___________________________________________________________________________

2011/SMEWG33/014 Agenda Item: 11.1.5

SME Financing in Malaysia

Purpose: Information Submitted by: Malaysia

33rd Small and Medium Enterprises Working Group Meeting

Bangkok, Thailand 15-16 December 2011

SME Financingin Malaysia

Borhan SidikSME C ti M l iSME Corporation Malaysia

15 December2011

33rd APEC SMEWG Meeting, Bangkok, 15-16 December 2011

Contents

• SMEs in Malaysia

• Status of financing for MSMEs

− SME financingSME financing

BNM SME Funds

Green Technology Financing Scheme

− Micro Financing

• BNM’s initiatives to assist MSMEs

− Financial advisory

− Awareness programmesp g

• Conclusion2

SMEs are the backbone of the economy and important generator of employment and growth

• Account for large proportion of businesses in Malaysia:

99 2% of establishments- 99.2% of establishments (548,267)

- Bulk (80%) micro enterprises, with less than 5 workers

99%Share of Firms

32%Share of GDP

19%Sh f E t

59%Share of Employment

3

19%Share of Export Market

A structured approach in SME Development since 2005

Promote development of competitive and resilient SMEs in all sectors towards increasing SME contribution to the economy

es

Economic Socio Economic

PromotingEnhancing Developing progressive and resilient

SMEs and entrepreneurs‐

Objectiv Promoting development of

SMEs in knowledge-based industries

Enhancing viability of SMEs across all sectors

III.I. II.hrusts

III.Enhancing access

to financing

I.Strengthening enabling

infrastructure

II.Building capacity and

capability

Strategic Th

4

New Financing Schemes for SMEs during the Budget 2012 Announcement

SME FinancingSME

Revitalisation SME Emergency CommercialisationInnovation FundSME Financing

Fund (USD0.6bil)Revitalisation

Fund (USD31mil)g y

Fund (USD3mil) Innovation Fund (USD156mil)

Market Validation Fund (USD94mil)

MyCreativeVenture Capital

(USD62mil)

Professional Services Fund

(USD31mil)

5

Challenge in developing resilient, competitive & innovative SMEs…

Capacity building key to improve viability of SMEs

to grow & withstand titi

Formalise and bring microenterprises into

the mainstream –bottom 40%competition

Financing essential to

bottom 40%

Financing essential to develop medium & fast growth companies to

Expand marketingchannels for Malaysian

SMEs to become regional/global players growth companies to

become championsregional/global players

6

Central Bank’s holistic framework implemented to assist SMEs

• Microfinance Institutional Framework

Financial Infrastructure

• BNMLINK, BNMTELELINK, Mobile LINKFi i H l D k t SME B i

Avenues to Obtain Information & Advice/Redress

• Strengthening the Development Financial Institutions (DFI)

• Credit Guarantee Corporation (CGC)• Credit Bureau Malaysia (CBM)

• Financing Help Desks at SME Business Associations

• ABMConnect • Complaint & SME Advisory Units at FIs• Bankinginfo & SME Portal (www bnm gov my)y ( )

• SME Financing Facilitation (ABM-PARTNER)

Financing Schemes

• Bankinginfo & SME Portal (www.bnm.gov.my)

• SME Rejuvenation Programme (pilot)

Debt Resolution & Management

• Various Central Bank SME Funds • Venture Capital Funds

• Small Debt Resolution Scheme (SDRS)• Credit Counseling & Debt Management Agency

(AKPK)

• Various CGC Guarantee Schemes• 10th Malaysia Plan: Working Capital Guarantee

S h (RM3 b)

Guarantee Schemes

• SME financial exhibition• Mass media advertisements

Outreach & Awareness Programmes

Scheme (RM3 b)• Green Technology Financing Scheme (RM1.5 b)

Mass media advertisements• Distribution of promotional materials through

strategic partners, including Local Authorities

SMEs across all sectors rely on banks as the main source of external financing

Financing Outstanding as at end-Sep 2011 RM billion Agriculture

(5%) Others (5%)

BIs144.7

Government Funds and Schemes 119 1

(5%)

Construction (11%)

Services (57%)

DFIs13.3

19.1

Venture Capital 23 4

Manufacturing (22%)

SMEs in all economic sectors have access to financing

Factoring and Leasing 20.1

3.4

1/ At end-Jun 20112/ At end-2010

• 87% of total SME financing are from banks

• Banks have 559,334 SME accounts

Source: Bank Negara Malaysia, SME Corp Malaysia and Securities Commission

SMEs continuously have access to bank financing

Approval rate remained high at 82%(%)

100

(%)

SMEs

• In Jan-Sep 2011, financing approvals grew by 26% yoy, amounting to RM54.7 billion for 91,688 accounts

• SMEs accounted for 40% of total81.5

66.1

75

SMEs

All customers

• SMEs accounted for 40% of total business financing

• Based on survey conducted by SME Corp, approval rate is 85% (Third

TitleMeasure502003 2004 2005 2006 2007 2008 2009 2010 Jan-

Sep2011

p, pp (Quarter 2010 Survey on SMEs)

2011

Source: Bank Negara Malaysia

Central Bank’s SME funds: More than 50,000 SME accounts approved

RM1.0 billion still available under Central Bank’sSME Funds at end-Sep 2011RM millionRM million

222.6

47.7

Fund for Food

Fund for Small and Medium Industries 2

91% 9%

25.7

171.0

560.8

Micro Enterprise Fund

Bumiputera Entrepreneur Project Fund-i

New Entrepreneurs Fund 2

9 %Utilised Available

25.7Micro Enterprise Fund

Total initial allocation: RM11.4 billion

Source: Bank Negara Malaysia and CGC

Total financing approved: RM20.8 billion (due to revolving nature of funds)

CGC has guaranteed RM48.3b to 413,698 accounts as at end-Sep 2011g p

Green Technology Financing Scheme to support national green agenda

• To promote investments in Green Technology (GT)

P d f GT T fi i t t i

Objective

• Producer of GT - To finance investments in production of green technologies

• User of GT – To finance investments in utilisation of green technologies

Purpose of Financing

• Producer of GT – Max: RM50 m per company • User of GT – Max: RM10 m per company

Financing Size

• Producer of GT – Up to 15 years• User of GT – Up to 10 years

Financing Tenure

• Malaysia Green Technology Corporation and CGC

• Issued 103 GT certificates with project value totaling RM2.1 b

Implementing Agency

A hip j g

• 82 companies applied for RM1.7 m financing• 24 companies have been granted RM350.6 m financing

Achievements

Easy, Fast & Convenient of Micro Financing

• Financing size ranging between

Small Fi i

Financing size ranging between RM1,000 to RM50,000

• Financing is

Key Benefits

Financing Amount

Use for

offered to micro enterprises

Key Benefits of

MicrofinanceEasyBusiness

Purposes

FastConvenient

F t l• Fast approval • Fast disbursement

• Widely accessible

Micro enterprises have benefited from Micro FInancing by 10 financial institutions

Financing outstanding grew by 15.5%RM million , end-period

No. of accounts grew by 7.9%‘000, end-period

15.5% yoySep-11 859 7.9% yoySep-11 70.4

2010 776 66.82010

2006 84 2006 10.2

No. of access points increased significantly

Micro enterprises have quick access to Pembiayaan Mikrosignificantly

End-period

2010 2,544*

Pembiayaan MikroAverage Processing Time in Sep-11 (No. of days)

Government’s 6 41 868

36.2% yoy

2006 913

* Increase in participation from 9

Approval Time

DisbursementTime

Target

Participating Financial

Institutions’ Performance

6

34

42009 1,868

Source: Central Bank Malaysia

p pto 10 financial institutions

Many have benefited from the advisory and resolution services provided

BNM has assisted 247,457 clients as at Jan-Sep 2011No of clients

For BNM:

• Majority (96.7%) soughti f ti

Information & guidance

Resolution of

239,766

7 691

AKPK has assisted 30 010 clients as at Jan Sep 2011

information

• 88% of complex issueswere resolved

57 5% f th l d

complex issues & advisory

7,691

AKPK has assisted 30,010 clients as at Jan-Sep 2011No of clients

− 57.5% of the resolvedissues were in favourof consumers

9,928Information &

guidance

12,570Debt mgt &

resolution

g

Source: Bank Negara Malaysia and AKPK

Central Bank’s promotion initiatives to enhance awareness among SMEs

Promotion of SME programmesin Jan-Sep 2011in Jan-Sep 2011

Distribution of SME information materials

(184 106 units)

Outreach programmes nationwide (29 events)

Advertisements (ads) including articles &

interviews

• SME events & road shows• Strategic partnerships

• Newspapers, business magazines, TV interview

• SME events, roadshows• SME Financing Fairs

d t t l l di l

(184,106 units)(29 events) (33 ads)

(private, government agency & local authorities)

and state level dialogues

Malaysia ranks high in terms of financial access

Category Ranking Source

‘Getting Credit’ No 1 for 4 consecutive World Bank (Doing Businessg No. 1 for 4 consecutive years*

World Bank (Doing Business 2009, 2010, 2011 & 2012 Reports)

‘Loans accounts per 1 000 adults’

No. 2 out of 87 Consultative Group to Assist the 1,000 adults Poor (Financial Access Report

2010)

‘Ease of Access to Loans’ No. 8 in 2011 from 10 i 2010*World Economic Forum (The Global Competitiveness Reports 2010 2011

‘Deposits accounts per No 9 out of 110 Consultative Group to Assist the

ase o ccess to oa s no.10 in 2010* Competitiveness Reports 2010-2011 and 2011-2012)

1,000 adults’ No. 9 out of 110 p

Poor (Financial Access Report 2010)

* Most recent update

Conclusion

New financialSMEs are important source of economic

Stepping-up the awareness campaign for

various

SMEs to be financially-savvy, pro active to

New financial sector

blueprint in the face of the

changinggrowth and have potential

programmesfor SMEs

improve themselves

changing financial

landscape

T d d i ti l i l d l b l h iTowards producing national, regional and global champions

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Vision

www.smeinfo.com.my

www.smecorp.gov.myThank you

SME Corp Malaysia

p g y

SME Annual Report 2009/10

SME Corp. Malaysia

1-300-30-6000

Physical KL Sentral

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