AS small and medium enterprises (SMEs) are the backbone of the nation and are the biggest employers in the country, it is of utmost importance to not only help smaller businesses tide through the Covid-19 storm, but also to foster more entrepreneurs to drive the economy.
This rationale is reflected in one of the core focus areas of Budget 2021, which covers the development of business- and entrepreneurship-related initiatives.
To encourage entrepreneurship among Malaysians, there are numerous initiatives that build upon the foundation of existing programmes, such as the RM510mil allocated to the National Entrepreneur Group Economic Fund (Tekun) and Perbadanan Usahawan Nasional Bhd (PUNB) to finance Bumiputera entrepreneurs and micro SMEs, which also includes RM20mil for the Indian Community Entrepreneur Development Scheme and RM5mil for the entrepreneurship development of other minority communities.
The RM510mil is part of an RM4.6bil allocation to empower Bumiputera entrepreneurs, including RM2bil in financial assistance for Bumiputera SMEs through Syarikat Jaminan Pembiayaan Perniagaan (SJPP), RM1.3bil for various professional development and capacity building programmes including Dana Kemakmuran Bumiputera and other Bumiputera-specific programmes or projects, RM800mil for Bank Pembangunan Malaysia (BPMB) and SME Bank capacity building programmes.
It also includes an allocation of RM50mil to the Islamic Economic Development Foundation (YaPEIM) to support Islamic Pawnbroking through Ar-Rahnu BizNita, RM300mil for the Lestari Bumi financing facility to encourage Bumiputera micro and small businesses to move up and transform to a higher category, as well as the RM1,000 Grant Khas Prihatin to be given to 20,000 traders and hawkers in Sabah. This grant will also be given to taxi drivers, e-hailing, rental cars and tour drivers in Sabah.
Nearly RM1.2bil microcredit financing will also be provided through Tekun, PUNB, Agrobank, Bank Simpanan Nasional and other financial institutions, including RM110mil given to the Micro Enterprises Facility under Bank Negara Malaysia (BNM) to encourage entrepreneurship among gig workers and self-employed and to support the iTekad programme.
In support of the inclusion of women in economic activities, this year’s budget highlights several initiatives to provide for women entrepreneurs. Among the allocations given are RM95mil for special micro credit financing through Tekun, Mara and Agrobank for women entrepreneurs.
Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said, “The government values the contribution of women to nation building... Training programmes, especially in the aspect of marketing, labelling and packaging in addition to business technical guidance will be given to more than 2,000 women entrepreneurs under the Micro Entrepreneurs Business Development Programmes.”
These initiatives are in addition to business technical guidance will be given to more than 2,000 women entrepreneurs under the Micro Entrepreneurs Business Development Programmes.
Budget 2021 has also allocated RM20mil for a social enterprise development programme under the Malaysian Global Innovation and Creativity Center (MaGIC) and selected agencies. Further, there is the e-Procurement registration pilot project for social enterprises that have a Government Impact e-Procurement Program Certificate from MaGIC and other selected agencies to become suppliers to the government.
Supporting SMEs
Understanding the importance of SMEs to the country’s economy and the drastic impact of the Covid-19 pandemic on smaller businesses, the government has doubled down on its initiatives to assistance them, following the financial aid and other support given through the Prihatin, Prihatin SME Plus and Penjana packages.
From those packages, RM1.9bil in soft loan funds and grants have been provided to help SMEs and micro-SME entrepreneurs who have difficulty accessing financing.
Moreover, to help reduce the cash flow burden of companies that are still affected by the Covid-19 pandemic, an exemption from the Human Resource Development Fund’s levies will be given for six months effective Jan 1,2021. The exemption will cover the tourism sector and companies affected by the Covid-19 crisis.
Under Budget 2021, there is RM2bil allocated for BNM’s Targeted Assistance and Rehabilitation facility, which will be introduced through loans from banking institutions, alongside the National Supply Chain Finance Platform Jana Niaga, which will be introduced to benefit SMEs - who have cash flow issues due to the long invoice payment period - that supply to the government or government-linked companies.
In terms of other assistance to upgrade the capacity of SMEs, RM150mil has been set aside for training programmes, sales assistance and digital equipment for 100,000 local entrepreneurs to encourage adoption of e-commerce under the e-Commerce SME and Micro SME Campaign.
The government has also allocated an additional RM150mil under the SME Digitalisation Grant Scheme and the Automation Grant, with the eligibility conditions for these grants relaxed for micro SMEs and start-ups that have been operating for at least six months.
There is a further RM230mil allocated as financing to SMEs for working capital, upgrading of automation systems and equipment and expenditure related to the implementation of Covid-19 SOP compliance, alongside the extension of BPMB’s RM1bil Industrial Digitisation Transformation Scheme until Dec 31,2023.
To spur more activity and excitement in funding SMEs through alternative financing methods such as peer-to-peer financing (P2P) and equity crowdfunding (ECF), the budget has earmarked RM50mil in matching investment for P2P under the supervision of the Securities Commission Malaysia (SC).
Meanwhile, income tax exemption of 50% of the investment amount (limited to RM50,000) will be given to individual investors to encourage them to take part in more financing through ECF platforms, with RM30mil in matching grants to be invested on these platforms under SC’s supervision.
Facilitating business and trade
Beyond the initiatives for entrepreneurs and SMEs, Budget 2021 also places importance on the overall development of businesses for economic growth.
A total of RM25mil has been allocated for the Micro Franchise Development and Affordable Franchise programmes, as well as the Buy Made in Malaysia programme, while RM35mil has been set aside to promote Malaysian-made products and services under the Trade and Investment Mission.
Noting the increasing shift in consumer behaviour from offline purchasing to online shopping and to ease shopping during the pandemic, the government has also allocated RM150mil to implement the Shop Malaysia Online initiative together with e-commerce platforms to encourage online spending, which will benefit 500,000 local sellers including the halal products and handicrafts entrepreneurs.
The RM3bil guarantee under the Danajamin Prihatin Guarantee Scheme has also been extended until 2021 for corporate companies involved in highly skilled industries such as oil and gas and aerospace.
In addition, the Maritime Development and Logistics Scheme, the Sustainable Development Financing Scheme, as well as the Tourism Infrastructure Scheme and Public Transport Fund will be extended until Dec 31,2023 with a fund size of RM3.7bil.
“A total of RM500mil from these schemes will be designated for Bumiputera entrepreneurs to increase their involvement in the key sectors, ” added Tengku Zafrul.
This article is third in a seven-part special coverage on Budget 2021.
BUDGET 2021
FOCUSING ON ECONOMIC DEVELOPMENT
> Overall
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RM25mil for the Micro Franchise Development and Affordable Franchise programmes and the Buy Made in Malaysia programme
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RM35mil to promote Malaysian-made products and services under the Trade and Investment Mission
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RM150mil to implement the Shop Malaysia Online initiative together with the e-commerce platform to encourage online spending
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RM3bil guarantee under the Danajamin Prihatin Guarantee Scheme extended until 2021 for corporate companies involved in highly skilled industries, such as oil and gas and aerospace
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RM3.7bil for the Maritime Development and Logistics Scheme, Sustainable Development Financing Scheme, Tourism Infrastructure Scheme and Public Transport Fund, which will be extended until Dec 31,2023
> Entrepreneurs
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RM10bil allocated to SJPP for guarantees, with RM2bil reserved specifically for Bumiputera entrepreneurs
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RM10mil to finance Bumiputera entrepreneurs and micro SMEs through Tekun and PUNB, including RM20mil to the Tekun Skim Pembangunan Usahawan Masyarakat India and RM5mil for entrepreneurship development of other minority communities
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RM800mil for capacity building programmes by Bank Pembangunan Malaysia and SME Bank
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RM1.3bil for various capacity building programmes, including professional development, Dana Kemakmuran Bumiputera and programmes or projects specifically for Bumiputera
-
RM50mil will be provided to the Islamic Economic Development Foundation (YaPEIM) to support Islamic Pawnbroking through Ar-Rahnu BizNita
-
RM300mil Lestari Bumi financing facility to encourage Bumiputera micro and small businesses to move up and transform to a higher category
-
RM1,000 Grant Khas Prihatin to be given to 20,000 traders and hawkers in Sabah. This grant will also be given to taxi drivers, e-hailing, rental cars and tour drivers in Sabah
-
Nearly RM1.2bil microcredit financing to be provided through Tekun, PUNB, Agrobank, BSN and other financial institutions, including RM110mil to BNM’s Micro Enterprises Facility to encourage entrepreneurship among gig workers and self-employed and to support the iTekad programme
-
RM95mil will be provided for special micro credit financing through Tekun, Mara and Agrobank for women entrepreneurs
-
Social enterprise development programme with an allocation of RM20mil to the Malaysian Global Innovation and Creativity Center or MaGIC and selected agencies.
-
The e-Procurement registration pilot project for social enterprises that have a Government Impact e-Procurement Program Certificate from MaGIC and other selected agencies to become suppliers to the government
> SMEs
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Exemption from the HRDF levies will be given for six months effective Jan 1,2021 to cover the tourism sector and companies affected by the Covid-19 crisis
-
RM2bil for BNM’s Targeted Assistance and Rehabilitation facility to be introduced through loans from banking institutions
-
RM150mil for training programmes and sales assistance as well as digital equipment for 100,000 local entrepreneurs to encourage adoption of e-commerce under the e-Commerce SME and Micro SME Campaign
-
RM150mil under the SME Digitalisation Grant Scheme and the Automation Grant, with the eligibility conditions relaxed for micro SMEs and start-ups that have been operating for at least six months
-
RM1bil Industrial Digitisation Transformation Scheme through BPMB extended until Dec 31,2023
-
The National Supply Chain Finance Platform (Jana Niaga) introduced to benefit SMEs that supply to the govt or GLCs
-
RM50mil matching investment for P2P and RM30mil matching grants for ECF platforms under SC’s supervision, while income tax exemption of 50% of the investment amount (limited to RM50,000) will be given to individual investors
-
RM230mil allocated as financing to SMEs for working capital, upgrading of automation systems and equipment and expenditure related to the implementation of Covid-19 SOP compliance
