LAUNCHING OF RM1.0 BILLION SME GROWTH ACCELERATION FUND

BY

YB TAN SRI NOR MOHAMED YAKCOP
MINISTER OF FINANCE 11

Y.Bhg Tan Sri Dato' Seri Dr Zainul Ariff Hj. Hussain,
Chairman Bank Pembangunan Malaysia Berhad.

Y.Bhg Dato' Gumuri Hussain,
Chairman SME Bank.
 
Y.Bhg Datuk Abdul Rahim Mohd Zin,
President / Group Managing Director Bank Pembangunan Group and Chairman Of SME Growth Acceleration Fund Sdn Bhd.

Y.Bhg Datuk Azmi Abdullah,
Managing Director SME Bank.

Members of the Board, Bank Pembangunan & SME Bank,
 
Distinguished Guests,

Ladies and Gentlemen,

Assalamualaikum w.b.t dan salam sejahtera.
 
Terlebih dahulu saya ingin mengucapkan terima kasih kepada  Bank Pembangunan Malaysia dan SME Bank kerana sudi menjemput saya bagi melancarkan dana bagi perusahaan kecil dan sederhana negara. Saya juga ingin mengucapkan tahniah kepada kedua-dua bank di atas kejayaan melancarkan dana SME Growth Acceleration Fund yang berjumlah RM10 bilion. 

Ladies and Gentlemen,

2.    Today we will witness another important milestone in the Government's comprehensive approach towards developing our local SMEs and to further to develop them into a stronger, efficient, and viable businesses.
3.   Indeed, it is the bank's primary objective to provide financing facilities for the enhancement of SMEs businesses by creating a group of energetic and competitive SMEs and entrepreneurs. I am happy to note that since its formation, SME Bank has entered into strategic partnerships with several government and non-government agencies and private institutions such as SMIDEC, PUNB, MARA, PNS, and Credit Guarantee Corporation to ensure that these comprehensive support programs are made available to the SMEs.  These integrated and business development services will undoubtedly provide valuable and timely assistance to the SMEs. 

Ladies and Gentlemen,

4.   The establishment of the SME Growth Acceleration Fund Sdn Bhd which specializes in equity financing for SMEs so as to accelerate its growth, reflects Bank Pembangunan Malaysia Berhad and SME Bank's strong commitment toward providing an alternative source of financing through a venture capital fund to further strengthen the efforts to assist SMEs, particularly when that growth exceeded their abilities to borrow and hence require long-term equity capital.
5.   The fund will augment SME Bank's primary role, which is to contribute towards the growth of a more robust entrepreneurial community in Malaysia.  This is also in line with the Bank's vision to be the SME Hub by 2010 with a focus on the development of the Bumiputera Commercial and Industrial Community (BCIC).
6.   In this regard, the launching of venture capital fund dedicated for SMEs as another source of financing will augur well with the SME Bank's function, as a one-stop center responding to the funding and business growth needs of the sector. 

Ladies and Gentlemen,

7.   The venture capital industry of Malaysia has through the years progressed significantly as an alternative source of financing to the economy. This is evidenced by: -
i. As at end of last year, the total available funds for venture capital investments increased by 14.3 per cent to RM2.6 billion compared to 2004.
ii. The total number of venture capital funds has increased to 48 in 2005 compared to 38 the previous year while the number of venture capital management companies has increased to 39 compared to 34 during the same period.
iii. The total number of investee companies has increased to 380 in 2005 compared to 332 in 2004 and,
iv. As at end of 2005, the Government remained as the largest contributor for venture capital funds with 37.8 per cent of the total funds of RM2.6 billion.
8.   It is noted that existing Government-funded venture capital companies are involved in financing new growth areas and potential companies at the seed and start-up stages. However, a substantial number of SMEs has past these stages of growth but still lack sufficient long-term capital to address the next level of growth.
9.  Thus, the injection of long term equity through the SME Growth Fund coupled with other value-added services by both the Bank and the Fund Manager will accelerate the growth of these SMEs into next level of expansion into stronger and profitable companies, ready to take on bigger markets and develop better products and services.
10.   In this regard and as mentioned earlier by Datuk Abdul Rahim on the fund raising exercise for the remaining RM800 million for the SME Growth Fund, I hope that the private sector will participate in the exercise to ensure the continued success of the SME Growth Fund.
11.   SMEs represent important segment of the economy as they offer sources of business innovations to deliver new opportunities, products, services as well as technologies. There are also a good source for financial rewards given a medium term risks and the clever selection of SMEs.   In addition, SMEs play an important role in job creation and form an integral part in the overall production network particularly through their support to larger companies, including multi-national corporations. Therefore, it is crucial that all programs designed to assist SMEs are implemented successful to ensure its continued growth and development.
12.   It is hoped that through the various sources of financing and advisory services already on stream, SMEs are able enhance their capacity and capability to become regional and, eventually, global entities.
Ladies and Gentlemen, 
13.   On that note, it is my pleasure to officially launch the SME GROWTH ACCELERATION FUND SDN BHD. I wish the SME GROWTH FUND every success in achieving its objective of accelerating the growth of SMEs in Malaysia.

Thank you.

Ministry of Finance
14th August 2006