MIDA Smart Automation Grant (SAG): A smart move for small and medium-sized enterprises (SMEs) in COVID-19 pandemic business operation

Article by the Malaysian Investment Development Authority, MIDA

MIDA Smart Automation Grant (SAG):
A smart move for small and medium-sized enterprises (SMEs) in COVID-19 pandemic business operation

In efforts to build a resilient recovery against the backdrop of the COVID-19 pandemic, the Malaysian Government launched the National Economic Recovery Plan (PENJANA) Stimulus Package, valued at RM35 billion in June 2020, to support the nation and businesses in the ‘new normal’. Through 40 key initiatives, PENJANA emphasises three (3) strategic thrusts:

• Empower the People;
• Propel Businesses; and
• Stimulate the Economy.

Recognising SMEs as the backbone of Malaysia’s economy, which makes up 98 per cent of the total establishments in the country, the Government continues to assist and support SMEs and Mid-tier Companies (MTCs) to cushion the impact of the pandemic. Hence, the Smart Automation Grant (SAG) initiative was introduced with an allocation of RM50 million. MIDA initiates the SAG over a 12-month programme and companies are eligible to apply to MIDA from 4 December 2020 to 31 December 2021.

Given on a matching basis (1:1) based on eligible expenditures, up to a maximum grant of RM1 million per company, MIDA SAG is a structured programme with the following objectives:-

• assist and incentivise Malaysian owned SMEs and MTCs to automise and digitalise operations, production and trade channels;
• reduce reliance on low-skilled foreign workers;
• improve efficiency in the manufacturing and services sectors;
• provide job opportunities in high value-added sectors; and
• boost domestic investment.

Eligibility criteria for SME and MTC

MIDA has also collaborated with selected banks as strategic alliances to promote and provide knowledge to companies on automation and digitalisation. First, companies will go through a series of session which would help them to refine their knowledge on automation and digitalisation through simulation training and evaluations. Subsequently, companies will share their plans to start developing or adopting new technologies to automate their production process or digitalise their business operations. Successful companies under this programme then may submit their application to MIDA and pitch to the Approval Committee. To date, MIDA has engaged with two banks, namely, AmBank Group and Malaysian Industrial Development Finance Berhad (MIDF).

Since its launch, MIDA SAG has received tremendous response and high interest shown by the domestic industries. As at 31 May 2021, MIDA has received 493 applications, surpassing the original projection. As at 30 June 2021, the Smart Automation Grant Approval Committee has approved a total of 77 companies with matching grants amounting to RM48.5 million, of which 86 per cent of the recipients are SMEs. Approved companies are mainly from industries such as plastics, wood, furniture and textiles. This indicates productive undertakings aligned with the Government’s aspiration under the PENJANA to reduce dependency on low-skilled labour and ultimately increase automation as well as the productivity of manufacturing and services companies.

The Government has since added an additional RM50 million allocation for the SAG under the PEMERKASA stimulus package.

Moving forward, MIDA, as the national principal investment promotion agency under the Ministry of International Trade and Industry (MITI), will continue to assume a vital role in shaping the future of Malaysia’s digital economy, as well as to drive automation and digitalisation of SMEs and MTCs.

About MIDA
MIDA is the government’s principal investment promotion and development agency under the Ministry of International Trade and Industry (MITI) to oversee and drive investments into the manufacturing and services sectors in Malaysia. Headquartered in Kuala Lumpur Sentral, MIDA has 12 regional and 20 overseas offices. MIDA continues to be the strategic partner to businesses in seizing the opportunities arising from the technology revolution of this era. For more information, please visit www.mida.gov.my and follow us on Twitter, Instagram, Facebook, LinkedIn and YouTube channel.

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