Article
Understanding the Financial Facilities to help you ride this pandemic wave
30 Mar 2021
Min Read

Understanding the significant impact of Covid-19 on businesses and the tremendous losses suffered as a result of the Movement Control Order (“MCO”) and Conditional Movement Control Order (“CMCO”), the Malaysian Government announced various initiatives to assist individuals and businesses over the past few months under the PRIHATIN Economic Stimulus Package. The Government identified a 6-step plan to save the economy, under the broad headings of “Resolve”, “Resilience”, “Restart”, “Recovery”, “Revitalize” and “Reform”.

 

The following section provides some highlights on the various financial assistances programmes available specifically for businesses 

FINANCIAL INCENTIVES 

PENJANA Small-to-Medium Sized Enterprise (“SME”) Financing

RM2 billion has been allocated to the banking sector to provide SMEs adversely impacted by Covid-19 with further financial assistance to sustain business operations at a concession rate of 3.5% per annum. This financing initiative provides a maximum loan amount of RM500,000 per SME.

PENJANA Microfinancing

A total of RM400 million has been allocated towards the PENJANA Microfinancing initiative to offer further funding support will be provided to SMEs at a subsidised interest rate of 3.5% per annum aggregated approved financing capped at RM50,000 per enterprise, and RM50 million specifically earmarked for women entrepreneurs.

This microfinancing initiative is meant to spur the creation of more micro-enterprises in the country, which is crucial towards the promotion of entrepreneurship. 

Bumiputera Relief Financing

A total of RM500 million was made available for Bumiputera businesses from June 2020 onwards. RM200 million will be dedicated for Bumiputera-owned Shariah-compliant businesses for the funding of working capital, operational expenditure, system automation, equipment, and expenditure to implement social distancing practices. Financing of RM100,000 up to RM1 million for up to 5 years at 3.5% per annum will also be granted to such businesses. The remaining RM300 million will be allocated for utilisation only as loans for working capital purpose at a maximum of RM1 million at an interest rate of 3.5% per annum.

This relief financing scheme is expected to ease issues with cash flow which many Bumiputera entrepreneurs have been confronted with as a result of the pandemic and is targeted at boosting their business operations.

SME Go-Scheme for Liquidity Support

A total of RM1.6 billion has been allocated to the Small Medium Enterprise Development Bank Malaysia Berhad (“SME Bank”) to provide financing support to contractors and vendors who were awarded with small projects by the Government under the Economic Stimulus Package and PRIHATIN. This financing support is effective from July 2020 and does not require any deposit or collateral. SME Bank will remit funds directly to contractors and vendors based on the presentation of invoices or claims.

This scheme is implemented with a view to provide liquidity for SME contractors to start delivering on Government projects and is expected to ease issues with cash flow which SMEs and small scale contractors with limited financial resources face in performing such projects.

OTHER INITIATIVES

Accelerated payment terms by Government linked companies (“GLCs”) and large corporates

The Government is encouraging GLCs and large corporations to reduce their vendors’ credit payment period to provide relief to the cash flows of SMEs. Companies that have agreed to participate include Axiata Group Berhad, Telekom Malaysia Berhad, Tenaga Nasional Berhad and Petroliam Nasional Berhad.

Many of the incentives announced are intended to provide relief to businesses, to provide financial support for businesses impacted by the Covid-19 pandemic. In pursuing survival in the post Covid-19 world, businesses are encouraged to undertake technological adoption and shift towards e-commerce as a primary revenue stream and in this regard, the incentives under PENJANA would most certainly provide a much-needed push in this direction. It is hoped that these incentives would kick-start such a transition in order to preserve businesses and facilitate safe trade and economic activities whilst the world continues the ongoing battle against Covid-19.

Source:https://www.smecorp.gov.my/index.php/en/initiatives/2020-03-31-00-53-27/relief-measures-for-smes-affected-by-covid-19
 

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