Standards as an investment for SMEs

This year, we celebrated the 47th World Standards Day on 14th October.The first World Standards Day was celebrated in 1970 and 46 years later, where we are today, I believe the celebration has had a positive impact on our local entrepreneurs as well as Malaysian consumers.Last Sunday Jabatan Standard Malaysia, an agency under the purview of Ministry of Science, Technology and Innovation (MOSTI), collaborated with Malaysian Communications and Multimedia Commission (MCMC) to organise a “Fun Run” in Cyberjaya. I flagged off the run, and completed the 5 km run, along with a thousand other participants in various categories.

I commend Jabatan Standards for initiating this inaugural run to raise awareness on the importance for businesses to comply with standards, as we are increasingly demanding quality products and services at a competitive price.

The theme for this year “Standards Build Trust” urges businesses to participate actively in ensuring that their products and services comply with the highest internationally recognised standards.

“Trust” has to be earned, and in businesses, it is the ultimate branding enables it to move into international platforms to meet the global demands for quality products and services at competitive prices.

The new economy is a borderless world. Many countries have the interest to expand business worldwide.

With the advent of the information and communication technology, it has never been so easy to trade internationally.

Besides, market access is abundant with the opening of the ASEAN Economic Community (AEC) since the beginning of 2016. We foresee growth in exports within the ASEAN region, which has a population of 650 million thus more entrepreneurs, will benefit from the free flow of goods and services.

Apart from the AEC, the Regional Comprehensive Economic Partnership (RCEP), which will likely conclude by end of 2016, and the signing of Trans-Pacific Partnership Agreement (TPPA) also create more markets for companies to export their products and services through compliance with international standards imposed by economies of these AEC, RCEP and TPPA.

This means more opportunities for the small and medium-sized enterprises (SMEs) in Malaysia, which comprise 645,136 or 97.3 per cent of the total business establishments.

They are concentrated in the services sector (90 per cent), manufacturing (6 per cent) and others (4 per cent); and contributed 35.9 per cent to our country’s Gross Domestic Product (GDP).

However, we really need to ask, “Are Malaysian entrepreneurs ready to benefit from these opportunities and survive in this borderless world?”

In Sabah, according to SME Corp. Malaysia, in 2011 there were 40,884 SMEs, and this number of SMEs was ranked 6th in Malaysia. The rest are Selangor (125,904), Kuala Lumpur (84,679), Johor (68,874), Perak (60,028) and Sarawak (43,830).

It is well noted that Sabah has a robust economy and growing at about 4 per cent annually.

The economy here is still much dominated by the primary sector, consisting of agriculture, forestry, mining and fishing.

A report of the Department Of Industrial Development And Research Sabah shows that the primary sector accounts for about 56 per cent of the state’s total GDP, with agriculture, livestock and fishing contributing 26 per cent; while mining and quarrying contributing 21.6 per cent; and the manufacturing sector accounted for about 8.4 per cent.

Most SMEs in Malaysia including in Sabah do not complying with standards and do not obtain certifications for their products and services. Thus, we are not yet able to position ourselves effectively in the international market.

Even if these entrepreneurs do not intend to expand their business overseas, these SMEs must at least ensure that their businesses would stay relevant to local markets and consumer needs in the face of AEC, RCEP and TPPA.

We have to bear in mind that Sabah is an open economy, thus relying heavily on external trade.

Without regulations and mandates, many entrepreneurs would not insist on obtaining standards and certifications voluntarily as they consider it as an unnecessary cost to their businesses.

They place emphasis on sales and marketing but do not realize that international buyers or joint venture partners also look at quality and standards as a critical criterion.

We have two success stories by entrepreneurs who complied with standards. The first is the seaweed industry in Kampong Look Buton, Semporna, Sabah. This industry has been successfully developed under the MyGAP (Malaysian Good Agricultural Practices) programme whereby the seaweed farmers comply with Malaysian Standards MS 2467- Code of Practice for Seaweed Cultivation; and just within two years, the monthly income of each participant of the programme increased from RM 350 to RM 2,500.

Another is Rosfaniaga Services Sdn. Bhd. located in Sarawak. This company sells fish crackers and fish sausage (keropok lekor).

Within two years, the revenue has increased from RM508, 359 to RM 1.9 million by just complying with two Malaysian Standards, that is, MS 1514 – Good Manufacturing Practice (GMP) for Food and MS ISO 22000 – Food Safety Management Systems – Requirements For Any Organisation In The Food Chain.

Thus I strongly advocate the adhering to standards and quality by businesses in accordance with the international requirements and those that have been developed by Jabatan Standards.

Sabah would require relevant certification bodies and more test labs operating locally to meet the entrepreneurs’ local needs for industries that are unique to Sabah.

To date, more than 700 labs and 29 certification bodies throughout Malaysia that are accredited by Standards Malaysia.

I hope more would be accredited in Sabah to serve our industries here better, be it government-owned, private-owned or through the public-private partnership program.

A couple of weeks ago, Sabah state Special Tasks Minister Datuk Teo Chee Kang urged our entrepreneurs to tap into China’s halal market, comprising more than 15 million Muslims.

This opportunity for trading halal products further demonstrates the urgency for Malaysia to have an identity of producing high quality products and services which are reliable and credible.

Malaysian entrepreneurs need to take up the responsibility of producing goods that are safe and of high quality.

The Government can only facilitate but they need to embrace the changes if they want to continue to enjoy the trust of existing and new customers towards their brands.

Once this requirement is met, we can position ourselves strongly in the global market. With standards compliances, we would be competent and would survive in this competitive, borderless world.

As the tagline goes, “Ada standard, untung!”

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