Different Models of Incubation in Asia

1
Different Models of Incubation in Asia
Thailand experience
22nd May 2007 International Conference on
Business Incubation Vellore Institute of
Technology

• By Mr. Wiwat Chutiwanichayakul
• Senior Consultant
• Kenan Institute Asia

2
Thailand Incubation

• Topics
• Thai SMEs and Basic Problems
• Support and Mechanism for SMEs
• New Entrepreneurs Creation Program (NEC)
• Business Incubator in Thailand
• Business Incubation Mechanism
• Promoter and supporter
• Incubators and Characteristics

3
Thailand Incubation

• Topics (continue)
• Case of Incubation in Thailand (DIP KIASIA)
• Expectation from incubation
• Success of Incubation
• Main Barriers to the Development
• Sources of information

4
Thai SMEs
Business Type Small Small Medium Medium
Business Type Employment (persons) Fixed Assets (Million Baht) Employment (persons) Fixed Assets (Million Baht)
Manufacturer lt 50 lt 50 51-200 50-200
Services lt 50 lt 50 51-200 50-200
Wholesales lt 25 lt 50 26-50 50-100
Retails lt 15 lt 30 16-30 30-60
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Basic Problems of Thai SMEs
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Support and Service Mechanism for SMEs

• New Entrepreneurs Creation (NEC)
• Invigorating Thai business (ITB)
• Manufacturing Development to improve
  Competitiveness Program ( MDICP)
• Industrial Restructuring on 13 industries
• Consultancy Fund(CF)
• Training Fund (TF)
• Business Opportunity Center (BOC)

7
New Entrepreneurs Creation (NEC)

• First developed in 1999 under the industrial
  restructuring budget
• No budget from 2000-2001
• Re-active in 2002 under the economic stimulating
  budget
• Cabinet approved National New Entrepreneurs
  Creation in May 2003

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New Entrepreneurs Creation (NEC)

• Target to develop 50,000 new entrepreneurs in
  Thailand by 2004
• As of July 2003, the DIP achieved 4,141 persons.

9
NEC Activities

• Short course training / Long course training
• Business incubation
• Business advisory service
• Supportive activities e.g. exhibition,
  franchising, buyer meet seller event, etc.
• Strategic partnership with all concerned
  organization e.g. educational institute,
  financial institute, research institute, etc.

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Result of New Entrepreneurs Creation 1999-2003
Results of New Entrepreneurs Creation, by the
DIP, from 1999
-


Persons


8
,
000


















As of July 2003

7,499 persons


7
,
000




6
,
000



4,141 persons






5
,
000






Investment
4,162
Million Baht

4
,
000

Investors 1,079 persons



Employments 7,184 persons





3
,
000




2
,
000




1
079
,
persons ( 14.38)


1
,
000




46 persons
(1.11)



1999
2002
2003
2000-2001
NEC

NEC
NEC

Industrial Restructuring budget
No Budget
Economic Stimulating budget of 174.5


Regular budget of 123.2 Million




Of 7.4 Million Baht
Million Baht
Baht


Regular budget of 7.4 Million Baht

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SMEs in Thailand
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Business Incubator in Thailand

• Initiated by the government
• Funding support by EU
• Established the first incubation center in 1999
  by DIP ISMED in southern Thailand
• Active incubators in 2006 39

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Business Incubation Mechanism
Policy
Stakeholder group

• Department of Industrial Promotion
• Office of SMEs Promotion
• Institute for SMEs Development
• National Science and Technology Development
  Agency
• Ministry of Education

INDIVIDUAL LEVEL
Entrepreneurial Policies
Create new entrepreneurs and new businesses

• Office of SMEs Promotion
• Department of Industrial Promotion
• Department of Export Promotion
• Institute for SMEs Development
• Financial Institutes
• National Science and Technology Development
  Agency

FIRM LEVEL
SME Policies
Increase the success rate of start up businesses

• Office of National Economic and Social
  Development
• Ministry of Industry
• Ministry of Commerce
• Board of Investment

MACRO LEVEL
Industrial Policies
Stimulate national economic growth
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Objectives of Business Incubator

• To reduce failure rate in doing business
• To create jobs
• To develop local economy
• To substitute import
• To produce commercial innovation
• To transfer technology

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Incubators in Thailand

• Most of the incubators are under Government arms
• From 2003, according to new Gov. projects New
  Entrepreneurs Creation (NEC) number of incubators
  may increase
• Universities and Independent organizations

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Business Incubator in Thailand

• Regional Industrial Promotion Centers (11)
• National Science and Technology Development
  Agency (2)
• University Business Incubator (25)
• Suratthani Vocational College (1)

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Promoter and supporter

• Office of Small and Medium Enterprises Promotion
  (OSMEP)
• The Commission on Higher Education
• Kenan Institute Asia (KIASIA)

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OSMEP PILOT PROJECTS IN 2005
IN BANGKOK 1. CHULALONGKORN UNIVERSITY Focus
sector Management of food, life style, leather
and fashion 2. King Mongkuts University of
Technology Thonburi (???,) Focus sector RD
of Tech, food, bio-tech and robot 3. KASETSART
UNIVERSITY Focus sector RD of Tech, food 4.
SOFTWARE PARK BUSINESS INCUBATOR Focus
sector Software, IT
Source OSMEP
19

• (2)

OSMEP

• (1)

• (8)

• (1)

Source OSMEP
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University Business Incubator (UBI)
Chiengrai (UBI)
Chiengmai (DIP1), 2 UBIs
Pitsanulok (UBI)
Khonkaen (DIP5), TBI, UBI
Nakornrajasima (UBI)
Surin (UBI)
Cholburi (DIP9), UBI
Bangkok (NSTDA TSP-TBI, DIP, Software Park-BI,
12 UBIs)
Nakornsrithammarat (UBI)
Phuket (UBI)
Songkhla (DIP11), TBI, UBI
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Technology Licensing Office (TLO) University
Business Incubator (UBI)
Royalty fees
University RD
License users Industry Commercial enterprises
TLO
Technology Know-how Creativity

UBI
New enterprises Start-up businesses
Researchers students
National competitiveness
Source UBICO Dr. Montri Chulavatnatol
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Multi-sector business incubator (DIP KIASIA)
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Models of Incubator in Thailand

• Classified by space utilization
• In-wall Incubation
• Out-wall Incubation
• Mix-used Incubator

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Types of Business Incubator

• Categorize according to objectives of an
  incubator (2 groups)

Multi-purpose incubators admitting any type of business satisfying commercial criteria Specialised incubators focussing on particular activities (e.g. technology, sectors)
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Business Incubator in Thailand
Type of Incubator Organization Begin
Multi-purpose Business Incubator Software Business Incubator Technology Business Incubator Technology Business Incubator University Business Incubator Multi-purpose Business Incubator Department of Industrial Promotion Software Park Thailand (NSTDA) Thailand Science Park (NSTDA) Regional Science Park (NSTDA) The Commission on Higher Education Suratthani Vocational College 2002 2002 2005 2005 2005 2006
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Business Incubator in Thailand
Kenan Institute Asia
Software Park
Srinakharinwirot University
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Case of Incubation in Thailand (DIP KIASIA)
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Project Partners

• Department of Industrial Promotion (DIP)
• Kenan Institute Asia (KIASIA)

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Multi-sector business incubator (DIP KIASIA)
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Target incubatee

• Unemployed persons
• Newly graduated students
• Certified New Entrepreneur Creation (NEC) program
  trainees
• No. of selected incubatee 23
• 10 in-wall
• 13 out-wall

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Multi-sector business incubator (DIP KIASIA)
32
Multi-sector business

• Furniture
• Jewelry
• Leather
• textiles

Incubation center Bureau of Industrial sectors
Development, DIP
33
BI Organization Chart
34
business incubator Operation

• Facilities Services
• Program Activities
• Operations Plan

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Incubator Facilities Services

• A full-service incubator offer
• Incubator space offices or workshops, available
  on a flexible, affordable temporary basis
  (easy-in easy-out)
• Common services incl. secretarial support,
  telephone answering, common reception, mailing
  facilities, access to computers and other office
  equipment, meeting rooms and canteen facilities
• Business counselling, namely hands-on
  assistance with regard to business planning,
  training in management skills, access to
  accounting, legal marketing financial expertise

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Incubator Facilities Services

• Access to finance specialist advice some
  operate own seed venture capital funds access
  to specialist advice will be provided if an
  incubator does not have the skills know-how
  itself
• Networking services, encouraging business
  relations inside the incubators among
  neighbouring tenants creating outside linkages
• After-care outreach services continuing
  assistance to tenants after they graduate, also
  offer advisory services to small business
  generally in the region

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Incubator Facilities Services (DIP KIASIA)
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Diagram of Program Activities

• Start

Project marketing/PR
Application
Screening of applicants/intensive interview
Decline or Pre-incubation
Incubation
Consultation
Networking, VC
Follow up
Performance Report
Services Improvement
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Government expectation from Incubation

• No. of selected incubatee
• Results
• Set up new cos.
• No. of new employment staff
• Capital Investment
• Income generating

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Success of Incubation (DIP KIASIA)

• No. of selected incubatee 23
• Results
• Set up new cos. 17
• No. of new employment staff 140
• Capital Investment 40 million baht
  (US 1 million)
• Income generating 50 million baht
• (US 1.25 million)

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Main Barriers to the Development

• No direct budget from Government for business
  incubation
• Culture and perception of Thai Entrepreneurs
• Measurement of achievement

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Sources of Information

• Department of Industry Promotion (DIP), Ministry
  of Industry
• The Office of Small and Medium Enterprises
  Promotion (OSMEP)
• The Commission on Higher Education, Ministry of
  Education
• Institution for Small and Medium Enterprises
  Development (ISMED)
• National Science and Technology Development
  Agency (NSTDA)
• Software Park Thailand

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• THANK YOU