Bank Negara Malaysia (BNM), the Malaysian government’s central bank, announced the launch of a RM200 million, or USD 56.6 million, Micro Enterprise Fund in order to increase access to micro financing for micro enterprises.  This fund is part of the government’s focus on small and medium-sized enterprises (SMEs) which includes micro enterprises.   BNM generally defines a micro enterprise as one with fewer than five full-time employees.  Since several initiatives were launched in 2007, BNM claims that over 286,000 SMEs have been assisted through over 189 programs with the use of over RM4.9 billion, or roughly USD 1.4 billion.  

Bank Negara Malaysia will use the existing Pembiayaan Mikro scheme to disburse the funds.  Currently, nine financial institutions, and a total of 2,600 branches and affiliates/agents of the banks participate in Pembiayaan Mikro.  No information was readily available on the terms of the financing from BNM to the financial institutions.  Since its 2006 inception, the Pembiayaan Mikro scheme has provided financing to over 40,000 micro enterprises.  The scheme allows micro enterprises to obtain unsecured financing up to USD 14,200 for working capital or capex.  Extensions of credit and the terms of the loans, including interest rates, are determined by the participating financial institution using their normal credit decision process.

Bank Negara is Malaysia’s central bank. Established in 1959, the bank’s focus is to promote monetary and financial system stability, and foster a progressive financial sector that achieves sustained economic growth. At December 2007, the bank held total assets of MYR 424.9 billion, roughly USD 130 billion, a debt-equity ratio of 1,328 percent and return on assets of 1.57 percent.

By Iyanna Holmes, Research Assistant

Additional Resources:

Bank Negara Malaysia:  Establishment of a RM200 million Micro Enterprise Fund; Developing and Strengthening SMEs Performance and Contributions to the Economy  

SME Info: Definitions for Small and Medium Enterprises in Malaysia