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Friday, May 24, 2013

Indian task force works without fear or favour

What has been the achievement of Special Secretariat for Empowerment of Indian Entrepreneurs (SEED) until to date?
COMMENT
By AT Kumararajah
Since the inception of Special Secretariat for Empowerment of Indian Entrepreneurs (SEED) in August 2012 until May 3, 2013, we have been able to disburse a total amount RM108.2 million to Malaysian Indian entrepreneurs. This money has been disbursed to 5,081 successful applicants.
We can divide the achievements of SEED on two distinct groups: microenterprises and SME companies.
Contextual achievement of what SEED has been able to do:
A. For microenterprises
On record since the inception of the Indian specific SPUMI scheme for Indians under TEKUN, a total of RM34.5 million to a total of 4,212 entrepreneurs have been disbursed until July 2012.
That’s roughly over a four year period. But after SEED was formed and in a period of just eight months we have been able to give out over RM80.5 million to 5,020 Indian entrepreneurs. This by any measure is an achievement.
We have summarised it in context below:
Other initiatives taken by SEED and TEKUN
1. Launch of special scheme for all Indian taxi drivers on April 18, 2013.
12,500 Indian taxi drivers stand to benefit from this initiative. Since the launch of the scheme just about the month ago, 350 taxi drivers have already obtained RM3 million as soft loans under this scheme.
2. Increase in age limit
i. Before SEED – age is 45-years-old
ii. After SEED (September 2012 – February 2013) – Age is increased to 55-years-old
iii.March 2013 – The age limit has been increased from 55 to become 65-years-old.
3. Introduction of eight new strategic sectors for Indian businesses to be financed under a TEKUN-SEED special scheme.
4. Introduction of special funding scheme for startup companies. Previously, the practice was to allow only companies that are running for at least six months to apply but now even new startup companies can apply.
5. Introduction of special scheme for Indian graduates has been introduced since March 2013.
6. Process re-engineering – we have taken two defined steps in making sure the loan applications are processed in a very transparent manner. They are:
I. The loan amount for SPUMI applicants will be on a on a need basis, and this will help increase the average lending limit.
II. No more waiting for cheques – all will be auto debited and this saves the applicants a valuable 10 days to two weeks’ time.
B. For bigger companies from the SME Sector
We have assisted all levels of Indian business including Indian SME’s.
We have through SEED been able to secure RM18.8 million for 15 companies from MIDF. The highest amount being for RM3 million and the lowest at RM100k. This is already averaging more than RM1 million each company.
We have also been able to secure RM5.4 million for 44 companies under SME Corp. That’s an average of RM122k each.
We have also gone further to secure “grants” of RM3.9 million for 32 companies from SME Corp. These are not loans, but grants, thus the companies don’t have to pay it back.
Other major initiative taken by SEED
Establishing a platform of “access to preferential funding for all Indian Entrepreneurs”, where SEED work together with SME Bank, for the Young Entrepreneur Scheme (YEF) which allotted RM50 million and for SME’s Development Scheme (SDS) with a RM1 billion allocation.
A large programme was organised on April 7, 2013 at Hotel Seri Pacific with the joint effort of SME Bank, which gathered 1,200 Malaysian Indian entrepreneurs for the launch of this platform.
Engaging the Indian business community
In our effort to disseminate this information, we have engaged various platforms. For SEED to deliver as a community outreach program, the last mile connection to the community at large has been made possible by various stakeholders like political parties, Indian chamber organisations, NGOs and Indian based trade and business associations.
That’s how to date we have been able to reach out to over 46,000 Indian entrepreneurs at over 113 pocket talks nationwide for the last 10 months.
We have also had 4,400 one-to-one meetings with Indian businessman over the same 10 month period.
SEED has also been able to assist 2,956 Indian businesses/entrepreneurs in providing with follow-up assistance. The details are as follows:
380 business entities assisted under non 180m scheme.
3,136 applications submitted to TEKUN HQ by SEED
96 applications submitted to Bank Muamalat for SSFS
75 applications submitted to MIDF
32 applications submitted to SME Bank
6 applications submitted to RHB Islamic Bank
Data publication of this special fund
With regards to the RM180million special funds allocated to the Indian entrepreneurs, the minister in charge has regularly been publishing the figures to the media.
We have to date published the figures 17 times over the last 10 months. The last we published was the May 3, 2013.
The summary is as shown here:
Work in progress
Yes, I have been very open with the fact that, yes we haven’t been able to completely reverse certain trends, while we have had very commendable success at both ends of the spectrum of Indian entrepreneurs.
Like when we deal with certain banks, there is still brick walls that we need to break or climb over. And that’s work in progress.
The RM180 million is structured in a way to help varying level of entrepreneurs from the micro business to that of larger SMEs. The majority of this RM180 million – which is RM150million, is banks’ internal fund, and that’s 83% of the total.
The sweetener in this deal is that this RM150 million are soft loans – with subsidised interest rates and easier terms and conditions.
The portion that is straight government funds is via TEKUN Nasional by virtue of SPUMI at RM30 million for 2012 and RM50 million for 2013.
We have also some confidentiality issues to deal with, such as:
SME Bank/Bank Rakyat etc. don’t fall under the purview of those bigger loans, so any facilitation to this is just an extension of our work and not the primary role of SEED. Nevertheless, we have also been open to extending the channels and continue to do so and facilitate many outside the ambit of the RM180 million scheme.
BAFIA/DAFIA Acts – loan applications and details of it are very confidential and they are all guided by laws. The financial details or any other details cannot be revealed to third parties without authorization.
I won’t go into the details of complaints made by some unsuccesful applicants, but suffice to say that even facilitators to these applicants have no ‘locus-standi’ to get these details without authorisation.
That is something that my team at SEED has been made very clear about, and to that they are sticklers to it. We don’t expect people to understand the BAFIA, we just expect to keep ourselves above board.
Our work is in line with what the leadership has outlined.
I have made it very clear, the success even with the TEKUN and MIDF examples, is no small feat. And for this I not only have to thank the young executives of SEED, but also all other stakeholders.
They work without fear or favour. We have had on multiple occasions, been threatened with this adage “…if even for me this cannot be done, then how will it be for common people”. This statement has always irked me.
Because what you quote and has been made very clear by even the PM is the question of ‘equality in access’ to these programs and that’s one thing we were very clear about even in the beginning, it doesn’t matter who he or she is, there is no ‘green-lane’ as far as SEED work goes. And that’s why in TEKUN and MIDF we have over achieved our numbers.
We owe a lot of our success to the joint efforts by many groups – that includes the political parties, their leadership and also other groups. All have been able to help in this process. That has always been our modus operandi, ‘internally we cooperate and externally we compete”.
Preferential access to funding – What we need to do further
We also understand a lot more that needs to be done. We know that Indian businesses need to be given a preferential access to funding. This would mean that these Indian businesses must be evaluated on a different basis than a standard evaluation process.
This would entail their credit scoring to become better and thus make them more “bankable” business.
This is something that we are working on. For the RM130 million under the 13 Islamic banks, we have also asked for the review of the two schemes under the SSFS program, whether to have it as a direct allocation which is co-managed by a Development Finance Institution and SEED, or as a Working Capital Guarantee Scheme, where the government guarantees 80% of the fund.
To this effect we have had several meetings with all the 13 Islamic commercial banks involved in this special fund to iron out implementation issues with regards to the SSFS program.
We have asked for a more market friendly criteria be established for these special soft loans.
If there are any further clarifications required please don’t hesitate to contact me at drk@seed.org.my

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