Chapter 6 - SME Corporation Malaysia

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CHAPTER 690 National SME Development Council SME ANNUAL REPORT 2009/10Enhancing Access to FinancingSpecial Guarantee SchemesAmong the most effective measures introduced during the period were theguarantee schemes.• SME Assistance Guarantee Scheme (SME AGS – RM2 billion):BNM established the scheme in February 2009 to assist viable SMEs,which were adversely impacted by the global crisis, to continue to haveaccess to financing from the financial institutions and at a reasonable cost.The take-up rate was overwhelming as the allocation was fully utilised byDecember 2009, benefiting 9,298 SMEs in various sectors. Eligible SMEscould obtain financing of up to RM500,000 per company with the supportof 80% guarantee cover provided by Credit Guarantee CorporationMalaysia Berhad (CGC) at no cost.• Working Capital Guarantee Scheme (WCGS – RM7 billion):The Financing Guarantee Scheme was introduced together with theIndustry Restructuring Scheme in March 2009 as part of the secondstimulus package. The schemes were administered through a Governmentownedspecial purpose vehicle, Syarikat Jaminan Pembiayaan PerniagaanBerhad (SJPP), a company managed by Prokhas Sdn Bhd (Prokhas). TheWCGS which was aimed at providing working capital to companies withshareholders equity of below RM20 million provided up to a maximum loanamount of RM10 million and repayment period of up to five years. TheGovernment guaranteed 80% of the financing, while the remaining 20%is by financial institutions. Due to the overwhelming response, theGovernment allocated an additional RM2 billion from the RM5 billion IndustryRestructuring Financing Guarantee Scheme to WCGS to total RM7 billion.The WCGS which was closed for new applications as of October 2009 hasbenefited some 5,300 companies with a total of RM5.9 billion in loansdisbursed as at 1 July 2010. Under the Tenth Malaysia Plan (10MP), theGovernment has increased an additional allocation of RM3 billion to theWCGS, which will be effective as of 1 January 2011.• Industry Restructuring Financing Guarantee Scheme (IRFGS – RM3billion): The IRFGS was to enable SMEs to retool their activity to move upthe value chain and to encourage usage of green technology. Under IRFGS,the Government provides guarantee ranging from 50% to 80% on thefinancing facility granted by the participating financial institution, dependingon the size of the shareholders’ funds of a company. The IRFGS will remainopen until end-2010 or until fully utilised before that. The maximum loanamount for the IRFGS is RM50 million to be repaid within a period of 10years. As at 1 July 2010, 228 companies have benefited with RM945.6million worth of loans approved.Credit Guarantee by CreditGuarantee Corporation (CGC)CGC continued to provide creditguarantees to SMEs despite theweak economic environment. Thiswas basically to assist viable SMEsto sustain or expand their businessesand help spur economic activities inthe country. In 2009, CGC guaranteedmore than 14,000 loans (2008:10,368)to all sectors of the economy valuedat RM3.1 billion, a significantachievement in a tough year.CGC also managed the shariahcompliantBumiputera EntrepreneurProject Fund (Tabung ProjekUsahawan Bumiputera-Islam(TPUB-i)), with a fund allocation ofRM300 million. The TPUB-i, originallymanaged by ERF Sdn. Bhd., providesfinancing to Bumiputera contractorswho have been awarded projects bythe Government or Government-Linked Companies and Agencies.As at end-2009, CGC had approvedloans valued at RM12.6 million to24 Bumiputera contractors.CGC’s guarantees enabled viableSMEs without or with minimalcollateral and no track record to gainaccess to financing from the financialinstitutions. As at end-December2009, CGC had cumulativelyguaranteed more than 402,000 loansvalued at RM45 billion. Currently,it manages 12 guarantee schemesincluding the Green TechnologyFinancing Scheme launched inJanuary 2010.
National SME Development CouncilSME ANNUAL REPORT 2009/10Success Stories of the SME AssistanceGuarantee SchemeFreeform Sdn Bhdclient of Alliance BankStar Forte Sdn Bhdclient of AMBank91CHAPTER 6Enhancing Access to FinancingFreeform Sdn. Bhd. was founded in 1998 by Mr. Yap JeePun. The company began publishing magazines as itscore business and gradually over the years ventured intoadvertising, media and event consultancy. Its magazineslike KLue and Junk which are now available at the variousbookstores and newsstands are published everyfortnightly. During the recent global financial crisis, thecompany needed additional cash flow to sustain itsoperations. However the company was unable to providecollateral to secure the credit facilities. Mr. Yapapproached Alliance Bank for financial advice andassistance. The bank manager evaluated his request andproposed the SME Assistance Guarantee Scheme (SMEAGS) as a financial solution for his company. Thereafterthe company applied for the facility and was approved.Mr. Yap is appreciative of the initiative by the Governmentespecially during difficult periods of the global financialcrisis. Mr. Yap commended, “SME AGS is a good schemefor SME customers as it enables them to sustain and growthe business”.Star Forte Sdn Bhd (SFSB) was incorporated in 2006 andprimarily involved in the supply of corporate gifts andsouvenirs. Its customers are from various sectors and oneof its major clients is Malaysia’s famous low cost airlinecompany, Air Asia. In line with expansion plan as well asexpected increase in working capital requirement, SFSBhas approached AmBank for the SME AssistanceGuarantee Scheme (SME AGS). The management ofSFSB was delighted by the fast turnaround time offered byboth AmBank and Credit Guarantee Corporation Berhad(CGC). The management of SFSB also realised that theBase Lending Rate was at record low of 5.55% andtherefore an opportune time to get additional workingcapital funding, particularly during the economic downturnthen. As a result of the funding from SME AGS, SFSB’scash flow position has improved significantly. Overall, thebusiness operation of the company has improved, as itwas able to negotiate better terms with suppliers whileexpanding its clientele base.
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Chapter 6 - SME Corporation Malaysia

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