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FMM's Soh urges Govt to set up to RM2b fund to assist MSMEs in ESG journey

FMM In The News: THE EDGE MARKETS, KUALA LUMPUR, Wednesday, December 7, 2022 - The Federation of Malaysian Manufacturers (FMM) on Wednesday (Dec 7) urged the Government to establish a one-stop centre and offer a fund of up to RM2 billion to assist micro, small and medium enterprises (MSMEs) in implementing environmental, social and governance (ESG) initiatives.

FMM president Tan Sri Soh Thian Lai said the proposed centre, which should fall under the purview of the Ministry of Natural Resources, Environment and Climate Change, would provide an opportunity for MSMEs to obtain affordable financing and resources to kick-start their ESG journey.

"The ESG fund should not only cater to certain industries, but include all industries that need financing and some government assistance for them to start implementing their ESG practices right now.

"We submitted our proposal to the previous government to establish the ESG fund via the recent Budget 2023 but it was not picked up. We will resubmit our proposal and hope that the new Government will consider it," he told Bernama on the sidelines of the FMM Entrepreneurship Conference (FEC) 2022 here on Wednesday. 

Soh noted that there is a need for greater adoption of ESG practices among MSMEs, as investors and financial institutions are increasingly placing greater importance on ESG elements before deciding where to invest and provide access to financing. 

"The ministry should also come up with a comprehensive policy by having a new task force to oversee the adoption of ESG among MSMEs while engaging industry players to understand their challenges," he added. 

Meanwhile, Ministry of Entrepreneur and Cooperatives Development secretary general Datuk Suriani Ahmad, in her keynote address, said MSMEs will need to seriously address ESG aspects of their business models to meet sustainability goals to remain relevant in global value and supply chains.

She said the Government, through Bank Negara Malaysia, had established a RM1 billion Low Carbon Transition Facility to support MSMEs in adopting sustainable and low carbon practices under Budget 2022. 

"Eligible MSMEs will be able to obtain financing of up to RM10 million per company, with a financing tenure of up to 10 years.

“As of July 6, 2022, 26 companies had applied for the facility, with a total financing of RM11.71 million," she said.

Her speech was delivered by SME Corporation Malaysia chief executive officer Rizal Nainy at the opening ceremony of the FEC 2022 on Wednesday.

The one-day conference, themed “Strengthening SMEs with ESG, going forward and expanding trade with Regional Comprehensive Economic Partnership (RCEP)”, focused on transitioning MSMEs towards a sustainable agenda, financing, market access and the global value chain.

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