SOFT LOAN SCHEME FOR AUTOMOTIVE DEVELOPMENT (SLSAD)

The SLSAD was launched in February 2007 to:-

i) encourage automotive parts and components manufacturers to rationalise their operations; and,
ii) assists companies in:-

tooling acquisition, development and production;
productivity improvement; and,
enhancing export performance.

The fund for this Scheme is channelled by the Government of Malaysia via the Ministry of International Trade And Industry (MITI) to MIDF for the implementation of the Scheme.

Eligibility Criteria and Main Features

1. Eligibility:

Companies incorporated under the Companies Act 1965:

at least 60% equity held by Malaysians;
possesses a valid business licence;
in operation for at least 2 years; and,
registered members of Malaysian Automotive Component Parts Manufacturers Association (MACPMA), PROTON Components and Parts Manufacturers’ Association or PERODUA Vendors Club.

2. Sectors:

Automotive parts and components manufacturing.

3. Financing Amount:

i) Rationalisation of Components and Parts Manufacturers

Minimum: RM500,000.
Maximum: RM5 million per application.

ii) Tooling Acquisition, Development & Production

Minimum: RM500,000.
Maximum: RM10 million per application.

iii) Productivity Improvement

Minimum: RM50,000.
Maximum: RM500,000 per application.

iv) Export Enhancement Programme

Minimum: RM50,000.
Maximum: RM250,000 per application.

4. Items Eligible For Financing:

i) Rationalisation of Components and Parts Manufacturers

Financing for:

Due diligence exercise.
Purchase of existing machinery and equipment.
Related expenses to undertake rationalisation exercises (mergers & acquisitions – M & As) such as registration fees and services undertaken by investment bankers.

ii) Tooling Acquisition, Development & Production

Financing for:

Acquisition of moulds, dies, jigs and fixtures.
Development of prototypes and system design.
Product testing and registration.
Acquisition of new or reconditioned machinery and equipment.*
Initial patent and industrial design registration / patent and industrial design research.
Working capital.

* The age of reconditioned machinery/equipment shall not be more than 5 years old.

Financing for:

Existing machinery/equipment, moulds, dies, jigs and fixtures and factory mortgages currently financed by other lending institutions.**

**i. Companies which are appointed vendors of PROTON and/or PERODUA and which maintain performing accounts with financial institutions are eligible.
ii. Letter of Support from PROTON and/or PERODUA.
iii. For fixed assets acquired in producing components for existing PROTON and/or PERODUA models which were launched not more than 3 years before the date of the financing application (“the relevant models”).

iii) Productivity Improvement

Financing for:

Training expenses for TS 16949 and ISO 14001 certification.
Licensing and technical fees for engineering process improvement.
Machinery/equipment testing and calibration.
Manufacturing process layout.

iv) Export Enhancement Programme

Financing for:

Participation in trade exhibitions and missions approved by MATRADE.
Expenses for overseas sample testing for international standards conformance.
Market surveys and feasibility studies.

5. Percentage Financing:

Up to 70% for mergers and acquisitions
Up to 90% for other eligible items.
Up to 100% for existing loan principal amounts with other financial institutions (existing machinery / equipment / moulds / dies / jigs / fixtures).
Up to 90% for factory mortgages.
Working Capital Financing - Up to 100% for Purchase Revolving Credit and up to 90% for Sales Revolving Credit.

6. Repayment:

3 to 7 years including grace period of up to 2 years (except for working capital financing).
Financing of existing machinery / equipment / moulds / dies / jigs / fixtures - The tenure shall not exceed the commercial production period for the relevant models with a maximum tenure of 5 years with no grace period.
Financing of factory mortgages - The tenure shall not exceed 12 years including grace period of up to 2 years.
Working Capital Financing (Purchase Revolving Credit & Sales Revolving Credit) - Up to 150 days for each drawdown including an option to rollover for a period not exceeding 60 days for eligible borrowers.

7. Interest / Profit Rate:

4% per annum on yearly rest (SMEs).
5% per annum on yearly rest. (Non-SMEs).