$880 M set aside by Malaysian Central Bank to assist MSMEs with automation and digitization

For micro, small, and medium-sized businesses (MSMEs), the Malaysian Central Bank has set aside MYR 3.8 billion ($880 million) to support automation and digitization, low-carbon and sustainable practices, and agrofood production.

According to a statement released by Bank Negara Malaysia (BNM) last Friday, the fund will help with automation and digitization through the SME Automation and Digitalization Facility.

The fund will also be used for agrofood production through the Agrofood Facility and to adopt low-carbon and sustainable practices through the Low Carbon Transition Facility and High Tech & Green Facility, the bank said.

Notably, BNM’s fund for SMEs currently has more than MYR 7 billion ($1.63 billion) offered to MSMEs.

In accordance with national priorities, the funds continue to support MSMEs for specific objectives, market niches, and key industries.

Furthermore, financial institutions have raised the financing cap for the Micro Finance Scheme (Skim Pembiayaan Mikro, SPM) from MYR 50,000 ($11,636) to MYR 100,000 ($23,272).

The government’s decision to raise the stamp duty exemption on the SPM’s agreement document by up to MYR 100,000 ($23,272) complements this.

In the meantime, iTEKAD’s seed capital component will receive a grant of MYR 15 million ($3.49 million).

Social finance funds, such as donations, zakat, and corporate social responsibility funds, will be used to match the grant.

A grant of MYR 5 million ($1.16 million) is also being provided by the government through iTEKAD to microentrepreneurs to help them with their yearly takaful contributions.

This will give microbusiness owners financial security against events like accidents and natural disasters that could jeopardize their means of subsistence.

Takaful operators will contribute to this grant in equal measure.

Small business owners, delivery drivers, and members of Inisiatif Pendapatan Rakyat will all gain from this initiative.

Additionally, the government will provide a matching fund of MYR 100 million ($23.27 million) to encourage the development of innovation in Islamic finance involving risk-sharing instruments (such as musyarakah structures).

This fund will be used to support risk-sharing financing for food security and climate change.

In an effort to promote innovation and raise awareness of risk-sharing tools, the fund will be used to match investments from Islamic financial institutions or other private sector investors.

The announcement aligns with BNM’s endeavors to enable a variety of Shariah contract applications, such as risk-sharing agreements.

Additionally, BNM is conducting a comprehensive review of Shariah contract standards in order to streamline the framework’s design and policy approach, promote innovation, and guarantee the efficient implementation of Shariah principles.

The government’s announcement that the Consumer Credit Act (CCA) will be tabled in the upcoming parliamentary session is also welcomed by BNM.