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Funding and Incentives 
 

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SME  >  Biz Resources  >  Business Tips  >  Funding and Incentives
 
 
 Funding options available to start-ups in Malaysia

Venture Capital

Venture capital (VC) is, in a nutshell, "risk money". VC investments in companies are often not supported by any collateral and venture capitalists are dependent on successful management. Thus, while venture capitalists put in sizeable investments into companies, they have little control over the management of the company. The high risk they face is offset by potential high returns when an investee company succeeds.

Angel Funding

This is a form of venture capital from individual investors. Angel investors look for companies that exhibit high-growth prospects, have a synergy with their own business or compete in an industry in which they have succeeded. Companies seeking equity capital from angel investors must welcome the outside ownership, and perhaps the surrender of some control.

Grants

These are funds that are normally disbursed by government bodies, in order to help finance a new or underdeveloped sector that the government is eager to grow. Grants are issued under special programmes as part of the Ninth Malaysian Plan (visit www.epu.jpm.my/rm9/english/)

According to your company's needs you could apply for grants from:

  • Small-Medium Industries Development Corporation (SMIDEC)
  • Malaysia External Trade Development Corporation (MATRADE)
  • Malaysian Technology Development Corporation (MTDC)
  • Ministry of Entrepreneur and Co-operative Development (MECD)
  • Ministry of Science, Technology and Innovation (MOSTI)
  • Multimedia Development Corporation Sdn Bhd (MDC)

These grants may be helpful to your company

Brand Promotion Grant (MATRADE)
Grant for Business Planning and Development Grant (SMIDEC)
Brand Promotion Grant (MATRADE)

If you have a product with generic properties it can be tough to establish yourself, especially in the international market. For example, if you are the manufacturer of your own toothpaste, it is important to have a strong brand image in order to compete with strongly established brands. (Learn more about brand strategy in Section 9)

Brand Promotion Grant (MATRADE)

The objective of the Brand Promotion Grant (BPG) is to develop and promote Malaysian products and services abroad. This Grant applies to brands approved by MATRADE's Brand Grant Approval Committee. Evaluation of brands will take into account:

  • Branding Strategy and Plan
  • Business and Marketing Plan
  • Resources invested by the company on branding and its commitment to the branding programme
  • Activities undertaken to promote the brand
  • Trend in overall sales and exports over the past 3 years
  • Market share both local and overseas markets
  • Potential for the brand to further expand in the international market.
  • How the brand will help project Malaysia's image as supplier of quality products and services

How much you can get

A 100 per cent reimbursement grant for the development and promotion of a brand subject to maximum grant of RM1 million. SMEs are eligible to apply for this grant.

A maximum 10 per cent of the total grant approved will be disbursed in the form of "advance payment", while the remaining 90 per cent of grant approved will be disbursed as 100 per cent reimbursable grant. Advance payment will only be considered for all initial work related to development of the branding plan.

In order for your company to be eligible:

  • It should be incorporated under the Companies Act 1965.
  • It should have at least 60 per cent equity owned by Malaysians.
  • It should own the brand and be the registered approved owner of the trademark.
  • For the Brand Promotion Grant focus market, the company must own the trademark or at least have filed for the trademark registration in one of the markets.
  • It should have an annual sales turnover of not more than RM250 million (based on the latest financial report).
  • For manufacturing companies, annual sales turnover must not exceed RM25 million and full-time employees must not exceed 150.
  • For the services sector, the annual sales turnover must not exceed RM25 million and full-time employees must not exceed 50.
  • Product/services are already exported with at least 20 per cent of the sales from export.

For more information on this grant, contact:

Chief Executive Officer
Malaysia External Trade Development Corporation (MATRADE)
Export Facilitation Division
7th Floor, Wisma Sime Darby
Jalan Raja Laut
50350 Kuala Lumpur

Grant for Business Planning and Development (SMIDEC)

This grant is designed to help finance the advisory cost incurred for the following research activities:

  • Market feasibility studies
  • Technology feasibility studies
  • Business planning
  • Domestic and export market strategy

Eligible applicants include manufacturers, those with plans to go into manufacturing or those who are involved in services related to manufacturing which are promoted under the Promotion of Investment Act (PIA) 1986.

The maximum grant allocated per company is RM40,000 whereby 50 per cent of the total project cost is borne by the Government and the balance is borne by the applicant.

In order for your company to be eligible

  • It must be incorporated under the Companies Act 1965
  • Manufacturing companies or companies providing manufacturing-related services must not have an annual sales turnover exceeding RM25 million and full-time employees exceeding 150 persons
  • At least 60 per cent of equity must be held by Malaysians

For further information, contact:

Small and Medium Industries Development Corporation (SMIDEC)
Tel : 03-76287400
Fax: 03-76601919

To learn more about the disbursement of funds and government incentives, as well as how to apply for them, please visit these websites:
www.technopreneurdevelopment.net.my/cms/AllProduct.asp?CatID=69
www.smecorp.gov.my/

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