BNM to revamp its fund for SMEs deployment

KUALA LUMPUR: Bank Negara Malaysia (BNM) is set to revamp its Fund for Small and Medium Enterprises (SMEs) to better align it according to the latter’s needs, its Deputy Governor Datuk Jessica Chew said.

“We are redesigning how we construct and roll out our SME funds,” she said, citing that only one-third of its RM1.5 billion allocation for SME Automation and Digitalisation Facility (ADF) has been taken up so far.

The ADF, which was established in March 2020, aims to encourage SMEs across sectors to automate processes and digitalise operations to increase productivity and efficiency.

The lacklustre response for the fund could have been due to it not being aligned with what the SMEs are focused on, she said at the Sasana Symposium 2024 session entitled: “The Role of Finance in Implementing Structural Reforms,” here, today.

“Perhaps they are not necessarily on the path of digitalisation. So, there is a lot to be done in terms of how we can align those imperatives for SMEs as well,” she said.

Chew said the central bank is also working on how funds that come under BNM can be deployed in different ways to achieve a greater multiplier effect by combining some of the information barriers as well as utilising asset tokenisation to unlock collaterals.

Chew also noted that a larger portion of SME financing comes from the banks.

“Bank financing for SMEs constitutes about half the portfolio of the total business financing of the bank. So, it is clearly in the interest of the banks to continue facilitating the SMEs,” she added.

Besides ADF, BNM also offers the RM1.1 billion High-Tech and Green Facility, which is designed to help SMEs and innovative start-ups grow their businesses and invest in strategic sectors and technologies fields (digital tech, green tech and biotech) for a sustainable and entrenched economic recovery.

The Agro Facility to increase food production for Malaysia and export purposes was increased in 2023 by RM500 million, resulting in a total allocation of RM2.5 billion, while the Business Recapitalisation Facility (BRF) has an allocation of RM1 billion. BRF supports SMEs to grow, without increasing their indebtedness during the recovery phase. – BK