PUTRAJAYA: Small and medium enterprises (SMEs) in Malaysia should take advantage of the guarantee schemes made available to them by the Government to gain better access to financing.

According to Deputy Finance Minister Datuk Chua Tee Yong, there are numerous facilities that the Government has implemented in recent years to help SMEs grow.

However, the response to certain programmes, such as the two ongoing schemes – the Services Sector Guarantee Scheme (SSGS) and the extension of the Working Capital Guarantee Scheme (WCGS) – that are worth a combined RM7bil, had not been encouraging.

“The take-up rate has been slow,” Chua said.

“We want to encourage SMEs to take opportunity of these facilities that have been made available to them to help them grow,” he told StarBiz in an interview.

Data from Syarikat Jaminan Pembiayaan Perniagaan Bhd (SJPP), which is a wholly owned subsidiary of Minister of Finance Inc, showed that total loans approved under SSGS by financial institutions as of March 31, 2016, stood at only RM370.07mil, compared with RM249.16mil at the end of 2015.

This means there was still a balance of RM4.63bil under the SSGS that SMEs can take advantage of. Besides that, there was still an ample balance of RM1.99bil under the WCGS extension scheme as of end-March 2016 that could benefit SMEs.

“We will be meeting up with banks next month to discuss how to improve the dissemination of information about these facilities more accurately and effectively, as well as ways that we could promote these schemes to SMEs,” Chua said, adding that poor dissemination of information was one of the main reasons for the low take-up rate of the guarantee schemes.

“There is a lack of understanding about the guidelines and criteria to qualify for the schemes,” he explained.

SSGS, which facilitates access to working capital and capital expenses financing, is targeted at SMEs in the services sector, which encompasses construction; information and communication; arts, entertainment and recreation; real estate activities; education; as well as professional, scientific and technical activities, among others.

“The scheme is specifically targeted at the services industry because this sector is a key driver of Malaysia’s economy, contributing more than 50% to the country’s gross domestic product,” Chua said.

Applications for SSGS will be open until Dec 31, 2017, or until the RM5bil limit of the scheme is fully exhausted, whichever is earlier.

Meanwhile, applications for the WCGS-extension will be open until Dec 31, 2018, or until the RM2bil is fully exhausted, whichever is earlier.

Both schemes, managed by SJPP, was set up following the economic crisis in late-2008, when the Government introduced the initial WCGS and Industry Restructuring Financing Guarantee Scheme (IRFGS) worth a combined RM10bil to support the SMEs.

Among the major achievements of SJPP were the successful implementation of WCGS and IRFGS that had helped revive Malaysia’s economy and the ability to keep non-performing loan rate of both schemes below 4%.

Chua said SMEs would benefit if they could keep themselves updated with policy changes and launch of new schemes or incentives by joining trade associations or SME Corp and visiting the websites of relevant ministries.

Meanwhile, Chua stressed the need for Malaysian SMEs to learn how to maximise productivity and get on the automation boat to move up the value chain.

“Our SMEs have to be equipped for global competition by upgrading their productivity and efficiency.

“As society progresses, SMEs also have to move up the value chain because no country can remain forever as a ‘low-cost’ manufacturing hub,” he explained, adding that the Government had schemes to incentivise SMEs to automate and move up the value chain.