Soft Loan Scheme for Automotive Development (MIDF)

Soft Loan Scheme for Automotive Development (MIDF)

The SLSAD was launched in February 2007 to:

i. Encourage automotive parts and components manufacturers to rationalise their operations; and,
ii. Assists companies in: tooling acquisition, development and production; productivity improvement; and,
iii. enhancing export performance.

Eligibility Criteria and Main Features

1. Eligibility:

i. Companies incorporated under the Companies Act 1965:

a) at least 60% equity held by Malaysians; possesses a valid business licence;
b) in operation for at least 2 years; and,
c) registered members of Malaysian Automotive Component Parts Manufacturers Association (MACPMA), PROTON Components and Parts Manufacturers’ Association or PERODUA Vendors Club.

2. Sectors:

i. Automotive parts and components manufacturing.

3. Financing Amount:

i. Rationalisation of Components and Parts Manufacturers
Minimum : RM500,000.
Maximum : RM5 million per application.

ii. Tooling Acquisition, Development & Production
Minimum : RM500,000.
Maximum : RM10 million per application.

iii. Productivity Improvement
Minimum : RM50,000.
Maximum : RM500,000 per application.

iv. Export Enhancement Programme
Minimum : RM50,000.
Maximum : RM250,000 per application.

4. Items Eligible For Financing:

i. Rationalisation of Components and Parts Manufacturers. Financing for:

a) Due diligence exercise.
b) Purchase of existing machinery and equipment.
c) Related expenses to undertake rationalisation exercises (mergers & acquisitions – M & As) such as registration fees and services undertaken by investment bankers.

ii. Tooling Acquisition, Development & Production. Financing for:

a) Acquisition of moulds, dies, jigs and fixtures.
b) Development of prototypes and system design.
c) Product testing and registration.
d) Acquisition of new or reconditioned machinery and equipment.*
e) Initial patent and industrial design registration / patent and industrial design research.

Working capital.

* The age of reconditioned machinery/equipment shall not be more than 5 years old.

Financing for:
Existing machinery/equipment, moulds, dies, jigs and fixtures and factory mortgages currently financed by other lending institutions. **

a) Companies which are appointed vendors of PROTON and/or PERODUA and which maintain performing accounts with financial institutions are eligible.
b) Letter of Support from PROTON and/or PERODUA.
c) For fixed assets acquired in producing components for existing PROTON and/or PERODUA models which were launched not more than 3 years before the date of the financing application (“the relevant models”).

iii. Productivity Improvement. Financing for:

a) Training expenses for TS 16949 and ISO 14001 certification.
b) Licensing and technical fees for engineering process improvement.
c) Machinery/equipment testing and calibration.
d) Manufacturing process layout.

iv. Export Enhancement Programme. Financing for:

a) Participation in trade exhibitions and missions approved by MATRADE.
b) Expenses for overseas sample testing for international standards conformance.
c) Market surveys and feasibility studies.

5. Percentage Financing:

Up to 70% for mergers and acquisitions
Up to 90% for other eligible items.
Up to 100% for existing loan principal amounts with other financial institutions (existing machinery / equipment / moulds / dies / jigs / fixtures).
Up to 90% for factory mortgages.

Working Capital Financing – Up to 100% for Purchase Revolving Credit and up to 90% for Sales Revolving Credit.

6. Repayment:

a) 3 to 7 years including grace period of up to 2 years (except for working capital financing).
b) Financing of existing machinery / equipment / moulds / dies / jigs / fixtures – The tenure shall not exceed the commercial production period for the relevant models with a maximum tenure of 5 years with no grace period.
c) Financing of factory mortgages – The tenure shall not exceed 12 years including grace period of up to 2 years.
d) Working Capital Financing (Purchase Revolving Credit & Sales Revolving Credit) – Up to 150 days for each drawdown including an option to rollover for a period not exceeding 60 days for eligible borrowers.

7. Interest / Profit Rate:

4% per annum on yearly rest (SMEs).
5% per annum on yearly rest. (Non-SMEs)