Bank Muamalat allocates RM10m to fund SMEs

The grants are based on an 80:20 principle, where 80% of the project value will be funded and SMEs contribute the balance 20%


BANK Muamalat Malaysia Bhd has exchanged a memorandum of understanding (MoU) with SIRIM Bhd to financially assist small and medium enterprises (SMEs) under the SIRIM-Fraunhofer programme.

The bank has allocated RM10 million to fund SMEs and expects to receive about 200 applications for the first year, its head of business banking Nor Hamidah Abu Bakar said.

The grants are based on an 80:20 principle for the first cycle, where 80% of the project value will be in the form of grants, while the remaining 20% is the commitment from the participating SME.

“The maximum amount of the eligible grant is up to RM200,000 per SME — particularly those in the manufacturing sector — of which funds will be channelled in the form of machineries and equipment.

“SMEs will also need to contribute up to RM50,000 for the project. We will then review the applications based on the requirement by SIRIM and provide the financing facility,” Nor Hamidah said at the MoU exchange ceremony yesterday.

Many SMEs are still struggling to evolve and unaware of their role in driving economic growth amid digital disruption, she noted.

Through the partnership, the bank will be able to fulfil SMEs’ financial needs and provide assistance in improving their productivity by using technology to stay competitive amid the Industrial Revolution 4.0.

“SMEs are now on a solid footing to further progress and this year is expected to provide SMEs with the best opportunities to improve their performance.

“Bank Muamalat will continue looking into bigger prospects and business opportunities with SIRIM, particularly in areas of technology and innovations,” Nor Hamidah said.

The SIRIM-Fraunhofer programme was implemented in 2016 to increase the productivity of SMEs in the manufacturing sector through technology penetration and upgrading.

Since the inception of the programme, 681 companies have undergone the technology audit programme conducted by qualified auditors comprising SIRIM researchers and engineers.

It provides an avenue for companies to assess their technology management capabilities and understand their individual strengths and weaknesses for potential improvements.

SIRIM, previously known as the Standard and Industrial Research Institute of Malaysia, is an industrial research and technology organisation wholly owned by the government through the Ministry of International Trade and Industry.

With the MoU exchange, the two parties will further explore ways to assist SMEs in reaping the opportunities available to improve their productivity, SIRIM industrial research VP Dr Mohamad Jamil Sulaiman said.

“This includes services in the areas of mechanisation, automation, smart manufacturing, medical devices and energy management.

“The funding structure by Bank Muamalat in the form of an 80:20 matching grant is attractive, as SMEs will only need to contribute 20% from the total project cost,” he said.

Certain SMEs today, especially those that fall into the small category, have difficulties in finding or securing funding to upgrade their operations, Mohamad Jamil added.

Hence, this limits the SMEs’ output and prevents them from reaping the full benefits of applying technology in their business.

According to the Department of Statistics Malaysia, 98.5% of business establishments in Malaysia are SMEs, which in turn accounted for 38.3% of the country’s GDP in 2018.

The manufacturing and services sectors were the main drivers of SMEs’ contribution to the economy, at 34.4% and 42.2% respectively. SMEs’ exports of goods and services stood at RM171.9 billion in 2018, representing 17.3% of Malaysia’s overall exports of RM994.9 billion.

SMEs also provided 66% of the country’s employment in 2017.