Malaysian Micro and SMEs get wider access to funding and financing in 2021

The pandemic has fastened the growth of going digital for micro, small and medium size enterprises (MSMEs) in Malaysia, and around the world. In terms of actual growth, the past year alone saw high growth in e-commerce, as much as 26% growth in a single year in 2020 compared to 2019.

How Can Small Businesses Survive and Thrive

During these difficult economic condition how can SME survive, and going forward, thrive, to increase their earnings, widen their customer base and achieve economy of scale.

The answer is in utilizing technology in their businesses, both in the front end (customer-facing) and in the back-end (operations). For the operations, it will enable businesses to automate their business operations, and transform their businesses by reducing costs, and faster response to customers. The front-end technology enables businesses to reach their customers faster, and easier, and have a wider market reach, such as using marketplace platforms locally and internationally.

Part of MSMEs ability to go digital requires them to further invests in terms of money, for computer equipment, software as well as upskilling their teams.

How Can Small Businesses Get Access to Capital

Getting financing and funding to grow the business for MSMEs have always been a hurdle. Accordingly, SME Corporation Malaysia (SME Corp. Malaysia) has teamed up with People 4.0, to discuss the funding and financing options available to Malaysian MSMEs, via their live Facebook webinar yesterday.

SME Corp is the central coordinating agency under the Malaysian Ministry of Entrepreneur Development and Cooperatives, and People 4.0 is part of Peopleology Development Sdn Bhd, a private company that aims to assist Malaysian small businesses to adopt the skillsets of 4.0 for the businesses to stay competitive.

The webinar saw SME Corp being represented by Pn Suraini Mohd Sulaiman, who is the Deputy Director of Business Development & Entrepreneurship, where she spoke of the variety of funding and financing options available to MSMEs in Malaysia.

She cited a study of SMEs in Malaysia where 60% of such businesses cited funding as a barrier to digitalisation.

However, this she said, is mainly due to a lack of awareness of available government grants and financing. While SMEs are familiar with government grants and bank loans, however, there’s more financing available than the traditional financing avenues.

Financing Avenues for Malaysian MSMEs

Pn. Suriani then explained the various financing avenues for Malaysian MSMEs. The traditional financing avenues include:

• Bank Negara Malaysia (BNM – Central Bank) special funds- to support SME development in automation, digitalization facilities
• Guarantee schemes such as Credit Guarantee Corporation (CGC) to support loan financing and startup financing –
• Government funds. According to the speaker, in 2020, 93 programs were allocated at RM12.7 billion when compared to 2019 which was an increase of 40% allocation. This allocation was even before the pandemic. In addition, there are government crisis funds such as the Penjana, Prihatin, Permai.
• Agencies that compile SME credit profile such as CCRIS, CTOS and Credit Bureau Malaysia with the aim to promote credit culture for SME with limited track record to enable them to secure financing from banks.

NON CONVENTIAL: such as

• Venture Capital – equity financing
• Leasing & Factoring – for equipment financing
• Pawn-broking services such as ar-Rahnu
• Microfinancing – Tekun and Amanah Ikhtiar Malaysia (AIM)

FINTECH- such as

• Equity CrowdFunding (ECF) – todate, a total of RM74 million funds were raised
• Peer-to-Peer Lending (P2P)- todate, a total RM630 million raised from 8,000 campaigns
• Investment Account Platform (IAP) – multi-bank platform where RM160 million funds were raised
• Leading Entrepreneur Accelerator Platform (LEAP)  –  via Bursa Malaysia, where fundraising has access to the capital market
• imSME – online financing and loan referral platform

To find out the details of the financing avenues for MSMEs and their criteria, business owners can visit the SME Info Portal, which aggregates all available financing and funding options available in Malaysia which is different from the SMECorp website.

Foodpanda Vendors Get Access to Microfinancing

In another development, Foodpanda has teamed up with Aspirasi, an Axiata company, that provides microfinancing. Vendors on the Foodpanda network can apply for Aspirasi Capital Plus, an initiative from Aspirasi that offers digital Shariah-compliant micro-financing up to RM100,000.

The benefits offered for the microfinancing to Foodpanda vendors include:

• easy digital application,
• the shorter application process,
• minimum documentation requirement.

The microfinancing is available up to 15 months of repayment terms. Aspirasi Capital Plus also offers micro-insurance as an additional benefit to protect approved loan applicants.

MSMEs which are not Foodpanda vendors are also able to apply for microfinancing with Aspirasi, although the financing terms will vary.

Farah I, Writer & Researcher

Farah Ishak is a Content Writer at Halalop. She grew up in the United Kingdom where she obtained her Bachelor’s degree in Management. Later, she completed her MBA and held senior-level positions in Malaysian based MNC. She left the corporate world to be with her young kids. She is passionate about issues concerning Muslim women, Startups and Muslim businesses in general.