Malaysia: MTDC to help SMEs boost Halal capabilities

By V.Ragananthini, The Sun Daily

KUALA LUMPUR: Malaysian Technology Development Corporation (MTDC) is looking to help 30 small and medium enterprises (SMEs) practicing halal principles to improve their technological capabilities via the Halal Technology Development Fund
The fund worth RM100 million set up under the 11th Malaysian Plan in 2016 was launched yesterday. So far four companies in the halal food industry and one from the cosmetics industry have secured RM25 million funds. They were presented with the mock-cheques yesterday. The fund aims to foster long-term export based growth for the SME’s market.

According to Tan Sri Rahman Mamat, a member of MDTC’s board of directors, companies approved for the funds have the potential to contribute to the gross domestic product (GDP) and will be able to compete at the global level with state of the art technology.

He also said that the potential of the halal market is vast but not free of its challenges, especially with foreign countries tapping in to the same market.

Hence it is crucial to ensure that the local products meet current standards with state of the art technology, especially in the food industry.

“With this fund we are hoping to help more SME’s develop and increase their productivity with the services we have arranged; not only in terms of funding but also through consultancy and reducing the challenges these entrepreneurs will face while bringing their products into the market, by providing them the platform.”

Malaysia’s exports value for halal products is worth RM37.7 billion and according to Malaysian Investment Development Authority (MIDA) the global halal food market has a potential worth of US$560 billion (RM2.49 trillion) a year.

According to MTDC’s CEO, Datuk Norhalim Yunus, SME’s will be able to obtain a funding of up to RM2 million for domestic businesses and RM4 million for exports based. MTDC is targeting export sales of RM50 million for the five companies under the fund, this year.

Besides aiding SME’s, MTDC is also looking to sustain the funds by issuing convertible promissory notes.

“We are trying to change the concept of the government giving money. We want to invest in the company so that whatever benefits we get from it, we put aside for the fund,” said Norhalim.

This way MTDC hopes to increase the fund size to more than RM100 million by the end of the 11th Malaysia plan in 2020.

About 75% of the funds for the companies will be in the form of convertible promissory notes with a maturity period of up to three years and a redemption rate of 12.5%. At the point of maturity, the company gets to choose if it wants to repay the funds accepted or convert it into equity stakes.

Norhalim said companies choosing the option of equity conversion could benefit from having an established name like MTDC as a shareholder when venturing into the overseas market.

The five companies that received the funds so far are Organic Gain Sdn Bhd, Vanity Cosmeceutical Sdn Bhd, DMS Resources Sdn Bhd, Hernan Corporation Sdn Bhd and PS Food and Beverage Sdn Bhd.