mmoAdvancing Entrepreneurship: The Role of Malay/Muslim Institutions 

by Abdul Shariff Aboo Kassim

This commentary was also published in Karyawan, A Magazine by the Association of Muslim  Professionals (AMP), July 2016, Volume 11, Issue 2.

Contrary to what is generally believed, institutional efforts to develop Malay/Muslim entrepreneurship is not a recent phenomenon, buoyed by the current national fervour of promoting and incentivising innovation and value creation, as evidenced by the schemes rolled out by SPRING Singapore, IE Singapore, National Research Foundation and Infocomm Development Authority of Singapore (IDA). Apart from the establishment of the Singapore Malay Chamber of Commerce and Industry (SMCCI) in 1956, there were noteworthy activities pursued by Malay/Muslim institutions and leaders over the course of the last five decades to advance Malay/Muslim entrepreneurship.

Advocacy

 In 1984, Dr Ahmad Mattar, former Minister-in-charge of Muslim Affairs and then-President of Yayasan MENDAKI, urged the Malay/Muslim community to “think business” and suggested pooling resources to raise capital for new businesses to emerge and existing ones to grow. This entailed tapping the Economic Development Board’s Small Industries Assistance Schemes.

During a speech at the Kongres Ekonomi Masyrakat Melayu-Islam Singapura (KEMAS) in 1985, then-Minister of State for Defence and Trade and Industry and current Prime Minister Lee Hsien Loong announced the setting up of the Small Enterprise Bureau and invited the congress to propose the types of assistance that would be most useful to Malay companies. He urged the Malay business community to ensure it is included in the business category that the Bureau aimed to reach out to: local businesses seeking to upgrade.

Networking and Collaboration

In 2002, AMPRO Holdings launched the AMPRO Centre for Entrepreneurship Singapore to promote skills upgrading and self-employment. During his speech at the launch in February that year, then-Senior Minister of State for Trade and Industry and Education, Mr Tharman Shanmugaratnam, stressed the importance of networking in an enterprise ecosystem and lauded the efforts of AMPRO and MENDAKI’s Minda 2000, a networking club for technopreneurs, for their contributions.

There were even collaborations across communities. The Sino-Malay Investment Holdings was set up to facilitate the exchange of business ideas between the Chinese and the Malays. In May 1992, the Singapore Chinese Chamber Foundation and MENDAKI Holdings, MENDAKI’s economic arm, each gave $50,000 towards investments in Sino-Malay Investment Holdings as part of a joint-venture between the Singapore Chinese Chamber of Commerce and Industry (SCCCI) and SMCCI.

Partnerships between institutions were also fostered. In June 1999, MENDAKI Holdings struck a deal with National Computer Systems (NCS) to pursue e-commerce solutions. With NCS’ expertise in web-hosting and facilitating internet-based businesses, services provided by MENDAKI will progressively take advantage of the e-commerce medium. At the same time, Malay/Muslim companies can immediately sign-up to capitalise on it. MENDAKI would also be able to offer NCS’ Consumer Connect e-commerce solution as part of its package of products and services to Malay/Muslim businesses. The partnership would enable small Malay/ Muslim businesses to take advantage of real e-commerce facilities on a cost-effective basis.

Direct Involvement in Business

There were forays made by Malay/Muslim institutions into market and industrial niches.

In 1985, the Singapore-Arab Chamber of Commerce and Industry (SACCI) proposed the Islamic Banking initiative to the Monetary Authority of Singapore (MAS).  However, MAS rejected the proposal on grounds of mismatch with the existing banking structure at the time.

In a 1992 Occasional Paper Series from the Malay Studies Department, National University of Singapore (NUS), entitled “MUIS and MENDAKI: Current and Future Challenges”, then-Chief Executive Officer of MENDAKI, Mr Zainul Abidin Rasheed mentioned that MENDAKI was beginning to provide corporate leadership through MENDAKI Holdings. ‘Tabung Haji’, or the Pilgrimage Fund, and MENDAKI Travel and Tours were typical initiatives from MENDAKI’s long-term economic strategy. MENDAKI Holdings was directly involved in running promising businesses.

AMP’s own business arm, AMP Investments, collaborated with Hong Leong Group. However, the initiative was fraught with problems, such as the loss of $230,000 in 1993.

AMPRO Holdings was established in 1995. One of its goals was to forge partnerships with regional players to boost trade, capital formation and human resource development. The Sijori, an economic growth triangle established in 1994 between Indonesia, Malaysia and Singapore, provided fertile ground for initiating joint ventures with regional partners. It was hoped that the move will provide opportunities for Malay/Muslim businesses to engage in joint ventures in the region to aid capital formation within the community.

Impact on Entrepreneurship

Thus, in the post-1965 era, there was no lack of institutional participation in promoting Malay/Muslim entrepreneurship. However, when it comes to measuring the collective impact on cultivating an entrepreneurial culture in the community, existing literature does not reveal comprehensive studies done to meaningfully assess this.

Recently-released General Household Survey (GHS) data provides some indication of the current status of Malay entrepreneurship. Chart 1 shows that the proportion of employers and own account workers among working resident Malays lag significantly behind the national average[1].

 chart1

This notwithstanding, when the community’s entrepreneurial progress is benchmarked against itself, Chart 2 reveals a notable progress. There are more employers and own account workers in the Malay community in 2015 compared to 2000 and 2010.

An anomaly nonetheless observed is the decline in the proportion of Malay employers between 2000 and 2010 before the trend reversed in 2015. Barring a more rigorous study, this could have been due to a number of factors. Small-sized enterprises, which were the profile of a typical Malay/Muslim business, struggled with manpower issues, a point raised in Prime Minister Lee’s speech at the Malay/Muslim Business Conference in 2014. He said Berita Harian’s interviews with Malay/Muslim SME owners suggest they turned to part-time workers or roped in family members to help.

 chart 2

According to a survey involving 500 Malay/Muslim companies carried out by the SMCCI and DP Information Group, the percentage of start-ups among survey respondents was 14 times higher than that across the country as a whole.

Overall, the figures suggest that the initiatives of Malay/Muslim institutions have paid some dividends. 

Review

Summing up the past actions of Malay/Muslim institutions, there was advocacy for government intervention in advancing entrepreneurship in the community such as that pursued by KEMAS; collaboration across institutions like the one between AMP Investment and Hong Leong Group; partnership between ethnic groups as exemplified by the Sino-Malay Investment Holdings and SCCCI; networking facilitated by AMPRO Holdings and MINDA 2000; and corporate leadership provided by MENDAKI Holdings and AMPRO Holdings through their business undertakings. Where then are the gaps?

MENDAKI Holdings’ direct involvement in business was criticised as being anticompetitive because it posed disproportionate competition to Malay/Muslim businesses in similar industries, as reported by Berita Harian in August 28, 1992, pointing in particular to MENDAKI’s travel business venture.

Likewise, when institutions suffer losses, such as the one experienced by AMP Investments in 1993, it immediately becomes a matter of public interest, thus undermining the cause of promoting and advancing entrepreneurship. People are generally less perturbed when private businesses experience failure.

However, the downside to lobbying for their withdrawal from the business sector is that it meant doing away with raising revenues to finance self-help programmes.

One approach Malay/Muslim institutions could consider is to adopt a venture capitalist model, encouraging and investing in emerging growth companies, especially against a backdrop of the government incentivising entrepreneurship.

The push for greater government support in Malay/Muslim entrepreneurship appears to lack the political will. Since efforts like KESUMA’s in the 80s, advocacy in this regard has been relatively muted.

The idea of government intervention in the affairs of an ethnic community is nevertheless unviable given the presence of self-help systems within each community which is already supported by the government. The outcomes may be better if the problems faced by Malay/Muslim businesses are framed as industry-specific rather than ethnic ones. For example, Malay/Muslim businesses may be overrepresented in certain sectors such as retail. The problems in this sector under the present economic climate should be identified and intervention by the relevant government agency lobbied for.

Malay/Muslim institutions could also take steps to generate interest in sunrise industries, such as Financial Technology, as suggested by Mr M Nazri Muhd, Chief Executive Officer and Head of Global Advisory Services of Vector Scorecard during the Community-in-Review seminar 2016 organised by AMP. It is chalking up phenomenal growth but there is barely Malay/Muslim presence in this sector.

______________________________________________________

[1] By the Singapore Department of Statistics (DOS)’ definition, own account workers are persons who operate their own business without employing any paid workers in the conduct of their business or trade, whereas employers refer to persons who employ at least one paid worker.

 

Mr Abdul Shariff Aboo Kassim is a Researcher / Projects Coordinator with the Centre for Research on Islamic and Malay Affairs (RIMA), the research arm of the Association of Muslim Professionals (AMP).

Photo Credit: Karyawan

 
© Copyright RIMA 2019 · All Rights Reserved