MALAYSIAN Industrial Development Finance Berhad (MIDF) will double the maximum financing amount in the soft loan scheme for small and medium enterprises (SMEs) in the manufacturing sector to RM20 million, said Mustapa Mohamed.

The international trade and industry minister said this was to help the industry in adopting automation and reducing reliance on foreign workers.

He said the Soft Loan Scheme for Automation and Modernisation had approved RM1.5 billion for 345 companies since its introduction in 2007.

“MIDF relaxed the conditions in July this year. The maximum loan (amount)  was RM10 million before, and now, it has gone up to RM20 million because we have been informed by the industry that the need is actually more than that (RM10 million).

“RM10 million was very restrictive, and on July 24, 2017, MIDF increased the cap to RM20 million, the maximum limit per loan,” he said after a dialogue with the Federation of Malaysian Manufacturers and Malaysian International Chamber of Commerce and Industry.

He said the ministry had submitted a proposal to the Treasury, asking the government to provide more funds to MIDF in the upcoming budget to enable it to lend more to SMEs.

“This is very relevant because the industry needs funding to automate. It’s important for them to have access to soft loans in order for them to increase the level of automation,” he said, adding that the ministry had proposed the reinstatement of the Market Development Grant, which was instrumental in encouraging SMEs’ growth and development in the export market.

Mustapa said the number of foreign workers in the manufacturing sector had declined from 748,000 to 631,000 over the past two and half years.

“It’s good to see this development, that our dependency on foreign labour has declined by 117,000 in the last two and half years.

“This has got to do partly with automation, (and) difficulties in getting foreign labour.”

He said the ministry would continue to hold meetings with industry players and government agencies to have a better understanding of the labour shortage issue and to look for solutions.

“We have to balance the national policy, which is to control the number of foreign workers, with some immediate requirements.

“We don’t want to have a situation where export or production is affected due to a labour shortage.”

Other issues raised in the dialogue were the need to address the increase in the cost of doing business, good regulatory practices and the implication of anti-dumping duties. – August 24, 2017.