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SOHO
by Rahim & Co Research Sdn Bhd

In the western countries especially in the United States and major European countries, excellent Information Technology (IT) facilities and convenient telecommunication services has expedited the growth and popularity of Small Office, Home Office concept, also known as SOHO . Unfortunately, if misunderstood, this acronym usually invites undesirable impression, often relates to people who work and operate businesses from untraditional offices and sometimes employing unconventional workers. In today's modern and borderless world, SOHO 's denizens are becoming more educated, well equipped with IT knowledge, confident and entrepreneurial-minded.

Small entrepreneurs, part-time business owners and IT start-ups have been the predominant catalyst for SOHO . The rationale of working from home is to save commuting time and expenses, while reducing the cost of starting the business including the hassle of finding suitable business premises, paying some advance rental, getting the right workers to man the office etc. Therefore, SOHO may be the best alternative for this group of people.

Down south in Singapore , in encouraging the entrepreneurial spirit, the government has taken some measures in facilitating businesses that operate from homes. The government's Technopreneur Home Office Scheme (THO) enables start-ups in technology-based and knowledge-intensive businesses to use their homes as home offices. Once the application is approved by the Economic and Development Board (EDB), the applicant can use his home as home office for a year. The approval can be extended on a yearly basis provided there are no complaints received for the use. However, the use may be terminated if the businesses are found to have adverse impact on the neighbourhood and causing pollution in terms of noise, dust, odour or smoke. This is to ensure that the good ambience and proper use of the amenities provided for the residents are not compromised. In addition, the business activities must not resulted in an increase in human or vehicular traffic to the surrounding area.

In Malaysia , unofficial home office is not something unfamiliar as there have always been small businesses operated from homes providing variety of business services, food and beverage, consultancy, tuition, tailoring and many others. Realising the potential of small businesses to boost the economy by indirectly creating new jobs and employment opportunities, the government is putting an effort to encourage the set-up of small business. For example, the Ministry of Entrepreneur Development and Cooperatives provides loans up to RM10,000 under Yayasan Tekun Nasional for small-medium entrepreneurs. SOHO entrepreneurs are encouraged to take advantage of the fund up-grade their businesses. However, there are a few businesses that are not qualified to apply for this fund which include agriculture, fishery, insurance, contractor and direct selling businesses.

Private as well as government agencies such as Johor Corporation are also playing an active role in promoting the concept of SOHO to promising entrepreneurs, mainly capitalising on its low-overhead and low-risk advantages. Aiming to improve the socio-economic status of the participants, JCorp is understood to organise a series of seminars on SOHO , mainly targeting housewives, single mothers and unemployed graduates. The purpose of the seminars is to educate, create awareness and highlight the advantages of operating a business form home.

Despite operating from home the home business would have good potential for future expansion with the opportunities of marketing the products globally should the business owners are well equipped with modern technology, using Internet facilities, faxes, teleconferencing and couriers, to mention the few. The prospects are better in the sense that the products can be marketed to a broader target market.

In terms of enhancing the telecommunication services, following the implementation of the National Broadband Plan, in long term, together with active participation of the industry players in leveraging the government initiatives, the government is hoping to achieve a 10% penetration rate for broadband usage in the country by 2008. The government also hopes to see 1.3 million broadband subscribers in 2006, representing a 5% broadband penetration rate from the current 2% of the total population. The country's overall use of telephone facilities ( refers to the sum of Direct Exchange Line ( DEL ) and cellular subscriptions ) as tabulated below indicates that the penetration rate is yet to reach satisfactory level although the growth looks promising.

Year

Population (Million)

Total number of telephone - all types ('000)

Penetration rate

1998

22.18

6,520

29.4

1999

22.71

7,140

31.44

2000

23.49

9,750

41.5

2001

24.01

12,095

50.37

2002

24.53

13,723

56.12

2003

25.32

15,696

61.99

2004 (1Q)

25.45

16,317

64.11

2004 (2Q)

25.58

16,945

66.24

Source: Malaysia Communication and Multimedia Corporation (2004)

The property industry is not all indifferent in reacting to the changing need and preference of the end users. A handful of developers are already committed in making the SOHO concept a reality. IGB Corporation Berhad for example, is presently launching the Northpoint Mid Valley City located within the greater Mid Valley City. The 22-storey building, anticipated to be completed by end of 2005, will comprise a total of 432 units of a mix office suites and residences. The office suites are offered for sale at price tags starts from RM557,000 (for units measuring 1,410 square feet). While the main target market would mainly comprise business owners or investors who are looking for office space at an affordable price, what makes the product different is that the office will be sold on a modular basis.

Berjaya Central Park, a 46-storey commercial building located at the junction of Jalan Sultan Ismail and Jalan Ampang, developed by the Berjaya Group Bhd will be featuring a mixed of retail entertainment and service apartment units. Capitalising on the strategic location near the Golden Triangle of Kuala Lumpur, with full range excellent facilities and amenities, the proposed serviced apartment would also be suitable for business owners who intend to acquire a trendy yet modern business premises that also accommodates a private residence.

While SOHO in the city is likely to brighten up the night life while reducing the vehicular traffic in the immediate vicinity, Kuala Lumpur is yet to see a proper designated building solely for the purpose of SOHO as long as the vacancy space is yet to be comfortably taken up.

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