PM: SMEs get RM4.5b in credit to stem Covid-19 fallout

Shoppers throng Chow Kit’s wet market in Kuala Lumpur March 17, 2020. — Picture by Firdaus Latif
Shoppers throng Chow Kit’s wet market in Kuala Lumpur March 17, 2020. — Picture by Firdaus Latif

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KUALA LUMPUR, March 27 — Small and medium enterprises, including microbusinesses, will receive an additional RM4.5 billion in credit to help stem the fallout from Covid-19, the government announced today.

RM3 billion of the amount will go to the Special Relief Facility to increase the total funds available to RM5 billion, as announced as part of a RM250 billion stimulus package by Prime Minister Tan Sri Muhyiddin Yassin dubbed “Prihatin”.

SMEs can also apply for credit at a reduced interest rate of 3.5 per cent, down from 3.7 previously.

Another billion ringgit will be injected into a special fund to help finance businesses, increasing the total to RM6.8 billion, while RM500 million in micro credit will be made available on top of the previous RM200 million announced under the first stimulus package.

Meanwhile, SME startups of less than four years in operation are eligible for loans up to RM300,000 under the BizMula-i and BizWanita-i programme provided by the Credit Guarantee Corporation Malaysia.

For SMEs that are struggling to obtain credit, Syarikat Jaminan Pembiayaan Perniagaan — a company under the Finance Ministry that manages the government’s guarantee schemes for SMEs — will guarantee loans up to RM5 billion in addition to a 10 per cent increase in coverage to 80 from 70 per cent previously.

Muhyiddin said the initiatives ensure “competitive” SMEs receive the financial support they need to weather the Covid-19 pandemic.

“The initiatives above ensure competitive SMEs receive adequate support from financial institutions, especially in these bleak economic times,” he said.

The sector collectively employs two-thirds of the total workforce despite its relatively small size in capital terms.

The Malaysian Institute of Economic Research in a report on the economic impact of the Covid-19 outbreak estimated that at least half the sector could shut down without assistance, at the expense of up to a million jobs.

With employment retention crucial in the next few months, Muhyiddin said the government will set up a “negotiation committee” to find solutions, including the possibility of “delaying, restructuring and rescheduling” their contribution to the Employees Provident Fund.

Employers will also be exempted from the monthly contribution to the Human Resources Fund for up to six months, a move the prime minister said is aimed at easing cash flow for struggling SMEs.

Previously, the government had waived business tax for SMEs, numbering at 750,000.

Muhyiddin said the waiver will continue for three months starting April 1.

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