Friday June 6, 2008 MYT 8:52:42 PM
Measures to soften fuel price impact on SMEs
By NG CHENG YEE and SALINEE GANESON
KUALA LUMPUR: The Government has revealed several measures, which take effect immediately, for small and medium enterprises to soften the blow from the fuel price hike.
One of them is the reduction of the interest rate for soft loans for small- and medium-scale enterprises (SMEs) from 4% to 2% per annum while the margin of financing will be increased from 85% to 90%.
When announcing the Government's decision, International Trade and Industry Minister Tan Sri Muhyiddin Yassin said the coverage of soft loan scheme for automation and modernisation through Malaysian Industrial Development Finance Bhd would also be expanded to cover all sectors and to include the purchase of energy-saving equipment.
Currently, the sectors covered under this scheme are manufacturing, electrical and electronics, wood products and furniture, plastics and chemical products, iron and steel, textiles and apparel, and automotive.
"For all Small and Medium Industries Development Corporation (Smidec)'s grants, 10% of the approved value will be disbursed upon approval," he said Friday at a press conference here.
He said Smidec's grants for purchase of machinery and equipment would also be disbursed directly to suppliers to reduce the financial burden of SMEs.
In addition, Muhyiddin said last week, the Cabinet had also approved RM800mil for soft loans for SMEs and grants for existing programmes, implemented by Smidec.
"We have also forwarded a request to the Treasury and Economic Planning Unit to make 10 new financial assistance initiatives, worth RM355.65mil, available for SMEs," he said.
He said these were the initiatives taken by the Government to mitigate the impact of the price increment in natural gas and fuel but they would not be the end of its effort to assist SMEs.
He said this was because the real impact of the price hike had yet to be felt and it would take time for industry players to give feedback to the ministry on how far they had been affected.
Muhyiddin also stressed that the Government was paying serious attention to the situation because the SMEs constituted 99.2% of the total establishment of the manufacturing and service sectors and made up 56.7% of the country's total employment.
"We hope that industry players will look at these measures before taking any step to downsize their organisations.
"We do not want it to affect the livelihood of the people. If there is any intention to downsize, it should be the last resort," he said.
On the automotive industry, he said national car producer Proton was encouraged to produce more fuel-efficient cars as they would be much sought after following the increase in oil prices.
Muhyiddin said he would also forward other proposals, which were beyond the jurisdiction of the ministry, from industry players to the Government through the Anti-Inflation Committee next week.
The proposals are:
* Prime movers be allowed to haul two trailers at one time on federal roads and highways;
* One prime mover be allowed to haul multiple trailers and not be restricted to a specific trailer;
* Reduction in road tax rate for commercial vehicles;
* To increase the maximum axle load from 22 tonnes to 30 tonnes on all federal roads and highways;
* In the medium term, clustering of industries, where related industries are located in the same area, will be encouraged to reduce transportation and logistics costs by facilitating the movement of goods and supply of raw materials and to share common facilities;
* All electronic transaction fees imposed by financial institutions be reduced and standardised across all banks to promote wider technology application;
* Tenaga Nasional Berhad review its policy on co-generation to make it more conducive for big companies to provide alternative fuels; and
* Import duty exemption on raw materials and intermediate goods used by industry to cushion the impact of energy price increase.
Muhyiddin said industry players were encouraged to give feedback on the subsidy restructuring and suggestions on how to reduce its impact to the ministry through its Industry Monitoring Unit.
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