Bumiputera Businesses Get $50m Boost
By Malai Hassan Othman and Suriani Garip

Ms Yvonne Chan of Baiduri Bank exchanges the agreement with Hj Abd Wahab Juned as Pehin Rahman looks on. Photo by Rudolf Portillo

Ailing bumiputera or indigenous enterprises were given a whooping fifty-million-dollar shot in the arm yesterday that is sure to give them a new lease of life in the wake of the current difficult economic situation.

The Government of His Majesty the Sultan and Yang Di-Pertuan of Brunei Darussalam announced this as its latest economic recovery initiative to stimulate the growth of bumiputera businesses in the country which were apparently affected by the recent economic downturn.

The latest multi-million-dollar recovery initiative comes in the form of a so-called working capital credit line which starts from a minimum of $10,000 to as much as $1.5 million.

It will be made available to any bona fide bumiputera entrepreneur. A local company with foreign partner is also given the opportunity to avail this facility. They could utilise the credit line facility for a working capital or to finance a feasible project upon approval by banks appointed by the government to administer the credit facilities. The endorsement of Brunei Darussalam Economic Council or BDEC is also necessary in the approval process.

All banks, except Citi Bank, in Brunei are participating in the latest economic recovery schemes or better known as a government-led stimulus package which have been carefully crafted since 1999 when BDEC was set up to spearhead recovery efforts to restore the economic health and growth of the country.

BDEC, whose members comprise mostly senior representatives of private companies and organisations, in 1999 put in its recommendation that the association of banks should produce within two weeks fast track schemes approving lines of credit for contractors. It also drew up in its action plan that banks open up a $200 million working capital credit fund of which 75 per cent would be backed by government guarantees. It would be open to local, private sector companies with 60 per cent to be set aside for bumiputera owned companies.

This new initiative has not been hastily drawn up and launched by the government and banks due to pressure from news media or from business people as has been perceived by some quarters.

"This is a continuation of the government's ongoing efforts with the support of BDEC to restore the economic health and growth of the country through short and long term action plans. The government (in this latest move) has formalised a cooperation with commercial banks to set up yet another loan scheme for small and medium enterprises," said Pehin Dato Haji Awang Abdul Rahman Taib.

"In 1999 the government had given the green light to set up a loan facility scheme for small and medium enterprises.

"This scheme was set up by the Ministry of Industry and Primary Resources in cooperation with the then Brunei Development Bank (now known as the Islamic Development Bank of Brunei)," said the minister in his speech to mark the launch of the latest loan facility scheme.

"The objective of the scheme is to provide financial assistance to small and medium enterprises and to encourage more bumiputeras to start up a business, and to develop further their existing businesses by participating in projects in the domestic front and in the region," explained the minister.

However, he said, the earlier scheme was only offered to those who ventured into agricultural, fisheries, manufacturing and tourism fields.

The scheme was only for Malay entrepreneurs and for joint venture companies where the Malays owned not less than 30 per cent equities in the business.

He said the new scheme is special as it offers low interest rate, flexible installment repayment scheme and government guarantee.

So far 15 loans worth around $5 million have been approved by the Islamic Development Bank.

"This scheme is progressing well now," said Pehin Rahman.

He said the latest scheme, called the working capital credit facility, though similar in nature with the earlier one, is actually significantly different in some ways.

Firstly, eight commercial banks are participating in implementing the scheme and share the risk with the government in a ratio of 75 per cent government and 25 per cent banks.

Secondly, the government and banks share equally the lending rate of four per cent charged on the amount of loans approved, explained the minister.

He said, in the latest scheme, 60 per cent of the total amount of credit facility to be made available is allocated to bona fide bumiputera-owned companies while the rest of the 40 per cent will be opened up to joint venture companies between bumiputera or permanent residents and foreign investors.

This scheme is open to all sectors of business in the country, especially to projects under the Economic Recovery Plan such as low-cost housing projects, small-scale tourism infrastructure, information technology, hospitality and tourism.

The value of this scheme is initially set at $30 million and would be increased to as much as $50 million if required.

Another special element is the competitive nature of the scheme.

Banks participating in the scheme would be carrying out campaigns to promote this scheme and to attract borrowers to their banks, said the minister.

Courtesy of Borneo Bulletin