Decision on additional funds for SMEs within weeks

by ALIFAH ZAINUDDIN & DASHVEENJIT KAUR/ pic by RAZAK GHAZALI

THE Finance Ministry (MoF) is considering to make more funds available for small and medium enterprises (SMEs) affected by the Covid-19 pandemic.

Entrepreneur Development and Cooperatives (Medac) Minister Datuk Seri Wan Junaidi Tuanku Jaafar said a decision on the supplemental fund will be known within the next two weeks.

“I have discussed with the MoF to inject more funds into Tekun Nasional (National Entrepreneur Group Economic Fund) to assist SMEs and micro entrepreneurs. We will know the outcome of the request in one or two weeks,” he told the Dewan Rakyat yesterday.

Wan Junaidi was responding to Akmal Nasir’s (Pakatan Harapan-Johor Baru) question on plans to reopen or extend applications for the Prihatin Special Grant (GKP) under Tekun Nasional.

The GKP grants affected SMEs a one-off financial aid worth RM3,000. It is one of several measures under the government’s economic stimulus package to help SMEs weather the effects of the Covid-19.

It was reported that many programmes to assist SMEs have run out of money, falling short of reaching businesses most battered by the pandemic. Apart from funds made available under Tekun Nasional, others included Bank Negara Malaysia’s RM5 billion Special Relief Facility (SRF) to ease short-term cashflow problems faced by SMEs.

The Malaysian Reserve reported in May that struggling SMEs had called for more support as desperate requests for emergency funds have been rejected by lenders who say relief funds have completely sapped.

SME Association of Malaysia president Datuk Michael Kang said funds by the central bank, which were made available in March, have reached less than 10,000 businesses — many of which are low-risk and cash-rich firms.

Wan Junaidi said Medac, through its agencies — namely Tekun Nasional, SME Corp Malaysia, SME Bank, Bank Kerjasama Rakyat Malaysia Bhd (Bank Rakyat), UDA Holdings Bhd, Perbadanan Nasional Bhd, National Entrepreneurship Institute, Malaysian Cooperative Institute and the Malaysian Cooperative Commission has implemented initiatives to ensure entrepreneurs are able to survive the impact of Covid-19.

“Among the initiatives implemented are providing financing to entrepreneurs; loan rescheduling; deferment of repayment or loan moratorium; online entrepreneurship training and guidance; and implementation of high impact programmes,” he said.

Wan Junaidi added that the government is also considering ways to reduce the dependency of SMEs on grants, including providing alternatives such as crowdfunding to relieve some burden on the government and on commercial banks.

“We are considering this. The percentage of SMEs that rely on banks is 95%, whereas only 5% are self-funded. We want to create an alternative system, perhaps like crowdfunding or something that doesn’t take a toll on the government,” he said.

Tekun Nasional recently announced the allocation of RM100 million as part of its latest Tekun Business Recovery Scheme under the short-term National Economic Recovery Plan. Some 38 applications worth RM302,000 had been approved within the first week after receiving 894 SME applications amounting to RM8.7 million.

SME Bank’s SRF scheme also offers business financing of up to RM1 million for a period of 51⁄2 years to SMEs. Wan Junaidi said the scheme has seen a total of 940 applications valued at RM503 million received as of last Friday.

Meanwhile, Bank Rakyat’s BR Care has seen 1,112 applications approved amounting to RM84.59 million. BR Care provides additional financing of RM300 million and is expected to benefit 500 cooperatives and 2,000 micro-enterprises, as well as SMEs.

Wan Junaidi said the government is also providing tax rebates of up to RM20,000 per year for three years of assessment to facilitate the establishment of new SMEs, as well as stamp-duty exemption on mergers and procurement-related instruments for transactions completed between July 1, 2020, and July 31, 2021.