We were at Radin’s Action Business Centre last Wednesday to listen to a short talk by Encik Tajul Ariffin bin Jamaluddin, the (new) SMIDEC Director for the Northern region.
I’ve heard much about SMIDEC grants but never got the true picture of what is was and how it could boost small businesses so this was an opportunity to find out. Plus I always love meeting new people!
SMIDEC, an agency under the Ministry of International Trade and Industry (MITI), has been transformed into SME Corp as of October 2009. So you can now access its new website at www.smecorp.gov.my for all your questions on applying for grants and assistance to help you grow your business.
SMIDEC grants are a type of business support for enhancing the competitive nature of Malaysian businesses, whether you are in manufacturing or services.
The unfortunate part is that many business owners aren’t getting the right information and that is why many are totally lost when it comes to getting SMIDEC to help. And those who know, sad to say, are selfish. They feel that if there’s fewer applications, they stand a higher chance of getting the grants! What rubbish!
So what I normally hear is what’s on the grapevine. No one KNOWS for sure how to get it, if only the favoured ones with the right linkages get it, or if one must go through an agent or insider to get it.
A friend rightly told me that he was nonplussed when his email never got answered at all when he emailed into SMIDEC. Hopefully things get better now that they’ve changed names from SMIDEC to SME Corp. I hope it is not another silly name change without any real implementation changes.
OK, let’s get to the meat of the talk.
Are You Eligible for This Grant?
According to Tajul, SME Corp defines businesses eligible for these grants:
Manufacturing – not more than RM25 mil sales turnover with not more than 150 full-time employees OR
Services – not more than RM5 mil sales turnover with not more than 50 full-time employees.
The grant offered is called Geran Bersama or Matching Grant where 50% is contributed by the Government (through SME Corp) and 50% comes from you/your business. This grant is only open to businesses which fit the definition above. Not surprisingly, it’s NOT available to insurance companies or those who provide financial services.
The basic criteria is simply this:
* you have to be a registered business (doesn’t matter if you run a sole proprietorship, partnership or limited liability company/Sdn Bhd)
* you must fulfill their definition of what an eligible business is (see definition above)
* the business must have minimum 60% equity owned by a Malaysian citizen
* the business must have a valid business licence (the licence is issued by the local authorities)
Types of Matching Grants You Can Apply For
Tajul mentioned 6 types of matching grants for the Manufacturing sector and 4 types for the Services sector.
The Manufacturing sector grants are:
Matching Grant for Business Start-ups (max RM100K)
Matching Grant for Product and Process Improvement (max RM500K)
Matching Grant for Certification and Quality Management System (max RM250K)
Matching Grant for Enhancing Product Packaging (max RM200K)
Matching Grant for Development and Promotion of Halal Product (max RM150K)
Grant for Enhancing Marketing Skills of SMEs (80% of the cost of training is borne by the Government and the remainder by the applicant.)
As I’m in the Service business, I was more interested in the Service Grants. The 4 types of grants for the Services sector fall under the category of Financial Assistance Scheme for SMEs in The Services Sectors. They include:
Matching Grant for Business Start-ups (max RM100K) – only applicable if your business is less than 1 year old and this is calculated from the date you started real operations, not from the date you registered your business.
It covers business plan and marketing plan preparation, market feasibility studies, rental of business premises and related equipment up to 24 months (even secondhand machines), developing prototypes (for construction and related activities only), purchase of machinery or office equipment and 1 year broadband subscription fee (for those in the ICT sector).
Matching Grant for Improvement and Upgrading of Existing Services and Processes (max RM500K)
This can include conducting feasibility studies, technology transfer, prototyping and initial intellectual property registration.
Matching Grant for Certification and Quality Management Systems (max RM250K)
This covers the necessary acquisition of certifications and quality management systems (ie. ISO 9000 series), and Halal certification and related expenditure.
Matching Grant for Advertisement and Promotion (max RM50K)
You can also apply for the grant to allow you to market and promote your service business such as producing brochures, catalogues, flyers, banners, posters, and CD-ROMS; electronic media advertisement, printed media advertisement and development of an interactive website for e-commerce activities.
How To Apply?
You can download the forms from their SME website but you need to register first (what a bother!). Other than that, you can call their info line: 1-300-88-1801 to get more details.
What Else Do I Need To Know?
Tajul notes rather honestly that his department is struggling with lots of applications. Your application could take 2 to 3 months to process.
If you are not sure which grant you should apply for, check with his staff. Plus SME Corp does not have special SMIDEC grant agents so don’t be conned into paying some agent to help you fill up forms. You can easily approach SME Corp to do this and they can tell you what category you fall into (Service/Manufacturing).
Also, note that you need to apply first before you run out to buy the machinery or equipment. They also need at least 3 quotations from different vendors if you intend to apply for grants where vendors/suppliers are concerned (such as needing to buy a particular machine or engage the services of a particular supplier).
Did I learn anything new? Yes, they’re grants. They give you a leg-up and encourage you to do business better.
During the Q&A, some of the attendees asked questions which are typically kiasu. A grant is a grant. They give you 50% financial assistance to help your business get going. They’re not your sugardaddies who give you money for everything like water bill, electricity bill, toilet paper bill! It’s not free money to throw away or do as you please.
But then again, that’s the Malaysian mentality, isn’t it? Grab all you can, be selfish, don’t tell anyone you got a deal.