RM1.2b aid for SMEs
SOME RM1.2 billion will be made available to small- and medium-sized enterprises (SMEs) from August 1 to help them cope with rising costs, Prime Minister Datuk Seri Abdullah Ahmad Badawi said yesterday.

The special financing scheme will comprise a RM700 million SME Assistance Facility (SAF) and a RM500 million SME Modernisation Facility (SMF).

The SAF is for SMEs facing financial difficulties, restructuring of SME loans, engaging advisory services on cost management and for investing in energy efficiency.

The SMF is specifically to finance modernisation of operations and for purchase of energy-saving equipment.

"These measures are aimed at assisting SMEs confronted with difficulties during this challenging period. It will also encourage them to upgrade and strengthen their ability to increase efficiency and productivity, thus reducing the cost of operations," Abdullah said after launching the 2007 SME Annual Report in Kuala Lumpur yesterday.

The measures have been put together by a task force headed by Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz.

Financing for both facilities can be obtained from any commercial and Islamic banks, SME Bank, Agro Bank, Bank Rakyat and EXIM Bank.

The maximum amount of financing at a four per cent interest rate extended under the SAF is RM1.5 million while the SMF allows a maximum RM5 million worth of financing.

Abdullah, who is also finance minister, announced that the Small and Medium Industries Development Corp (Smidec) will be expanded and transformed into the SME Corporation Malaysia from January 2009.

"It will function as a dedicated SME agency that will continue to drive the SME development agenda," he said.

He also announced the official handover of the National SME Development Council (NSDC) secretariat function from Bank Negara to Smidec. Bank Negara served as the NSDC secretariat since June 2004.

As at end-March 2008, SME financing provided by financial institutions amounted to RM132.4 billion, accounting for 44.3 per cent of total outstanding business financing.

Meanwhile, Zeti said SMEs can come forward for advisory services, restructuring and additional funds which are extended at concessionary rates.

"These facilities are not only for those facing difficulties due to the adverse environment but also to improve their position by upgrading energy efficiency and processes," she said.