THE BENEFITS OF SME GRANTS FOR BUSINESSES

In his welcome message, Herbert Koh, Vice President of MIIP said that there is an allocation of RM400,000 available to SMEs to ramp up their business and drive productivity, and that SMEs should capitalise on this opportunity. He also introduced the speaker for the day, Czarif Chai Abdullah, Senior Director, Business Advisory & Support Division, SME Corporation Malaysia.

Czarif, holds a Master of Business Administration (MBA) from UPM Malaysia specialising in corporate governance. He also has a Graduateship with the Malaysian Institute of Chartered Secretaries & Administrators (MAICSA). Czarif is a qualified Mechanical Engineer from UPM and has been with SME Corp since 2006 where he is involved in diverse financial and technological support development programmes for Malaysian SMEs. He is also the winner of Chairman’s Award which has led to his admission at the prestigious Stanford Business School to complete the Leading Change and Organisational Renewal Program (LCOR). He was also awarded the Best Business Counsellor and Best Business Counsellor Trainer by Japan International Cooperation Agency (JICA), and was appointed as Head Business Counsellor providing advisory to help nurture competitive, innovative and resilient SMEs in Malaysia.

BAP 3.0

In elaborating about BAP 3.0, Czarif explains that BAP 3.0 is a 5-year plan that is in line with the 12th Malaysia Plan 2021 –2025. BAP 1.0 commenced in 2011 until 2015, followed by BAP 2.0 from 2016 – 2020. Formerly known SMIDEC, SME Corp is wellknown as a government engine that provides financial grants to SMEs.

Czarif explains that SME Corp is the Central Coordinating Agency that manages the implementation of SME development programmes across 17 ministries and more than 70 agencies. SME Corp reports to the National SME Development Council (NSDC) chaired by the Prime Minister.

SME CORP’S MANDATE

SME Corp is driven by its vision to be the premier organisation for the development of progressive SMEs to enhance wealth creation and social well-being of the nation. Meanwhile, the agency’s mission is to promote the development of competitive, innovative and resilient SMEs through effective coordination and provision of business support.

“SMEs are very important as they employ 7.3 million people in the country, thus putting food on the table for millions of families,” stresses Czarif.

Headquartered in Kuala Lumpur, SME Corp has 12 state offices across Malaysia to provide advisory and outreach, support implementation of SME programmes and to monitor and coordinate SME development.

“Representing 98.5% of business establishments in Malaysia, SMEs are the backbone of the economy,” said Czarif.

He adds that there are 907,065 registered SMEs in Malaysia, of which 76.5% are microenterprises, with 21.2% smallsized enterprises and 2.3% medium-sized enterprises, while 20.6% are women-owned businesses. Close to 35% of SMEs are based in the Klang Valley.

“In 2021, there are a total of 228 entrepreneurship and SME development programmes being implemented with total allocation of RM17.21 billion. BAP is one of the 228 programmes,” highlights Czarif.

Score

“For all of SME Corp’s programmes, we use the SME Competitiveness Rating for Enhancement (SCORE) with customised parameters that vary across sectors, to measure the current condition of the company before providing assistance. SCORE will once again be conducted after assistance is provided to measure whether or not the assistance provided is beneficial,” he shares.

SCORE is a diagnostic tool to rate and enhance competitiveness of SMEs based on their performance and capabilities. The 7 parameters assessed include business performance, financial capability, management capability, production capability, technical capability, quality systems and innovation.

The SCORE ratings are kept confidential and not shared with any other parties except to the particular company that is being assessed.

ASSISTANCE OFFERED UNDER BAP 3.0

Under this programme, financial assistance is available in two forms, namely matching grants of up to a maximum of RM400,000, and soft loans of up to RM1million.

Under the matching grant, 50% of total approved cost (amount of financing) will be determined by SME Corp. The matching is grant is available on a reimbursement basis whereby the SME would need to fork out RM800,000, after which, if the SME is eligible, SME Corp will match that amount with an RM400,000 matching grant. The eligibility of financing for a single business entity is up to a maximum of RM400,000, with a tenure of up to 6 months only. This grant is open to projects implemented 180 days or 6 months before the date of online submission. Fifty percent of the total approved cost is allowable to be disbursed to suppliers. Processing fees for this grant is RM500 for SMEs and RM300 for micro-SMEs.

As for soft loans, the financing limit is from RM50,000 to a maximum of RM1million with a profit rate of 4.0%. Under this scheme, the margin of financing for fixed assets and working capital is 90%. The financing tenure is up to 10 years inclusive of a grace period of up to 24 months for fixed assets; while the tenure for working capital is 7 years inclusive of a grace period of up to 12 months.

Qualifying Conditions

SMEs are required to undergo an SME status certification, and fulfil the SME definition. Annual sales turnover has to exceed RM300,000 per year. The SME has to have a minimum of 60% local equity with a valid business premises license from local authorities. Also, the SME has to be willing to undertake the SCORE/MCORE assessment.

Priority will be given to SMEs that are paying taxes, have a minimum paid up capital of RM30,000, and cash at bank of at least 20% of the project value. Also, the SME has to have a ratio of local workers against foreign workers of at least 70:30. Projects with high value added / contribution to increased productivity are also prioritised.

The scope of the matching grant includes renovation for certification and quality management systems such as HACCP, HALAL and GMP; packaging and product packaging; branding development and promotion; productivity and automation; and, online applications, mobile eCommerce, ePayment and ICT applications.

The application for BAP 3.0 is open from 1 – 30 September 2022. Applicants must have the approved SME status before application and undertake SCORE. Project planning can start immediately and preparation of relevant documents is encouraged to be done well ahead of submission.

Responding to a question on whether or not grants will be provided for ISO implementation, Czarif said ISO certification that require renovation is applicable. To another question on whether the matching grant will be provided for businesses dealing with supplier from overseas, Czarif responded that it is permitted because the grants are on a reimbursement basis, which means the business has to purchase and operate the machine and later submit for reimbursement to SME Corp.