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RM1.2b to assist SMEs cope with rising prices
KUALA LUMPUR: Bank Negara will establish two financing facilities of up to RM1.2bil to assist small and medium enterprises (SMEs) cope with the impact of rising costs due to rising prices. Prime Minister Datuk Seri Abdullah Ahmad Badawi announced Thursday that the RM700mil SME Assistance Facility and the SME Modernisation Facility with an allocation of RM500m would commence Aug 1.
He said special measures were being introduced to assist the SMEs weather these hard times as they may face difficulties in managing their financial position.
"The measures also include loan restructuring, provision of advisory services on effective cost management and incentives to invest in energy saving and energy efficient initiatives," he said when launching the SME Annual Report 2007 at the Bank Negara.
The SME Assistance Facility is to assist viable SMEs that are facing financial difficulties to manage temporary cashflow problems due to rising costs. It is intended to assist them to continue their operations and preserve employment.
Under this facility, viable SMEs will be able to obtain financing at 4% per annum from any commercial and Islamic banks, SME Bank, Agro Banks, Bank Rakyat and EXIM Bank with an 80% guarantee coverage by the Credit Guarantee Corporation Malaysia Bhd (CGC).
The maximum amount of financing is RM1.5mil per SME with a maximum tenure of five years. The SME Modernisation Facility would provide financing to SMEs to modernise their operations, or for purchase of energy saving equipment.
Viable SMEs would be able to obtain financing at a rate of 4% per annum from any commercial and Islamic banks, SME Bank, Bank Rakyat and Agro Bank, with an 80% guarantee coverage by CGC. The maximum amount of financing is RM5mil or up to 95% margin of financing, with a tenure of eight years.
Abdullah said that more than ever, it was important for SMEs to increase their drive to become the engines of growth for the country's economy.
"SMEs represented over 99% of total business establishments, account for 56% of total employment, contribute 32% to the gross domestic products and account for 19% of total exports," said Abdullah who also witnessed the handing over of the National SME Development Council (NSDC) secretariat functions to the Small and Medium Industries Development Corporation (SMIDEC).
With expanded functions, SMIDEC will be transformed into the SME central coordinating agency, known as SME Corporation Malaysia (SME Corp).
Bank Negara served as the NSDC secretariat since its establishment on June 1, 2004.
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