2nd Regional Conference for Credit Guarantee Schemes

2nd Regional Conference for Credit Guarantee Schemes
SMEs Financial Inclusion - Guarantee Schemes
International Best Practices
By
Mohamad Zamree Mohamad Ishak
12 May 2016
This proposal is the sole property of Credit Guarantee Corporation Malaysia Berhad. (12441-M) This intellectual property should not be
disseminated or otherwise conveyed to any third party without the prior written permission of the Corporation.
ORDER OF PRESENTATION
1.0 Brief on CGC Malaysia
2.0 Malaysia’s Holistic SME Ecosystem
3.0 CGC Malaysia - Journey & Experience
4.0 Conclusion
2
1.0 BRIEF ON CGC MALAYSIA
1.0
Brief on CGC Malaysia
“We should aim to reach a situation in which poverty or lack
of capital is no bar to success in business or industry”
-Statement made by the late Tun Tan Siew Sin (Finance Minister of Malaysia) in conjunction with the setting up
of CGC Malaysia in 1972
• Incorporated on 5th July 1972

Companies Act of 1965
• Authorised Capital:

USD750 mil. (RM3.0 bil.)
• Paid Up Capital
 USD396
mil. (RM1,585.6 mil.)
• Shareholders’ Fund
 USD740
mil. (RM2,958.7 mil.)
• Shareholders
 Central
Bank of Malaysia
 Financial
Institutions
– 78.65%
– 21.35%
4
2.0 MALAYSIA’S HOLISTIC
SME ECOSYSTEM
2.1 Malaysia’s Holistic SME Ecosystem
Description
• National SME Development Council
(established in June 2004) chaired by
Rt. Hon. Prime Minister of Malaysia
• Members: 13 Ministers (e.g. Minister in
Prime Minister’s Office, Minister of
International Trade and Industry,
Minister of Agriculture) & 3 Heads of
Agencies (Chief Secretary to the Gov.,
Governor of Central Bank of Malaysia,
Director General of Economic Planning
Unit)
• NSDC is the highest policymaking
body to chart SME development in
Malaysia
Key Roles
• Formulate broad policies on SME
development
• Oversee coordination of policy
implementation
• Ensure
effectiveness
of policy
implementation
2020: 41.0%
2014: 35.9%
2005: 29.4 %
Enhance
SME’s
Contribution
to GDP
6
2.2 SME Masterplan identified 6 Focus Areas
to accelerate growth of SMEs
Source : Central Bank of Malaysia
7
2.3 The focus area on Access to Financing is
underpinned by 5 main pillars
• Microfinance Institutional
Framework
• Strengthening the Development
Financial Institutions
• Central Credit Reference
Information System (CCRIS)
• Credit Guarantee Corporation
• Credit Bureau Malaysia
• SME Financing Facilitation
(Asso. of Banks in Malaysia –
PARTNER)
Financial
Infrastructure
• Train-the-Trainers
• SME events
• Media promotions
• Distribution of
promotional materials
through local
authorities
Outreach &
Awareness
Programmes
• Small Debt Resolution
Scheme
• Credit Counselling & Credit
Management (AKPK)
Source : Central Bank of Malaysia
SME
Financing
Ecosystem
Debt
Resolution &
Management
Financing &
Guarantee
Schemes
Avenues to
Seek
Information &
Redress
• BNM’s SME Funds
• CGC Guarantee Schemes
• Green Technology Financing
Scheme
• Emergency Funds
• BNMLINK, BNMTELELINK,
MOBILELINK
• Financing Help Desks at SME
Business Associations
• ABMConnect Helpdesk
• Bankinginfo & SMEinfo web portals
• Complaint & SME Advisory Units at
FIs
8
2.4 SME Financing Support at all stages of
business cycle
SME Corp provides advisory, training and entrepreneurial development to SMEs
Loans by
DFIs
Loans by Govt
agencies
SME Bank
CGC
Agrobank, Bank Rakyat, BSN, EXIM
AIM, TEKUN, PUNB, MARA, PNS, SME Corp
MDV
Loans by Banks
Commercial Banks
Equity
Grants
Venture capitalists
Small Debt
Resolution
Scheme
Stock Exchange
MTDC, CIP, MOSTI,
MDec, Biotech
CGC
Guarantee
Syarikat Jaminan (PROKHAS)
Seed and
Start-up
Source : Central Bank of Malaysia
Early Stage
Companies
Growth /
Expansion
Companies
Expansion/
Large ent.
Distressed
Companies
3.0 CGC MALAYSIA
JOURNEY & EXPERIENCE
3.1 CGC Malaysia is a key institution in
Malaysia’s Holistic SME Ecosystem
The evolution…..
Implemented/established:
1972 – 2000:
Paving the path for FIs to
lend to SMEs
2000 – 2005:
Address needs of SMEs
in changing environment
• Provide comfort to banks, to increase
receptiveness of SME customers
• Concessionary guarantee fee to keep
borrowing cost low
• Expanded branch network nationwide
• Implemented Direct Access Guarantee
Scheme
• Enhanced advisory services to SMEs
2005 – 2015:
Perform social mandate
sustainably
• Achieve financial sustainability
• Expand products and services to meet
evolving needs of SMEs
• Balance financial sustainability with
developmental role
•Risk-adjusted pricing
•Rebates for SMEs with good track
record
•Portfolio guarantee/ wholesale
guarantee
•Securitisation for SME loans
•Credit Bureau Malaysia
•Govt-sponsored schemes
– Crisis schemes
– GT financing scheme
•IP financing scheme
•Start-up, contract financing &
women schemes
Moving forward:
•Find niche areas to address
financing gaps
•Lower cost of financing for SMEs
CGC availed more than 437,000 financing to SMEs amounting to USD15 b (RM59.5 b)
Source : Central Bank of Malaysia
11
3.2 CGC’s 5-Year Strategic Plan (2016 – 2020)
Aspiration
To be the household name for SMEs by 2020
Vision
To be an effective financial institution dedicated to promoting the growth and development of
competitive and dynamic small and medium enterprises
Mission
To enhance the viability of small and medium enterprises through the provision of products and services
at competitive terms and, with the highest degree of professionalism, efficiency and effectiveness
Core Values
Teamwork; Hardworking; Nurturing; Knowledgeable (T.H.i.N.K.)
Strategic
Objectives
15 Strategies
&
31 Initiatives
Headline
Targets
for 2020
S.O #1
S.O #2
S.O #3
S.O #4
Reposition CGC to
become more proactive
and relevant
Ensure sustainable
growth
Enhance human
capital
Enhance operational
efficiency and
effectiveness
7 strategies
13 initiatives
5 strategies
8 initiatives
1 strategy
8 initiatives
2 strategies
2 initiatives
Loan Base
USD3.6b
(RM14.5b)
Guarantee
Reserve Ratio
4 times
Pretax
Profit
USD40m
(RM160m)
Cost to
Income
35% capped
Graduation
Rate
50%12
Brand
Awareness
80%
4.0 CONCLUSION
4.0
Conclusion
14
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THANK YOU