is the transformation of a sole proprietorship company to a public company

To read more on Alfred Marshall, kindly go here: http://en.wikipedia.org/wiki/Alfred_Marshall

Ibn Khaldun ( 1377 )

An entrepreneur is a knowledgeable individual crucial to the emergence of enterprises through development of cities and states

To read more on Ibn Khaldun, kindly go here: http://en.wikipedia.org/wiki/Ibn_Khaldun

David Mcclelland

An entrepreneur is a person with high needs for achievement and success

To read more on David Mcclelland, kindly go here: http://en.wikipedia.org/wiki/David_McClelland

Module 1: Entrepreneurship Definitions

Definition of entrepreneurship

• Process of setting up, development and expansion of a business entity
• Study of entrepreneurial behaviors and business dynamics
• Entrepreneurship is aided collaboratively by government, education and institutions

Definition of an entrepreneur

• A person who undertakes a job ( Richard Cantillon - 1975 )

Functional definition of an entrepreneur

• A person who create and / or lead a business entity, and nurture them for growth and prosperity
• The growth of the business depends on four dimensions, individual, organizational, environmental and process

Is the picture of the plant significant to the definitions? Yes. Imagine that an entrepreneur is a farmer, which is YOU. You buy the seeds from a store, and then find a place where to bury that particular seeds. In this case, the seeds represent business entities. The process of planting those seeds signifies actions of setting up such entities. When the plants grow, this is what we refer as business development. As the plants grow bigger, this represent expansion. However, during the growth of such plants, you need to nurture them, which is the same thing that you are going to do with your business as an entrepreneur. While you wait, of course, you will be observing how your plants grow, which defines entrepreneurial behavior and business dynamics. 

Test Yourself Module 1

1. What is the definition of entrepreneurship ?

2. Explain the evolution of the entrepreneurship theory.

3. Discuss Islamic entrepreneurship model.

4. Why entrepreneurship is important to the Malaysian economy ?