Competition ACT 2010 Forum with Small & Medium Enterprises (SMEs)
Prince 1 , Level 3, Prince Hotel, Kuala Lumpur
3 December 2013 , 9:30 am
Y.Bhg. Tan Sri, Dato’, Datin, Distinguished Guests, Ladies and Gentlemen
Greetings and Good Morning
We are here today at the “Competition Act 2010 Forum with Small & Medium Enterprises (SMEs)”. If you remember, last year we had a briefing session with some of you and that was in collaboration with the SMECorp. We heard your grouses and concerns and since then we have tried to have more engagement with the SME community. However, we have also discovered that merely having formal briefing sessions does not serve much purpose and so this forum is being held to ensure that after today, engagement with the SME community will continue to take it to a more meaningful level.
Ladies and Gentlemen,
As we know, the introduction of competition law in Malaysia is key to providing the progressive steps needed for Malaysia to attain a higher Gross Domestic Product (GDP). The MyCC is now almost 2 ½ years old, while the implementation of the act almost 2 years. It has been challenging and frustrating and daunting, simply because every day poses new issues and challenges. There is no one definite answer to questions posed to us and therefore for the participants at today’s forum, you may go away without an answer to your query, if you have one. And why is that so? Simply because in competition law, we begin with defining the market and to ascertain which is the market we are talking about and where the competition is affected, if any. So to you and the lay man out there, you may think a particular behaviour is anti-competitive but when it comes to the Commission we may analyse it and then dismiss it as not anti-competitive. And that may then frustrate the complainant. And we have and are seeing many of these sort of complaints. So ladies and gentlemen, that gives you a flavour of how complicated competition law isLadies and Gentlemen,
As we know, the introduction of competition law in Malaysia is key to providing the progressive steps needed for Malaysia to attain a higher Gross Domestic Product (GDP). The MyCC is now almost 2 ½ years old, while the implementation of the act almost 2 years. It has been challenging and frustrating and daunting, simply because every day poses new issues and challenges. There is no one definite answer to questions posed to us and therefore for the participants at today’s forum, you may go away without an answer to your query, if you have one. And why is that so? Simply because in competition law, we begin with defining the market and to ascertain which is the market we are talking about and where the competition is affected, if any. So to you and the lay man out there, you may think a particular behaviour is anti-competitive but when it comes to the Commission we may analyse it and then dismiss it as not anti-competitive. And that may then frustrate the complainant. And we have and are seeing many of these sort of complaints. So ladies and gentlemen, that gives you a flavour of how complicated competition law is.
To bring the session back to focus, the MyCC has been receiving dissatisfied complaints and feedback from the SME community on the implementation of the Competition Act 2010. Some negative press coverage have also been received especially after the first decision by the Commission was made, ie in relation to the Cameron Highlands Floriculturist Association, which claimed that the MyCC seems to be targeting small enterprises while ignoring the deeds of large corporations. Well, it may have seemed true at that point in time but lately if you have been following the news, 3 large corporations have been served proposed decisions. By stating this I am not trying to defend the Commission but what I would like to say here is that more often than not, blatant anti-competitive activities of SMEs are being reported and highlighted in the press. And this clearly demonstrates the fact that the SMEs are not aware that some of the behaviours are outright prohibitions and cannot be undertaken even if you are a small enterprise.
Now why this special emphasis on SMEs and why is the Commission taking extra efforts to reach out to them? Yesterday’s STAR newspapers (2/12/13) had a special feature on SMEs. It reported that 97.3% (now with the new definition of SME it will be 98.5%) of business establishments are SMEs, SMEs contribute 32.5% to the nation’s GDP, SMEs registered 6.8% growth in 2011, and 645,136 SMEs generate 52.7% of nation’s employment. And the article further states that as the SMEs venture into higher value added activities they are in various sectors from medical devices to aerospace.
Another study released by Oxford Economics recently also states that SMEs worldwide, and I stress worldwide, are making radical changes to their business models in order to cater for global demand, investing in technology to make operations more efficient and allow them to compete with larger firms. 41% are capitalising on growth opportunities in expanding markets, 36% are entering new geographical markets, 34% are creating a culture of innovation while 26% are investing in new technologies.
So therefore, with all these statistics on SMES, the bottom line is that as SMEs venture out into the world and as they grow to become household names, it is important to know your obligations under this Act and to have in mind that compliance with this law, which has been implemented in more than 140 countries, is an important aspect of your ethical business practice and governance.
Ladies and Gentlemen,
I was recently informed that in October 2013, SME Corp issued a guideline where the definition of SMEs has been revised and which will be adopted beginning January 1st, 2014. Looking at the definition, (ie manufacturing – annual turnover of RM50 million or full time work force of not more than 200 and for services and other sectors, turnover of not more than RM20 million or full time workers of 75) I am now fully convinced that this new definition which has taken into account the numerous changes in economic structures as well as shifting business trends since 2005, should bring about a shift in the thinking of SMEs towards the Competition Act 2010. The guidelines also contain an FAQ and an important issue that is highlighted is how an SME with a few entities is regarded as a single entity if it is registered under a single name. This ladies and gentlemen is an important issue for you to ponder upon as this is an important issue in the Competition Act 2010.
I also want to share the results of a survey conducted by SME Corp in 2012 regarding the level of awareness among SMEs of the existence of the Competition Act 2010. Here the findings showed that as much as 81% of the 2,307 respondents were not aware of the existence of the Competition Act 2010. And this to us at the Commission is a disappointing and alarming figure as while the MyCC has endeavoured to engage the business community through various means, the message seems not to have been cascaded down to members of the community. Perhaps we can have an open and informal discussion as to how this issue can be addressed and overcome.
Ladies and Gentlemen,
In closing, allow me to once again stress that the MyCC will always remain committed to ensuring a competitively sustainable business environment for Malaysians. I also sincerely hope that the participants here today will take note of the implications of this Act to your business through this forum.
I would like to take this opportunity to express our warm gratitude to all the representatives of associations, related bodies and private companies as well as all individuals present here today for attending this event.
Thank you.
Competition Commission of Malaysia
3rd December 2013