Malaysia is growing quickly, opening doors for male and female entrepreneurs alike. More...
Malaysia is growing quickly, opening doors for male and female entrepreneurs alike. The World Economic Forum’s 2015–2016 Global Competiveness Report ranked Malaysia as the most competitive economy in developing Asia and the 18th globally. Since independence in 1957, Malaysia has recorded one of the highest growth rates in Asia, expanding at an annual average of 6.5 percent.
SMEs are vital to Malaysia’s economy, contributing 32 percent to GDP. They account for 99 percent of all businesses, and employ 56 percent of the workforce. Yet women’s participation in SMEs as entrepreneurs is limited. The total early stage entrepreneurial activity (TEA) of women in Malaysia—defined as the working age population starting an entrepreneurial activity and those running a new business less than 3 ½ years old—is only 6.78 percent, much lower than the TEA for women in Thailand (22.1 percent) and the Philippines (20.8 percent). Further, World Bank data show that, as of 2014, just 44 percent of women over 15 participated in Malaysia’s labor market, a lower rate than in 2000. In addition, woman-owned businesses are often in less profitable sectors than men’s, largely in services (91.7 percent of women’s businesses) and manufacturing (6.2 percent). The potential for women entrepreneurs in Malaysia is nonetheless significant. The growth rate of women’s SMEs in Malaysia is quite high at 9.7 percent. This is 2 percentage points higher than the growth rate for men’s SMEs.
Women in Malaysia face a number of barriers to more active participation in the workforce. According to the OECD, low rates of women in the workforce are largely due to difficulties reentering after a break and to inflexible work conditions. A 2013 study on retaining women in the worforce by Malaysia’s Association of Chartered Certified Accountants found that a lack of gender and inclusion programs in Malaysian workplaces impedes retention of female employees. The study also found that the main reasons women leave their jobs is to raise a family or care for a family member, or because they generally lack opportunities for work-life balance. A 2012 study by the University of Toronto’s Rotman School of Management found that cultural norms encourage women to be less assertive and take on fewer leadership positions. This study also found a tendency for a woman’s male relative to take over her business when it grew larger than micro.
Inadequate access to finance very often constrained women entreprenuers, The Asia Foundation and APEC’s 2013 research found, and certainly in Malaysia where high interest rates were reported to be the biggest challenge. In addition, application paperwork was cited as a major problem for women: more women business owners (by a 28 percentage point difference) and more women exporters (by a 47 percentage point difference) cited paperwork as an obstacle to obtaining loans than did their male counterparts. On a positive note, the importance of role models, and in particular female role models, was particularly highlighted in Malaysia with women owners being more likely to have a female relative in business than men owners were by a difference of 26 percentage points.
There is strong evidence that, with support, women’s businesses could make significant contributions to Malaysia’s economy. According to Malaysia’s Ministry of Trade and Industry, efforts to support women entrepreneurs have contributed to a 55 percent increase in the number of woman-owned SMEs since 2005. The government of Malaysia has responded proactively to the need to boost women’s participation in the workforce. A 2013 Forbes article notes that, in Malaysia, “cultural and socio-economic forces have combined to allow for radical experimentation in female entrepreneurship. …Malaysia is preoccupied with entrepreneurship.” For example, Malaysia’s 10th Malaysia Plan has the goal of increasing women’s participation in the workforce to 55 percent in 2015, which has helped to spur the government into action. This is expressed in the government’s commitment to support business innovation, to build the capacity of the workforce, and in the willingness of the government to take bold measures toward economic development. Malaysia is also looking to increase the use of technology by woman-run businesses, a response to the relatively low percentage of Malaysian businesses that are currently online, and has allotted RM 50 million (US$16.34 million) toward this goal through the “Get Malaysian Business Online” campaign.
Evidence of the need for continued support of the business sector is clear in The Asia Foundation and APEC’s 2013 survey, which found dissatisfaction among Malaysian entrepreneurs in general and women entrepreneurs in particular. The survey found that 40 percent of Malaysian entrepreneurs considered the government to be unsupportive of business or even hostile toward it. Women entrepreneurs were less likely than male entrepreneurs, by an 18 percentage point difference, to say that the government was “supportive” or “very supportive.” Complicating the challenge of supporting women’s entrepreneurship in Malaysia are the cultural dynamics in the economy. Malaysia is a multicultural society largely composed of Malays, Chinese, and Indians. Women’s employment varies by region with 48.5 percent in employment in urban areas and 41.2 percent in rural areas. As will be observed in this report, certain assocations target specific women’s groups such as Bumiputera, the indigenous Malay group, or Chinese-Malaysians. In addition, Malaysia is a Muslim state. This leads to some persisting conservative gender norms such as limited divorce rights, unequal inheritance for Muslim women, and unclear land rights for women in the case of divorce or death of husband.
Business networks are important to the success of women entrepreneurs in Malaysia. Findings show that networks help in making connections and imparting business skills and knowledge critical for success. The Asia Foundation and APEC’s research in Malaysia shows that most businesses there considered the primary benefits of membership in business associations to be access to both information and training on regulations, policies, and taxes. While women are often less connected to networks than men, the benefits of joining these associations are significant. In addition to formal networks such as associations, findings show that informal networks are also very important to entrepreneurs in Malaysia. Women business owners who engaged in informal networking in Malaysia were more likely, by 25 a percentage point difference, than those that did not engage in informal networks to report that they planned to expand their operations over the next three years. The findings also indicate that businesses in Malaysia often join associations when their businesses get larger or expand into export, indicating a gap in utilization of business associations by small or medium businesses that haven’t yet developed into exporting.
Malaysia offers a number of business networks and associations that work to connect women entrepreneurs and support development of their business skills. Some are open to all women entrepreneurs while others target specific cultural groups.
Networks that support women’s access to capital and assets:
Networks that support women’s access to markets:
Networks that support strengthened capacity and skills for women in business:
Networks that support women’s leadership, voice and agency:
Networks that support women and innovation and technology:
The private sector in Malaysia is very active in supporting women entrepreneurs’ skills development, including their ability to use technology to increase their business’s online presence. Services target both larger businesses as well as microenterprises that seek to support low-income segments of the population.
Initiatives that support women’s access to capital and assets:
Initiatives that support women’s access to markets:
Initiatives that support strengthened capacity and skills for women in business:
Initiatives that support women’s leadership, voice and agency:
Initiatives that support women and innovation and technology:
The government of Malaysia plays a strong role in its economy’s economic development. Related to entrepreneurship, the government has created programs in cooperation with ministries and agencies to support entrepreneurs with a number specifically targeted toward women entrepreneurs. Recent efforts were motivated by the Fourth Thrust of the National Key Result Area, which aimed to support 4,000 women entrepreneurs by 2012 and the 10th Malaysia Plan, which aimed to increase women’s labor force participation to 55 percent in 2015 (from 44 percent in 2013). Likewise, women are incorporated into the Economic Transformation Program which is part of the government’s Strategic Reform Initiative on Human Capital Development. This program lays out strategies to support women in various stages of their career.
The government’s efforts to advance women entrepreneurs are particularly notable in regards to supporting women exporters, for example through the Malaysia External Trade Development Corporation’s “Women in Export Directory” (detailed below). Government efforts also focus on encouraging businesses to migrate their businesses online. Currently only 15 percent of Malaysia’s businesses are online.
Efforts to support women entrepreneurs also extend to its efforts to hold high-level events which highlight women’s participation in the economy as a priority area. For example, Malaysia hosted the Global Summit of Women in 2013 with the theme of “Women: Creating New Economies.” The summit brought together over 1,000 high-level delegates from 70 countries and received strong support from government officials throughout. Further, through the Ministry of Entrepreneur and Co-operative Development, which was dissolved in 2009, the government partnered with UNDP and the Malay Chamber of Commerce to run a skills-training program for low-income women; this program built awareness of available options for small and micro loans. This included a communications campaign on microfinance as well as a six-month training program for a group of women running food businesses in two of the most impoverished states in Malaysia: Kelantan and Terengganu.
Overall, the government’s support for women entrepreneurs is increasing. In 2014, the government released Guideline for New SME Definition, providing more firms with opportunities to access SME support services.
The government also runs programs more generally targeted toward helping entrepreneurs. These include : Young Entrepreneur Program, IPTA Entrepreneur Development Program, Graduate Enterprise Development Program, Mentor Program, Basic Training in Business, Basic Entrepreneurial Skills for Graduates, Basic Training in Franchising for Would-Be Franchisers, as well as more applied training programs for specific industries. Access to finance for entrepreneurs is supported through various government funding packages such as the High-Technology Venture Capital Fund and the Small Enterprises Guarantee Scheme. Government ministries also run shorter term workshops including in marketing and business planning.