Stimulating Growth

More than 70% of all businesses have less than 6 employees. This demonstrates that thriving small businesses generate the most jobs and economic activities. Microenterprises created 37% of all new jobs between 2001 and 2007. For Malaysia, small and medium-sized enterprises account for over 75%

of all enterprises and are responsible for more than 60% of private sector employment and 55% private sector turnover. Massive hydro-power dams or huge aluminium smelting plants do not create the kind of employment opportunites that small enterprises do.

Clearly, entrepreneurship is the engine of economic growth in local communities. While employment is established as a major route to sustainable livelihood, and for some, as a route out of poverty, entrepreneurship is increasingly being recognized as a major creator of economic and social opportunities.

Within local communities, participation in the local job market unlock the potential of young people, providing a route to economic independence. It is crucial, both for their own fulfilment as well as in the broader economic interest of their community, that their talents and energies are harnessed in productive work opportunities.

While entrepreneurship is not suitable for everyone, it is vital that opportunites are open to young people in local communities and well-understood by them upon completion of formal education. Entrepreneurship can provide a successful route to sustainable participation in the job market, more so if the entrepreneur is well-supported in the business start-up phase.

By running businesses, young people within local communities achieve economic independence, reducing reliance on government subsidies or state welfare. Young people who run their own businesses are more likely to engage in their local communities. They create additional jobs and thus, more young people become productive members of their families and communities.

The opportunities are great as Sarawak will have a larger, more skilled workforce. However, Sarawak's young people must be well-prepared in order to create and find jobs. The spread of Sarawak’s population over the vastness of the state in small communities, presents unique challenges and opportunities to develop entrepreneurship.

Research undertaken by the Sarawak Community Action Network (SCAN) reveal that there are practical actions that the new Pakatan Rakyat-led state government and established business organizations can take to develop entreprise culture within local communities through out the state. Among the practical actions identified by SCAN include:

1. Establish high priority for investments in youth entrepreneurship.

This will help to reduce the need for young people to leave their communities in search of employment in West Malaysia, Singapore and elsewhere. There have been incidences of Sarawak's young people who have been lured by promises of high paying jobs in West Malaysia and Singapore, but end up being cheated by employment agents or their employers.

By prioritising and targeting investments at entrepreneurship schemes for young people, the state can create employment, improve livelihood at local communities, reduce dependence on subsidies and increase tax revenues for both state and local governments.

Towards this end, the state must establish a grant for youth entrepreneurship, disbursed through the district offices or local branches of selected banks. SCAN’s research estimates that a grant of RM10 mil can potentially create 900 new small businesses which can potentially generate an estimated 5,000 new jobs. The investment can potentially generate an estimated RM135 mil sales revenue.

2. Microcredit institutions should improve access to financing for young people.

Microcredit institutions like TEKUN and the banks that have been tasked by the government to disburse microcredit should work with local organizations that better understand the risk profile of young people. This will enable the institutions and the microcredit funds allocated by the government to reach new sections of communities and new segments of society that may have been excluded from finance. A good example can be found in India, www.bystonline.org.

3. Use existing business networks to support the development of youth entrepreneurship.

Business networks such as chambers of commerce can be most valuable to start-up businesses. The government can use existing structures such as business networks to support and promote entrepreneurship. Chambers of commerce can begin initiatives to support start-up businesses at local levels before scaling up to state-level.

4. Encourage established companies to partner with youth enterprise organizations to strengthen their capacities and capabilities.

Through sharing their experience and expertise, companies can enhance the services that district offices and youth enterprise organizations provide. Employees of the company can impart invaluable skills and knowledge to the youth enterprise organization and to support young people starting

out in business, especially in mentoring capacities.

Establishing relationships between new entrepreneurs provide many benefits. Start-up businesses boost the local economy, expanding the overall size of the market and contribute to the value chains of existing companies. For the start-ups, they gain from the support, networks and other relationships. A proven example can be found in the Youth Business China’s mentoring program which is supported by major Chinese and international companies, www.ybc.org.cn.

5. Ease the administrative process of setting up a business.

The time, effort and cost involved in registering and establishing a new business can be cumbersome and creates deterrents, especially to young people who do not have sufficient means to persist against administrative difficulties. There must be coordinated support by both state and local governments for emerging entrepreneurs in small business sectors. District offices should establish convenient walk-in information and processing centres for young entrepreneurs across Sarawak. The services of these venues should be designed to stimulate local business and assist communities reduce the administrative process of dealing with the state or federal government.

6. Include self-employment as a viable alternative to sustainable livelihood.

Our traditional advice to young people about making a living is biased towards the benefits of working in a large company or government. Seldom are the benefits of supporting young people into new business communicated. The state government, through schools and community programmes, can bring entrepreneurship experiences to young people. The state government can better promote entrepreneurship education opportunities and dispense resources to train young entrepreneurs to advance their local economies.

The state government should also encourage schools and colleges to run business plan competitions that promote start-up opportunities. The world over, business plan competitions have proven to provide effective approach to intorduce a variety of business-related subjects to new audiences. Winners are given the opportunity to turn their business proposition into reality.

A good example is the Students in Free Enterprise (SIFE), www.sife.org. SIFE runs business competitions for university students to develop social enterprises in their communities to meet local needs.

7. Enable more companies to provide apprenticeships and training programs.

Take the example of Business in the Community’s Work Inspiration program, www.workinspiration.com. This is a business-led program aimed at strengthening the relevance and impact of work experience for the benefit of both the young people and the companies involved. This is one valuable role the private sector can play to boost the motivation, confidence, experience and capability of young people to be enterprising.

Conclusion

Improving the livelihood of Sarawak’s communities by boosting youth enterprise presents a significant challenge. The outlook for the future of young people in communities demonstrate the need for immediate, coordinated and sustainable response. Enterprise can provide sustainable livelihood for many young people. Both the new state government and private sector can play significant roles in making entrepreneurship work.

When both sectors work together in a coordinated manner, more opportunities open to young people and the culture of entrepreneurship is developed further.

For the new PR-led state government, enterprise can reduce subsidies and welfare costs, and provides opportunities for the government to benefit from the talent, enthusiasm of the young people whom the government serve.

For the established companies, it helps the development of a dynamic small business sector and boosts demand in the local economy.

For the community at large, it helps alleviate challenges associated with youth unemployment, helps spread prosperity, and minimises disenfranchisement of young people and social conflict.

Clearly, the new Pakatan Rakyat-led Sarawak state government will have to channel some of the state’s revenues to invest in high priority youth entrepreneurship at local community level in order to boost economic activities, create new jobs and improve income levels of more Sarawakians. Established companies in Sarawak that traditionally build their wealth from the state’s natural resources will need to be asked to contribute more significantly to develop youth entrepreneurship.