MIDF GIVES MORE LOANS TO THE SERVICES SECTOR, PROMOTES GREATER AUTOMATION IN MANUFACTURING PROCESSES AND ASSISTS MALAYSIAN EXPORTERS’ BRANDING ACTIVITIES

Kuching, Sarawak, 19 May 2009 – Malaysian Industrial Development Finance Berhad (MIDF), an agency under the Ministry of International Trade and Industry (MITI), has been mandated by the Malaysian Industrial Development Authority (MIDA) to implement the Soft Loan Scheme for Services Capacity Development (SLSCD) to provide soft loans to the services sector.

“Simposium Usahawan Bumiputera MIDF 2009 was organised with the intention of assisting Bumiputera entrepreneurs to overcome difficulties arising from the current economic climate. The symposium is one of MIDF’s efforts to support the Government in maintaining the economic well-being of the Malaysian small and medium enterprises (SMEs).

MIDA had set up the RM100 million Services Sector Capacity Development Fund for financial assistance to be extended to the services sector through soft loans and grants.

Soft loans totalling RM50 million are being provided by MIDF under the SLSCD for the upgrading and modernising of borrowers’ operations to diversify into higher value-added activities and to improve productivity and efficiency of service delivery. Grants totalling RM50 million are being provided by MIDA for training and outreach programmes, accreditation, and mergers and acquisitions to be carried out by grant recipients.

The SLSCD addresses the need for financial assistance by local services providers to build up its capacity in order to withstand competition due to international competitiveness. The Government had recently announced new measures for the development of 27 services sub-sectors.

As at 7 May 2009, MIDF has received a total of 15 applications for soft loan financing totalling RM4.1 million under the SLSCD and 3 applications had been approved for soft loans totalling RM785,000.00

“MIDF is expediting the release of loan disbursements to borrowers and is working towards disbursing the allocated RM50 million in soft loans by September 2009 to companies and enterprises in the services sector to stimulate the economy,” MIDF’s Head of Development Finance, Encik Nik Izani Nik Muhammad said.

All services sub-sectors, except for the financial, insurance, utilities and construction sub-sectors are eligible to apply for the soft loans which charge interest rates of 2 per cent for small and medium enterprises (“SMEs”) and 3 per cent for non-SMEs. The maximum loan amount is RM500,000.00. The margin of financing is up to 90 per cent with repayment period of up to 7 years including a grace period of up to 2 years. Purchases of equipment, hardware and software as well as related development costs are eligible to be financed.

Encik Nik Izani stated that MIDF was also encouraging more eligible companies in the manufacturing sector to apply for soft loans under the Soft Loan Scheme for Automation and Modernisation (“SLSAM”). This soft loan scheme promotes the modernisation and automation of manufacturing processes to minimise dependence on labour-intensive activities and foreign labour in addition to other objectives.

The SLSAM is administered by MITI while MIDF has been mandated to implement it.

Companies in the manufacturing sub-sectors are eligible to apply for soft loans under the SLSAM which charges an interest rate of 4 per cent. The maximum loan amount is RM5 million. The margin of financing is up to 85% for machinery and equipment. The repayment period is up to 7 years including a grace period of up to one year.

Purchases of new or reconditioned automation-related machinery and equipment as well as software and computer peripherals to develop the automation system, and costs related to the installation, commissioning and related training and maintenance of machinery and equipment for investment in automation are eligible to be financed.

Encik Nik Izani added that as at 14 May 2009, soft loans totalling RM122.6 million had been approved to companies in the manufacturing sector under the SLSAM.

“To enhance the competitiveness of Malaysian-made or sourced products and services in international markets, MIDF is providing soft loans to companies and enterprises under the Soft Loan Scheme for International Branding (SLSIB),” Encik Nik Izani said. The activities eligible for financing have to be held overseas and include branding and re-branding exercises, establishing distribution channels, participating in international trade fairs, acquiring brands and distribution networks to promote Malaysian brands, and advertisements and promotions.

The SLSIB is administered by Malaysian External Trade Development Corporation (MATRADE), a MITI agency while MIDF was mandated to implement it.

Companies and enterprises in the manufacturing and services sectors are eligible to apply for soft loans under the SLSIB which charges an interest rate of 4 per cent. The maximum loan amount is RM5 million. The margin of financing is up to 100 per cent. The repayment period is up to 4 years including a grace period of up to one year.

“In the current global economic slowdown brought on by the worldwide financial crisis, manufacturers and service providers can enhance or consolidate their competitiveness by using soft loan disbursements, which lower the costs of doing business, to implement programmes to increase efficiency and productivity within their companies and enterprises.”

Entrepreneurs based in Sarawak who are interested to apply for soft loans under the SLSCD, SLSAM and SLSIB should contact the MIDF Sarawak Regional Office at Rooms 401- 402, 4th Floor, Bangunan Bank Negara, Jalan Satok, 93400 Kuching, Sarawak or at telephone 082-254533 / 254203 and facsimile 082-246343.