KUALA LUMPUR: The first phase of the Digital Free Trade Zone (DFTZ) is currently in the process of onboarding more than 1,500 local small and medium enterprises (SMEs).
It will be launched by the Prime Minister Datuk Seri Najib Tun Razak and Alibaba Group founder, Jack Ma in early November.
International Trade and Industry Minister Datuk Seri Mustapa Mohamed said the process would be a boost for local SMEs in terms of their export growth and employment creation.
Meanwhile, he described the 2018 Budget as being well-balanced, futuristic and pro-globalisation friendly.
“I congratulate the Prime Minister for the best ever Budget that is well-balanced and inclusive, touching every aspect of Malaysia and its citizens, as well as preparing us for the future,” he said in a statement today.
He said the budget proposals continue to empower Malaysia’s SMEs and for the first time ever, the sector received a big boost of RM23.7 billion in terms of government allocation, grants, soft loans and guarantees.
“These initiatives are vital in building the capabilities of our SMEs to ensure they remain competitive in meeting the economic challenges of today and tomorrow.”
In addition to these allocations, the RM1 billion provided by major institutional investors and the tax incentive for investment in venture capital will stimulate entrepreneurship and promote the growth of start-ups and innovation of the country’s economy
“With the support and allocations, I have every confidence that SMEs will be able to contribute 41 per cent to the GDP by 2020.”
he adds that the government is also committed in positioning the country’s SMEs in new growth areas including the digital economy.
Mustapa said Malaysia’s pro-globalisation and international outlook were also reaffirmed by the Budget.
“The Principal Hub initiative that was introduced in May 2015 has approved 27 applications from multinational companies to establish their regional and global headquarters in Malaysia.
“The Principal Hub initiative has also resulted in business spending of over RM230 million and utilisation of local ancillary services worth around RM20 million per annum, as well as creation of high-value jobs.
“The extension of this Principal Hub incentive package beyond 2017 until December 2020 is a significant move to strengthen Malaysia’s position as the gateway to the region and the world.”
Mustapa said Malaysia’s focus in recent years had been to promote high quality investment and thus the RM200 million allocated for High Impact Strategic Fund under MIDA will assist in achieving this objective.
He said these investments would also facilitate technology-transfer and creation of high-skilled jobs that will change the landscape of Malaysia’s economy, especially as it continues to transform itself into a high-income status.
Mustapa said internationalisation agenda is further strengthened with the allocation of RM150 million for MATRADE, MIDA and SME Corp to undertake export and investment promotion activities including Market Development Grant (MDG). In 2016, the MDG has benefited a total of 1,910 SMEs
“This allocation will certainly strengthen the Government’s efforts to increase the visibility of Malaysia in the international marketplace especially in light of increasingly competitive environment.
“For the year 2017, we expect our total trade to grow by 17.1 per cent to RM1.7 trillion while exports will accelerate by 16.6 per cent to RM917.5 billion.”
Moreover, Mustapa said the allocation for EXIM Bank of RM1 billion for credit insurance facility and RM200 million for export financing will address the financing problem faced by SMEs which are looking to export.
“It will be instrumental in boosting the export by SMEs, especially as we target to raise their export contribution to GDP to 23 per cent by 2020.”
He adds that the 2018 Budget is also a future-focused, which takes cognizance of the need to strengthen Malaysia’s embrace of Industry 4.0.
Over the last 10 years, MIDF has approved over
RM1.5 billion of loans under the Soft Loan Scheme for Automation and Modernisation (SLSAM) – an amount which is still small given the importance of automation especially in current business landscape as well as the pressing need not only to reduce dependence on foreign workers, but also to create more high income jobs, he said.
“As such, we believe the RM1 billion in the form of 70 per cent government guaranteed loan for companies that plan to innovate will help us achieve this objective.”
On the provision of RM245 million worth of matching grant under the Strategic Domestic Investment Fund, Mustapa said it will be utilised to upgrade the Smart Manufacturing facilities, which are an important dimension of Industry 4.0.
He said the Government is committed in providing a necessary ecosystem that will encourage and facilitate more companies to innovate and adopt Industry 4.0 elements in their business processes.
“Overall, Budget 2018 places SMEs in the mainstream of socio-economic development. SMEs form 98.5 per cent of total establishments, where 76.5 per cent of them are micro enterprises.
“The allocations for promotion and financing activities will further enhance our growth in trade and investment, which will play a major role in delivering the targeted economic growth of 5.2–5.7 per cent.”