KUALA LUMPUR (Sept 28): The Ministry of Entrepreneur Development and Cooperatives (MEDAC) will propose the introduction of incentives such as tax relief for companies to the Cabinet in an effort to encourage more alternative micro-funding from the private sector.

Minister Datuk Seri Dr Wan Junaidi Tuanku Jaafar said this would help reduce reliance on the conventional way of government funding and grants to finance business needs given that demand for such financing is growing amid limited government capacity.

Hence, the ministry would facilitate and promote access to a diversified financial landscape via alternative financing platforms spearheaded by the private sector, he told reporters at the memorandum of agreement (MoA) signing ceremony between SME Corp Malaysia and Axiata Digital Capital Sdn Bhd here today.

"I can bring this matter to the Cabinet for incentives, such as a tax holiday, tax rebate and so on, or credit guarantee from the government can be given if there is any application.

"We’re looking into the trend [where] the government's commitment is reduced due to other commitments," he said.

The MoA is to provide micro-financing worth RM150 million for small and medium enterprises (SMEs), which will likely be disbursed in 18 months.

Asked whether the government would slash allocations for funding and grants for micro-financing in the upcoming Budget 2021, Wan Junaidi said the reduction plan is not immediate.

He said MEDAC would request some allocation from Budget 2021 from the Ministry of Finance (MoF) for informal business and micro SME development, especially in rural areas, as well as less developed states such as Kelantan and Sarawak.