III. MECHANISMS FOR INTEGRATING ENVIRONMENTAL CONSIDERATIONS INTO AGRICULTURAL POLICY
B. Agricultural incentives
4. Financial and loan facilities for the agricultural sector(a) Export Credit Refinancing Scheme of Bank Negara
The Export Credit Refinancing Scheme (ECR) was designed specifically to meet the needs of exporters. It is aimed at promoting the exports of manufactured and agricultural products that have significant value-added and that utilize local indigenous resources. Agricultural products include livestock, fish, prawns, fruit, vegetables and flowers. In short, it is a reference to items in section I and II of the Harmonized Commodity Description and Coding System. ECR provides short-term credit at a preferential rate of interest to enable Malaysian exporters to price their export products competitively in international markets. Two ECR schemes are operated by commercial banks. Bank Negara refinances those banks.
A pre-shipment ECR facility provides working capital both to direct and indirect exporters. Indirect exporters are domestic suppliers of inputs to final exporters. The maximum period of financing for pre-shipment is for months.
A post-shipment ECR facility enables Malaysian exporters to obtain immediate funds upon the shipment of eligible goods sold on credit terms. The maximum period of financing for post-shipment is six months.
It should be noted that not all products are eligible for ECR. Only products not listed on the "negative list" are eligible for ECR. Furthermore, eligible products should comply with the minimum value-added 20 per cent and a minimum of 30 per cent domestic resource content criteria. Crude palm oil, rubber, vegetable oil products, agricultural food products and textile products are exempted from those requirements.
The Fund for Food (3F scheme) was established on 30 October 1992 with an initial allocation of M$ 300 million in order to promote investments in new capacity in food production. Since the establishment of the scheme, the criteria for loans have been liberalized, the interest rates reduced (from 7.75 to 4 per cent per annum) and the size of the loans has been increased. To further encourage the private sector to expand production of agricultural products and livestock, the fund has been expanded to M$ 600 million. The scheme provides financing at reasonable cost, covering:
Bank Pertanian Malaysia (the Agricultural Bank of Malaysia) was established in 1969. The objective of Bank Pertanian Malaysia, which comes under the Ministry of Agriculture, is to provide development credit for the agricultural sector. The target group, which comprises small farmers, fishermen and livestock owners whose incomes total less than M$ 1,000. The bank also serves the non-target group (involved in agriculture on a commercial basis) by providing credit and loan facilities.
Credit and loans are provided under the Special
Agricultural Loan Scheme. Loans below M$ 10,000 are given interest-free;
loans exceeding that amount are charged a lower interest rate of 3-6 per
cent. There are 15 such schemes in place for farmers, fishermen and institutions
linked to the development of small-scale farmers and fishermen.