MoF Inc unit opens 2 new govt-guaranteed schemes to bank funding

The Edge Markets

23 January 2018


KUALA LUMPUR (Jan 23): Syarikat Jaminan Pembiayaan Perniagaan Bhd (SJPP), a company wholly owned by the Minister of Finance Inc, is now accepting applications from all participating financial institutions to provide funding under two special government-guaranteed schemes to small and medium enterprises (SMEs).

The two new schemes, namely the Intellectual Property Guarantee Scheme (IPGS) and Automation Process Guarantee Scheme (APGS), were announced in Budget 2018 by Prime Minister Datuk Seri Najib Abdul Razak. IPGS guarantees up to RM1 billion, while the APGS guarantees up to RM1.5 billion.

Treasury secretary general Tan Sri Mohd Irwan Serigar said the IPGS is aimed at assisting companies with intellectual property (IP) to gain access to financing by using their IPs as collateral, in hopes of encouraging growth of the technology and innovation industry.

"There are many young entrepreneurs with IPs but who find it difficult to start a business due to lack of financing. There have been a lot of complaints on the lack of financing. We hope the banks will be open to this new financing scheme," Irwan said at a press conference on the schemes today.

Meanwhile, he said the APGS is expected to accelerate the pace of automation by SMEs, in line with Malaysia's aim for greater productivity, as these companies are mostly labour-intensive.

Automation will also reduce the SMEs' reliance on foreign workers in their operations, Irwan said.

The government also announced additional allocations for existing schemes, such as RM5 billion for the Working Capital Guarantee Scheme (WCGS), RM200 million for the Working Capital Guarantee Scheme for Startups, and RM2 billion for the Services Sector Guarantee Scheme (SSGS).

Since 2009, SJPP has made available RM30 billion worth of financing through its various schemes with some 11,339 SMEs benefitting from the schemes.

Meanwhile, SJPP principal officer Dr Nungsari Ahmad Radhi noted some participating banks have been charging a high spread for these government-guaranteed financing schemes. He urged these banks to lower their spreads, especially considering the risk these banks take on is sovereign risk.

"Banks will definitely need the spread, that is their business. What I'm saying is that the guarantee schemes under SJPP comes from the government itself.

"Given that it is sovereign risk, we hope the banks take this lower risk into consideration and not charge a high spread to SMEs," Nungsari said.

Meanwhile, asked if there are any updates on the appointment of the master developer for the Bandar Malaysia project, Irwan, who is chairman of Bandar Malaysia, said: "When the time is right, we will come to the media".

There has been no updates on the project since late last year.

Irwan previously highlighted strict criteria for parties wanting to participate in the project and said the decision on the master developer will be made in July 2017.

In August, he said six companies had been taken for a site visit and were expected to submit their proposals by end August.

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