Funding Your Export Business: A Guide for Malaysian SMEs

Securing a low-interest and flexible funding is a tricky subject matter for entrepreneurs, particularly the ones operating small and medium enterprises. But when it comes to scaling up a small and medium enterprise to export-ready level, it becomes exponentially harder to discover the perfect funding opportunities. That’s where you need to step up in your game and look for alternatives that best suit your business.

During the Malaysia Halal Expo 2019, two sessions took place discussing several funding platforms to help Malaysian SMEs to scale up and expand their business especially into foreign markets. “Finance Your Exports” was one of the forums, featuring representatives from EXIM Bank, SME Bank as well as Association of Islamic Banking Institutions Malaysia (AIBIM) discussing the access to financing of exports for SMEs in Malaysia.

Among the discussions of the session was the importance of export financing, both as a means of hedging in forex as part of international competitiveness as well as to cope with the exponential increase of production cost as volume grows naturally with the venture of the firm into international export business. EXIM (Export Import Bank of Malaysia Berhad) Bank is one of the notable key players in aiding entrepreneurs, Malaysian or otherwise, in this by providing three types of financing.

The first is financing for exporters specifically in the halal goods industry. Dubbed as the Halal To Overseas (H2O) fund, EXIM Bank provides financing up to a maximum of 5 million ringgits to firms. The biggest prerequisite for firms to fulfill is to obtain JAKIM Halal Certification as well as have a steady trade track record. The other two financing offered are supply credit financing and financing for foreign buyers to buy Malaysian goods.

It is essential however, that SMEs hoping to benefit from these financing schemes to have a good credit record as well as prior export experience. For SMEs without prior experience, Mr Baharuddin Muslim of EXIM Bank recommends that these companies approach other funding options from numerous government agencies such as MARA and TEKUN before approaching EXIM Bank for financing.

One such government agency is Malaysian Technology Development Corporation (MTDC) which in its own slot during MHE2019, shared with the audience two different funds to which they can apply to, namely: Dana Halal 1 and Dana Halal 2. The first caters to enterprises seeking funding for the local market while the latter focuses on exporting enterprises with a funding capped at RM4 million ringgit! Both are offered on a convertible promisory note (soft loan) basis with the 2 first years set aside for implementation and the following 4 years focused at repayment to MTDC.

As long as these enterprises are registered with the Companies Commission of Malaysia (SSM) and are owned by local shareholders up to 60%, they are eligible for the MTDC funds and are encouraged to pitch their business ideas every Monday to MTDC. With numerous funds aimed at helping local SMEs unlock their full potential and be able to compete internationally, we are sure to see a larger number of high quality Malaysian export products in the recent future!





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