chapter-7-sources-of-capital_compress.pdf

topics about business

1. sources of capital &
support systems.

2. 6.0 INTRODUCTION

3. •The government plays an important role in
ensuring that the entrepreneurial industry is
moving forward and able to compete in the
local and international arena.
•Encourages the participation of the society in
the economical development of the country.

4. 6.1 SOURCES
OF CAPITAL

5. Sources
of
capital
Personal
funds/
savings
Retirement
accounts
Banks and
other
financial
institutions
Family and
friends
Government
loan
Stock
market

6. •First sources of capital.
Personal funds/savings
•Easier to raise as it is based on
personal relationship and thrust
Family and friends

7. •Saved funds for retirement purposes.
•Use this money to fund the development of venture.
•If fails in business, he may have to live more frugally after
retirement.
Retirement accounts
•Provides loans to assist entrepreneurs in running their
ventures.
•Government subsidized loans in bid to encourage investment
and development.
Government loan

8. •Provides support through various agencies.
Government agencies
•One of the external funding to initiate a new
business.
•Long-term financing
•Medium-term financing
•Short-term financing
Banks and other financial institutions

9. •Funds borrowed from external sources generally
over a long period between 5 and 25 years.
Long-term
financing
•Loan made by an entrepreneur that ranges
around 1 year and not exceeding 8 years.
Medium-
term
financing
•Bank overdraft facilities are one of the most
typically and frequently used types of short-term
financing. The arrangement fees are high.
•Only pays interest on the amount actually
withdrawn.
Short-term
financing

10. 6.2 BUSINESS
SUPPORT
SYSTEMS

11. Business
support
systems
Financial
support
Entrepreneur
and
management
training
Technical and
technological
support
Informational
support
Infrastructure
support
Marketing
support
Research and
project
recognition
Extension and
advisory
services

12. FINANCIAL SUPPORT
•Provided by financial institutions to start and perform a business.
•Assist in establishing the factory’s site, buying office equipment,
and purchasing machinery as well as for the capital turn over.
•Financial facilities provided by banks and agencies in Malaysia:-
AGENCY FINANCIAL FACILITY
MajlisAmanahRakyat (MARA) Provides assistance in the form of loans and
equipment to SMEentrepreneurs.
Commercial Banks Provide loans that are located by the Central
Bank of Malaysia (BNM) to be distributed to
qualified applicants.
Bank PembanggunandanInfrastruktur
Malaysia Berhad(BPIMP).
Gives financial credit to industrialbusinesses
Malaysian Industrial Development
Finance Berhad(MIDF).
Provides fixed asset financing to
manufacturers in Malaysia.
Bank PertanianMalaysia (BPM). Gives financialassistance and equipment to
agriculture-related industries.

13. ENTPRENEUR & MANAGEMENT TRAINING
•Provided to train entrepreneurs to obtain the necessary skills in relevant field and
knowledge in the area of management.
•Build the entrepreneurs’ confidence an give them encouragement
•Entrepreneur and management training provided by agencies in Malaysia:-
AGENCY ENTPRENEUR & MANAGEMENT TRAINING
MajlisAmanahRakyat (MARA) Provides training and guidance to SME
entrepreneurs so that they are highly skilled in
their area interest.
Malaysian Entrepreneurship
Development Center (MEDEC)
Plans and implements entrepreneurship
developments programmessuch as training,
education, research, and consultancy.
State Economic Development
Corporation (SEDC)
Provides and promotecommercial, industrial and
socio-economic development in the states.
National ProductivityCorporation
(NPC).
Provides training in enhancing quality and
productivity, consultation and guidance in Total
Quality Management (TQM)

14. TECHNICAL & TECHNOLOGY SUPPORT
•To exposed the latest production methods and
systematic management.
•To learn about the latest technological
advancement in manufacturing and
management field.
•Technical assistance provided in Malaysia:-
AGENCY TECHNICAL ASSISTANCE
Palm OilResearch Industry Malaysia
(PORIM)
Develops quality products using the latest
technological advancement.
Forest Research Instituteof Malaysia
(FRIM)
Promotes sustainable management and the
optical use of forest resources
Malaysian Instituteof
Microelectronic system (MIMOS)
Promotes innovationin information technology.
Strives to be applied research centre in frontier
technologies.

15. INFRASTRUCTURE SUPPORT
(LOCATION & PREMISE)
•Help the entrepreneur to decrease issues and
problem related to the premise and industrial site.
•Infrastructure assistance provided by agencies in
Malaysia:-
AGENCY INFRASTRUCTURE ASSISTANCE
UrbanDevelopment authority (UDA)Provides & carries out projects at urban
settlements (development,housing,
commercial, & industrial issues).
MajlisAmanahRakyat (MARA) Provides businesssites to carry out
business activities.
StateEconomic Development
Corporation (SEDC)
Develops basics utilitiesand area like
pathway and recreational facilities.

16. MARKETING SUPPORT
•Marketing: effort which is performed to penetrate the sale
of products or services offered by the business.
•Purpose: to help an entrepreneur distribute & market his
products locally and internationally.
•Marketing assistance provides by agencies in Malaysia:-
AGENCY MARKETING ASSISTANCE
FederalAgriculture Marketing
Authority (FAMA)
Markets agriculture products locally and abroad.
Malaysian ExternalTrade
Development Corporation
(MATRADE)
Exposethe entrepreneur to available business
opportunities.
Ministryof International Trade
and Industry (MITI)
In charge of affairs related toforeign trade, high
technology, environmental protection and industry
location, energy & other areas.

17. RESEARCH AND PROJECTS RECOGNATIONS
•Purpose: help the entrepreneur to increase the
efficiency, technological achievements, production as
well as produce better quality products.
•Research agencies provided by agencies in Malaysia:-
AGENCY RESEARCH ASSISTANCE
Malaysian Agricultural
Research and Development
Institute (MARDI)
Carries out research nthe output of agricultural
products, improves the quality of agriculture
products, and produces new seeds for farmers.
RubberResearch Institute
Malaysian (PRIM)
Carries out researchon the quality of rubber and
produces new rubber-based products.
Malaysian Palm Oil Board
(MPOB)
Carries out research on products producedfrom the
out put palm oil, spreadsover the markets, and
improves the quality o palm oil.
Standard and Industrial
Research Institute of
Malaysia (SIRIM BERHAD)
Focus on discovering and developingnew
technologies to enable industries to move up yha
value chain.

18. INFORMATIONAL SUPPORT
•Offered to an entrepreneur in the form of business
opportunities, statistics, discovery, research and
technological developments.
•Informational assistance provided by agencies in Malaysia:-
AGENCY INFORMATIONASSISTANCES
Forest Research institute of
Malaysia(FRIM)
Provides research and development, transferof
technology and testing services for the forest and
timber industry.
MalaysiaIndustrial Development
Authority (MIDA)
Provides information on business opportunities.
MalaysianExternal Trade
Development Corporation
(MATRADE)
To organize training programesto improve
international marketing skills of Malaysian exports.
Standards IndustrialResearch
Institute of Malaysia (SIRIM)
Ensures the quality of local products, penetrate the
market potentiality, and provides information on
new discoveries in production.

19. EXTENSION AND ADVISORY SERVICES
•Consulting and monitoring the implementation of the
proposed projects to ensure no hiccup happens while
carrying out the business operations.
•Extension and advisory assistance provided by agencies
in Malaysia;
AGENCY EXTENSIONAND ADVISORY ASSISTANCES
MajlisAmanahRakyat (MARA)Apprenticeshiptraining scheme, technical
entrepreneurs programme
Malaysian PalmOil Board
(MPOB)
Technical advisory services.
Federal AgriculturalMarketing
Authority (FAMA)
Enhancements of productimage and presentation,
vendor programme, development of quality
products.
Department of Agriculture
(DOA)
Follow-upon entrepreneurial training and
development programme.

20. 6.3 INCENTIVES IN
ENTREPRENEURIAL
ACTIVITIES

21. •Tax exemption to a new industry.
PIONEER
STATUS
•Limit on the quantity of products.
•Helps to protect domestic market.QUATO
•Duty or tax that are imported into the country.
•Maximum amount of a products that can be
imported or exported.EMBARGO

22. •Tax imposed on goods that
are imported into the
country.
•Paid directly by the importer.
TARIFF/IMPORT
DUTY
•Assistant given to a local
entrepreneur which helps
him sell his products
overseas.
EXPORT
ENCOURAGEMENT

23. 6.4 FINANCING
FACILITIES

24. FINANCING FACILITIES
•Financing facility refers
–A loan extended by a bank or financial provider to
a business in need of operating capital.
–Different banks or agencies have different facility
plans for their clients who own or run businesses.

25. •Term: buyer’s purchase of goods from a seller or
supplier who finances by delaying the date at
which the price is due, or by allowing payment
in instalments.
Supplier credit
•Short-term financing of working capital.
•Current account exceeding their available cash
balance.
Overdraft

26. •A term loan is a medium-or long-term
•Given to entrepreneurs who finance their fixed asset
or working capital needs.
•2 categories:-
•i) loans with mortgage ii) loans without mortgage
Term Loan
•Transaction in which the purchaser pays an initial
deposit and takes of the goods.
•Subsequent instalmentsare made over a specified
time period.
Hire Purchase

27. •To procure assets without having worry about
maintenance and repair costs.
•Known as a contract under.
LEASING
•Entrepreneur with a limited amount of capital.
•Arrangement where by the debts of business are
collected by a factor business.
•Short-term loan.
FACTORING
•Aiming to assist projects , promote growth &
improvement in rural areas
GOVERNMENT LOAN

28. •Can obtain funds from a variety sources.
•Find a source of funding which is appropriate
with his needs.
•Business support systems are one of the
resources that can be used by an
entrepreneur to obtain loans and assistance.
•Help to prosper and support the nation’s
economic growth.
•New venture will be safer if it passes through
the business support systems.