KUALA LUMPUR, Nov 23 (NNN-Bernama) -- To simplify access to small and medium enterprise (SME) financing, the government has decided to rationalise the existing seven grant schemes implemented by SME Corp Malaysia into two.

This will be effective from January next year, International Trade and Industry Ministry Mustapa Mohamed said Monday.

the two new schemes are grant for enhancement of capacity buildings and grant for skills upgrading, he said.

"We are not removing any elements available in the existing schemes but compressing them into two schemes," he told reporters after chairing the SME CEO Roundtable Luncheon organised by SME Corp here.

Mustapa said the existing grant schemes provided financial assistance for SMEs to start up their business, enhance capability in developing products, upgrade processes, acquire certification and quality management, improve packaging, and undertake promotion and marketing.

According to him, the rationalisation can improve use of government financial resources effectively, optimising value for money for the grant schemes that is given to the right target groups and catalysing the outcome based on projects.

To start the new schemes effectively, SME Corp will temporarily suspend all new applications for one month starting Nov 30, 2009, to process balance of grant applications and claims received from September to November 2009, he said.

Mustapa said the recent economic turmoil had affected the SMEs, which resulted in an increase in applications for the grant schemes.

There has been a three-fold increase in terms of average monthly applications received this year compared to the 2006-2008 period, with 5,126 applications and claims pending for approval or payment.

"SME Corp is optimistic of clearing the pending backlog of applications for grants from SMEs by end of this month," he said.

Mustapa said SME Corp managed to clear almost 50 per cent or 2,240 of backlog applications as well as claims in October and simultaneously received 1,920 new applications and claims from SMEs.

To date, RM192 million had been disbursed from RM293 million fund allocated for SMEs this year, he said.

-NNN-BERNAMA