KUALA LUMPUR:  In order to drive the government’s green technology development agenda, Malaysia Debt Ventures Bhd (MDV) plans to disburse RM300 million in loans over the next year for both startups and existing companies that produce green tech products, said managing director and CEO Md Zubir Ansori Yahaya.

Speaking after the launch of MDV’s Green Technology Financing Programme here by Deputy Finance Minister I Datuk Donald Lim Siang Chai yesterday, Zubir said three companies had applied for loans amounting to RM60 million.

“Presently, our portfolio (for loan disbursement) stands at 85% for ICT and 15% for biotech. In the long run, we hope to make it 60% ICT, 20% biotech and 20% green tech,” he said, adding that MDV’s fund size was RM4.1 billion.

MDV, which is owned by the Ministry of Finance (MoF), offers loans on a project basis to higher-risk, high-growth emerging sectors that conventional banks are likely to be cautious about such as ICT, biotechnology and green technology.

According to Zubir, the minimum amount for the contract loan could be RM250,000 with financing margins up to 85% of the contract value and loan tenure period of up to 10 years.

However, as green technology could be quite capital-intensive, he said normal contract sizes could vary from RM2 million to RM50 million, and even go up to RM120 million.

MDV said it is collaborating with Malaysia Green Technology Corp for this financing programme to identify potential green-certified companies for financial assistance.

Meanwhile, Lim said this initiative was in line with the government’s push towards green technology development and to complement national efforts through the existing Green Technology Financing Scheme under the MoF to boost activity in the area.

“Last year, of the RM1.5 billion allocated to encourage companies to invest in innovative green technology, only RM204 million was approved (for disbursement), leaving RM1.30 billion still available,” he said of the existing scheme.

Lim said to date 109 applications had been received with 83 awarded the “Green Certificate”, making them eligible for financing. Meanwhile, 13 had been approved for financing.

Under the MoF’s financing scheme, entrepreneurs and businesses will approach banks for funding after receiving certification from the Malaysia Green Technology Corp.

However, Lim said the take-up rate was still below expectations despite the fact that the government bears 2% of the total interest rate and provides a guarantee of 60% on the financing amount with participating financing institutions taking on the responsibility of the additional 40%.

“Another RM1.5 billion has been allocated for 2011; we want to engage with industry players to see how we can improve the take-up rate,” he said.

On MDV’s future funds, Zubir said it had issued a sukuk of RM1.5 billion in 2008 and utilised RM1 billion so far, with RM500 million left.

“We plan to draw down over the next year, but for now we have sufficient funds,” he said.

Zubir declined to comment when asked about MDV’s recovery and default rates, saying that MDV focused more on contract financing, evaluated based on the borrower’s cash flow.

This article appeared in The Edge Financial Daily, May 4, 2011.