The Government, particularly through its agencies under MITI, acknowledges the significant influence of external factors on businesses. It recognises that even well-managed companies can suffer setbacks from circumstances beyond their control, especially in the ever-evolving economic landscape.
Sudden shifts in market conditions, unforeseen disruptions, or internal struggles can push promising companies to the brink of failure. Therefore, it is crucial that the government consider the potential for recovery of local SMEs and the long-term benefits of supporting their recovery. To that end, the Government is dedicated to addressing SMEs’ challenges such as access to funding, business development, and competition.
This was the sentiment posed by Minister of Investment, Trade And Industry Tengku Datuk Seri Utama Zafrul Aziz at the MOU exchange event today (Oct 3) between Malaysian Industrial Development Finance Berhad (MIDF) and Agensi Kaunseling dan Pengurusan Kredit (AKPK) to provide financial assistance through MIDF’s Second Chance Financing scheme (2CF). This MOU marks their synergistic collaboration in providing businesses that are facing challenges and financial difficulties, particularly small and medium enterprises (SMEs) with access to financing assistance, advisory services, and business guidance.
This is why the MIDF-AKPK collaboration is crucial in helping struggling SMEs to stabilise, and meet their obligations, effectively maintaining better stability within the broader supply chain ecosystem, the minister said.
“This means providing these companies with some form of financial lifeline which ‘supports’ not just them, but their entire operational ecosystem, encompassing suppliers, customers, employees and possibly the surrounding communities. In short, by enabling SMEs to overcome their challenges, their business recovery could also fuel future supply chain growth which in turn, is crucial to the nation’s socio-economic development.
“To that end, I perceive the MIDF-AKPK collaboration as a natural synergy and a holistic ‘recovery ecosystem’ in terms of supporting troubled companies, particularly the SMEs. I say this because the collaboration not only provides financing assistance under MIDF’s Second Chance Financing to troubled SMEs, but also extends assistance under AKPK’s Debt Management Programme, assisting them to ease their financial burden and enhance the financial well-being holistically. By enabling this, their chances of obtaining new financing are also improved.
“By facilitating SMEs’ recovery and sustainability of their operations, we also stimulate innovation, safeguard employment opportunities, and ensure overall economic stability. Without such support, we risk stifling innovative companies with valuable ideas, products, or services that could drive significant advancements in their respective industries and our society,” said Tengku Zafrul.
As such, we welcome the MIDF Second Chance Financing scheme which serves as a vital support for selected SMEs, offering financing of up to RM5 million for assets or working capital financing at a low rate of 3% per annum. This provides the SMEs with the lifeline to overcome cashflow constraints, settle outstanding debts, revive their business, and subsequently re-invest in their operations, enhance competitiveness, and expand their market reach.
Tapping Into Opportunities From Shifting Global Supply Chains
Tengku Zafrul said ASEAN is, in fact, the new China and ASEAN is set to become not just the world’s factory, but also a consumer base that we must pay attention to. The 10 nations that make up ASEAN are already home to more than 678 million people, with a combined GDP of about US$3.7 trillion in 2022. As a bloc, ASEAN is the fifth-largest economy in the world. It also had a middle class of roughly 350 million in 2022, representing US$300 billion of disposable income.
Further, in 2022, when the global FDI fell by 12%, FDI into ASEAN went up by 5%, and ASEAN’s share of global FDI rose to an alltime high of 17%. In short, our own SMEs’ survival in local supply chains could help them to capitalise on not only ASEAN’s growing middle class, but also shifting supply chains to and FDI flowing into this region. This regional economic integration is also a goal that is also espoused by the MADANI Economy framework.
