Malaysian Budget Financing Measures

Putting together the financing initiatives found in the Malaysian Mini Budget which was just rolled out:

First a brief summary
* RM60 billion for stimulus budget, almost 9% of the GDP, to be implemented in 2009 to 2010.

• RM15 billion is fiscal injection,
  
• RM25 billion guarantee funds
• RM10 billion equity investments
• RM7 billion private finance initiative (PFI) and off-budget projects, as well as
  
• RM3 billion in tax incentives.

Working Capital Gaurantee Scheme ($5bn)
The Credit Guarantee Corporation under Bank Negara Malaysia provides Skim Jaminan Usahawan Kecil to fund working capital of SMEs, with shareholder equity of less than RM3 million.To assist medium-sized companies access to working capital to finance operation during downturn. The maximum loan amount will be RM10 million with a maximum repayment period of five years. 80:20 default risk sharing. Eligibility raised to Malaysian companies with shareholders funds of less than RM20 million eligible (subsidiaries not eligible).

Industry Restructuring Loan Guarantee Scheme ($5bn)
The slower economic environment provides us with the opportunity to improve the economic structure of the nation and shift rapidly towards increased productivity and higher value-added activities, as well as promote greater use of green technology.

To accelerate this shift, the Government will set up an Industry Restructuring Guarantee Fund Scheme to provide loans increase productivity and value-added activities, as well as the application of green technology. Scheme for companies with shareholder equity less than RM20 million, the Government will provide a guarantee based on the ratio of 80:20, with Government guarantee of 80%, and the remaining 20% by financial institutions. For companies with shareholder equity of RM20 million or more, the guarantee ratio will be 50:50.

The maximum loan is RM50 million to be repaid within a period of 10 years.

Facilitating Access to Capital Market (Up to $15bn)
"Under the current market conditions, even companies with investment grade ratings are unable to access the capital market, particularly the bond market.

To assist and facilitate these companies access the bond market, the Government will establish a Financial Guarantee Institution to provide credit enhancement to companies that intend to raise funds from the bond market. This measure will also further develop the domestic bond market.

Bank Negara Malaysia will assist in the setting up of this institution. This government-owned company will have an initial paid-up capital of RM1 billion, which will subsequently be raised to RM2 billion. It is expected that bonds totalling RM15 billion will be raised under this facility."

Najib's speech is found here