Malaysian Central Bank has allocated MYR 3.8 billion ($880 million) to support digitalization and automation, sustainable and low carbon practices, and agrofood production for micro, small and medium enterprises (MSMEs).

Bank Negara Malaysia (BNM) said in a statement on last Friday that the fund will support digitalization and automation via the SME Automation and Digitalization Facility.

According to the bank, the fund will also be utilized to embrace sustainable and low carbon practices via the Low Carbon Transition Facility and High Tech & Green Facility; and for agrofood production via the Agrofood Facility.

It is noted that currently, more than MYR 7 billion ($1.63 billion) is available for MSMEs under BNM’s fund for SMEs.

The funds provide continued funding to MSMEs for targeted purposes, segments and strategic sectors in line with national priorities.

In addition, the financing limit for Micro Finance Scheme (Skim Pembiayaan Mikro, SPM) by financial institutions has been increased from MYR 50,000 ($11,636) to MYR 100,000 ($23,272).

This is complemented by the government’s decision to increase the stamp duty exemption on the SPM’s instrument of agreement for an amount up to MYR 100,000 ($23,272).

Meanwhile, a grant of MYR 15 million ($3.49 million) will be allocated towards the seed capital component for iTEKAD.

The grant will be matched with social finance funds e.g. donations, zakat and corporate social responsibility funds.

The government is also allocating a MYR 5 million ($1.16 million) grant through iTEKAD to subsidize microentrepreneurs’ annual takaful contributions.

This will provide financial protection to microentrepreneurs against risks to their livelihoods from events such as accidents and natural disasters.

This grant will be matched with contributions by takaful operators.

This initiative will benefit small traders, delivery riders and Inisiatif Pendapatan Rakyat participants.

To spur the development of innovation in Islamic finance involving risk-sharing instruments (e.g. musyarakah structure), MYR 100 million ($23.27 million) matching fund will be provided by the government.

This fund will be used to support risk-sharing financing in the areas of climate and food security.

The fund will be utilized to match funding from the Islamic financial institutions or other private sector investors, as part of the efforts to encourage innovation and increase familiarity to risk-sharing instruments.

The announcement is in line with BNM’s efforts to facilitate diverse application of Shariah contracts including risk-sharing contracts.

BNM is also undertaking a holistic review of the standards on Shariah contracts to simplify the framework’s design and policy approach to spur innovation while ensuring effective application of Shariah principles.

BNM also welcomes the announcement by government for the tabling of the Consumer Credit Act (CCA) in the next Parliamentary sitting.

With the passing of this CCA, the Consumer Credit Commission (CCC) will be established as the new authority regulating non-bank credit providers and credit service providers in Malaysia.

Currently, the Consumer Credit Oversight Board Task Force (CCOB) is tasked to drive the finalization of the CCA together with relevant ministries and agencies.

The CCA will address overlaps in responsibilities between regulatory authorities and reduce coverage gaps in the supervision of consumer credit providers.

The CCC will regulate and supervise a range of entities currently not subject to any regulatory authority in Malaysia.

This includes ‘Buy Now Pay Later’ (BNPL) companies, non-bank factoring and leasing companies, impaired loan buyers, debt collection agencies, and debt counselling and management agencies.

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