A common misconception among startups is that they have to do it alone. Imagine your fledgling company navigating the challenges of capital and costs in an increasingly globally competitive market. Daunting, isn’t it?
But small and medium-sized enterprise (SME) owners are not the only ones who believe in the growth potential of their business idea. Governments have also shown their fair share of support through grants and policies.
Within the Association of Southeast Asian Nations (ASEAN) region specifically, SMEs are highly valued and recognised for their role in the growing economy. A 2015 report by the US-ASEAN Business Alliance for Competitive Small and Medium Sized Enterprises states that SMEs account for more than 96% of businesses in the region. As such, policies towards SME development and modernisation play a major role towards realising the region’s full economic potential.
One report that aggregates SME development policies and actions implemented by ASEAN countries is the ASEAN SME Policy Index. It was developed to promote more competitive and innovative practices in the region and address concerns surrounding entrepreneurship, standards compliance, as well as marketing and management. The ASEAN Economic Community (AEC), on the other hand, was formed to transform the region into a single market and production base, integrating the Southeast Asian economies by 2025. One of its areas of focus is helping SMEs trade in the region.
Such government policies provide a competitive playing field and optimistic outlook for SMEs.
In this blog post, we’ll take a closer look at government policies and grants in Singapore, which has arguably the most developed startup ecosystem in the region, and its neighbouring countries Malaysia and Indonesia.
Government policies and schemes for small business
Singapore, Malaysia, and Indonesia have set the pace for collaboration between government and small businesses through their active policymaking agencies.
The Standards, Productivity, and Innovation Board of Singapore (SPRING), under the Ministry of Trade and Industry, lives by its mission of “enabling enterprise.” It aids SMEs by providing internationally recognised standards and quality assurance infrastructure while promoting compliance.
In Malaysia, the SME Corp. is the central coordinating agency formulating overall policies and strategies of SMEs and overseeing implementation. It also serves as the Secretariat to the National SME Development Council (NSDC), the highest policymaking body for SMEs in the country.
Indonesia’s Ministry of Cooperatives and SMEs (MoCSME) draws its mandate from the country’s president to craft and coordinate policies to drive productivity, competitiveness, and independence towards a better business environment.
Beyond their bureaucratic functions, they tangibly serve the business sector through grants and funding opportunities.
Government grants: Helping the government help you
A grant is different from other forms of monetary assistance: It’s not a loan; there is no expectation that the funds will be paid back. While being a grant beneficiary sounds like the perfect scenario, there are pros and cons to be aware of.
While a single stellar proposal can earn your company an award in the millions, that doesn’t mean you can coast with cash flow. Grants are usually implemented under a reimbursement scheme, so you must be prepared to shell out some capital until the government releases the grant funds. And, as to be expected, bureaucratic processes take time.
Winning a grant elevates your small business’s reputation. But the prestige comes with paying your dues and building a profile that meets the application’s requirements. Drafting a proposal demands research and planning, as well as comprehending and conforming to the grant-giving agency’s terms. These include rules and regulations that warrant specialised expertise and conditions that the grantee must strictly meet.
Winning a grant elevates your small business’s reputation. But the prestige comes with paying your dues and building a profile that meets the application’s requirements.
Any payoff is ultimately rewarding, which is why applying for grants is not only challenging but also competitive. But the good news is there are diverse prospects for Southeast Asian SMEs in need of funding.
Singapore government grants for small business
Singapore has a wide menu of government funding for capability-upgrading initiatives, such as process improvement and product development. It also offers tech startup programs, as Singapore aspires to host its own version of Silicon Valley.
Singaporean SMEs are vital to the growth of GDP in the country – that’s why the government addresses constraints like the lack of financial support and resources through these grants:
- Capability Development Grant helps SMEs build capabilities across 10 key business areas, from adopting technology to overseas expansion. Recently it has simplified its application process for grant support of SGD30,000 or less.
- ACE Startups enables SPRING to match SGD7 to every SGD3 raised by an entrepreneur, up to SGD50,000. This grant also matches each SME with a mentor who will support the startup in its first year.
- Spring Startup Enterprise Development Scheme makes use of SPRING SEEDS Capital, SPRING’s investment arm, to grow SMEs with investments.
- Interactive Digital Media (IDM)’s IDM Jumpstart and Mentor targets individual or locally registered companies with at least one local founder who holds a minimum of 20% equity. It covers up to a maximum of SGD50,000 in qualifying costs of the project.
- IE Singapore’s Global Company Partnership (GCP) Grant benefits small to medium businesses aiming for global competitiveness.
- The International Expansion Grant (Market Readiness Assistance Grant) aims to hasten the expansion of homegrown SMEs internationally.
Malaysia government grants for small business
In Malaysia, the impact of SMEs on the overall economy had been modest compared to those in other countries, despite their good performance. In response, the government launched the SME Masterplan in 2012 to further support the development of SMEs. It paved the way for the following initiatives:
- Through the Soft Loan Schemes for Service Sector, the Malaysian Industrial Development Berhad (MIDF) aids the expansion, upgrade, modernisation, and diversification of existing service providers into higher value-added activities.
- MIDF’s Soft Loan for SMEs helps existing and startup companies with project, fixed assets, and working capital financing. It also helps them become more efficient and productive through the adoption of information and communications technology in business management and operations.
- The Young Entrepreneur Fund from SME Bank is available to young entrepreneurs, 18 to 30 years old, who are engaged in business activities catering to their generation.
- The Business Start-Up Fund (BSF), sponsored by the Malaysian Technology Development Corporation (MTDC), reaches out to tech entrepreneurs and new startup companies.
- TEKUN Financing provides funds to SME owners who eye expansion.
- Agro Bank’s Perusahaan Kecil dan Sederhana provides financial backup to local agricultural entrepreneurs.
Indonesia government grants for small business
Indonesia’s economy relies on grassroot SMEs that comprise most of the sector. Because of SMEs’ importance to long-term sustainable economic growth, the government aims to help them improve productivity and narrow the gap between SME and large enterprise growth. Seeing clustering as a strategy to promote SMEs across the Indonesian archipelago, the government has also enlisted the help of nonprofit organisations to roll out grants, including:
- Credit for Businesses (Kredit Usaha Rakyat) provides credit, working capital, and/or investment financing schemes specifically dedicated to micro, small, and medium enterprises and cooperatives.
- The Ministry of Cooperative and SME Startup Incubator Program focuses on promoting local entrepreneurs through adequate business opportunities.
Innovating and preparing for the grant proposal
Now that you’re aware of the government support programs for small business within Singapore, Malaysia, and Indonesia, check out these tips to increase your chances at winning one. Foremost is overcoming the tedious preparation of a proposal.
- Do not fret. Focus. Sharpen your understanding of your business concept enough that you can convey and sell it. Your business plans must be clear and concise to those reviewing them.
- Stand out. As mentioned, there’s plenty of competition to draw the attention of grant-giving bodies. You can help them notice you by giving accurate information, highlighting team expertise, and enumerating the economic benefits that your business can offer.
- Last, when it comes to innovation, show, don’t tell. Most small businesses will claim to be above average right off the bat, but here’s one solid way to back it up: Automate your business processes through cloud-based enterprise resource planning (ERP) solutions. Grant-giving agencies specifically look for future-looking and innovative startups, and when they find out you’re open to using cloud-based ERP solutions, they’ll know you’re efficient, quick-thinking, and have great capacity for growth.
Besides, investing in a cloud-based ERP solution increases your productivity, safeguards your data, and helps you manage and streamline the processes that allow your small business to grow with ease. With or without a grant, it’s a win-win situation for all.
Modernise your processes and gain advantage over your competition through SAP Business One. It’s a worthy investment that will help make your business globally competitive.
This blog post originally appeared in the Digitalist.