Rafizi – Loans, not grants, to strengthen bumi economy
21 May 2024 CYBERJAYA: In a break from past practices, the unity government is moving away from giving grants to bumiputra entrepreneurs. Instead, it will assist them with loans as part of its agenda to strengthen the community’s economy. By getting entrepreneurs to pay back what they borrow, the government hopes to create a steady supply of funds that could benefit more such businessmen, said Rafizi Ramli. Under the initiative, the government also hopes to build a sustainable business ecosystem producing the right kind of professionals and businesses that will see micro and small enterprises scaled up to create value, the Economy Minister told reporters after an event here yesterday featuring three of the ministry’s agencies tasked with bumiputra empowerment.
The agencies – Teraju, Ekuiti Nasional Berhad (Ekuinas) and Yayasan Peneraju (Peneraju) – have been realigned to focus their resources and energies on creating the bumiputra business ecosystem envisioned by the ministry.Rafizi emphasised that the “tougher” approach of building an ecosystem and assisting businesses with credit instead of grants, would be more effective at creating successful bumiputra firms.
“One of the differences (from the past) is focus. For instance, in the past, Teraju gave out grants to everyone, large or small. They did not focus on building an ecosystem,” Rafizi said.
“Peneraju also gave scholarships to every bumiputra who wanted to be professional, but it was up to them to decide what kind of professional they wanted to be.”
This approach, he said, “did not connect the dots” between the professional talent being nurtured and the grants being given out to entrepreneurs.
As part of its own realignment, Peneraju, which was previously tasked with creating bumiputra professionals such as chartered accountants and chartered financial analysts, will now focus on nurturing business leaders. Peneraju chief executive officer Ibrahim Sani said that instead of just creating more professionals to join the workforce, the foundation’s new accelerator programme will train talent to start venture capital funds.
“This will hopefully create a cycle, and bumiputra entrepreneurs need people to invest in their companies,” he said during the event.
Similarly, Ekuinas, which previously concentrated on assisting large bumiputra companies to become listed on the stock market, will now offer loans and credit to mid-size businesses to enable them to scale up. Ekuinas chief executive officer Datuk Syed Yasir Arafat Abd Kadir said this was because medium and small firms often had trouble getting loans from banks, which then hobbled their ability to expand. On the strategy of providing credit instead of grants, Rafizi said this would ensure that only those who are serious about building a business would apply for the funds.
“If you give out a grant of RM500,000 to someone and, at the end of two years, he says the business flopped, that money would be wasted. It could’ve gone to so many other people.
“We want people who want to really do business because they have to repay what they borrowed. They will only take money if they are confident they can pay it back.
“We don’t want our funds to just go to 500 people; we want them to go to thousands, but in order to do that, we have to roll the money.”
Rafizi stated that this strategy would generate additional funds and opportunities for bumiputra firms to expand, enabling them to list on the stock market and achieve sustainability.
“We must work on the assets and the funds. It is controversial, but my hope is that people will know that a tougher approach is what is needed for bumiputra entrepreneurs to accelerate their competitiveness.”
Source: The Star