Our Government has allocated a total fund of RM 200 million aside for companies who are taking their brand global. Called the “Brand Promotion Grant”(“the Grant”), the Government launched the Grant in 2003 under the Government’s new stimulus package to boost the economy.
According to Mr. Zakaria Kamarudin, the Senior Director of the Exporters Development Division of the Malaysia External Trade Development Corporation (MATRADE) who gave a talk on the Grant on October 29, 2007 at Hotel Nikko, the objectives of the Grant are to develop and promote strong Malaysian international brand names, to enhance image of the country as a manufacturer and supplier of high quality products and services and to encourage companies to shift from being an original equipment manufacturers (OEM) to original brand manufacturers (OBM).
The Grant should be considered by companies which have established their trade mark locally and are considering expansion into overseas markets. This is because not more than 10% of total grant approved is allowed to be expended on domestic promotion of the brand.
The types of brand promotion expenses that covered by the Grant are
- Branding/Marketing strategy consultancy fees (not more than 10%)
- Brand development (including trade mark searches and registration in overseas markets)
- Brand promotion (not more than 50%)
- Brand research
Since the brand promotion grant was launched, to date, a total of RM 81.64 million grant has been awarded to SME companies (29.56 milion) and non-SME companies (50.08 million).
The Grant is approved based on the projected spending of the Company over a two-year time frame. Mr. Zakaria further stated that companies are expected to execute their branding exercise within 2 years. Extension can be granted for one year upon request.
The Grant is awarded in the following forms:
Forms of grant
- 100% reimbursable grant of up to a maximum of RM 1 million. Only small and medium-sized enterprises (SME) are eligible for this.
- 50% reimbursable grant of up to a maximum of RM 2 million – for non SME companies only.
- Combination of 100% reimbursable grant and 50% reimbursable grant up to a maximum of RM 2 million – for SME companies only
Definition of SME
What companies constitutes as an SME? In the manufacturing sector, SME companies are companies which achieve annual sales turnover less than RM 25 million or have not more than 150 full time employees.
In the services sector, SME companies have annual sales turnover less than RM 5 million or full-time employees not more than 50 people.
As any other Government grant, there are certain criteria which a company must satisfy to be qualified for the Grant. In brief, the criteria are as follows:
- Company must be incorporated in Malaysia
- Minimum of 60% equity of the company must be owned by Malaysians
- Company must be the registered owner of the trademark in Malaysia
- For overseas markets, the company must either own the trademark or at least have conducted a trademark availability search in the overseas market
- Annual sales turnover of not more than RM 250 million (based on latest financial report)
- Product/services are already exported for at least 3 years
- At least 20% of sales derived from exports. For companies that do not meet 20% export condition, the application may be considered based on the following:
- resources invested on branding and company’s commitment to the branding programme
- promotion programmes and activities undertaken by company to promote brand
- trend in overall sales and export growth
- awards and recognitions received
- obtained international quality certifications such as HACCP, ISO, GMP etc
- products and services originate from Malaysia.
For products manufactured offshore, the brand can be considered if the company undertakes value added activities in Malaysia such as R&D, designing, packaging, marketing, distribution and invoicing.
Reasons for Unsuccessful Applications
According to Mr. Zakaria, the common reasons applications for the Grant are denied are that the applicant companies do not own any trademark (locally or internationally); there has not been any branding exercise executed by the company todate; presence of the brand/trademark of the company(locally or internationally) is less than 3 years; the company’s branding strategy and plan is not clear; the brand is attached to low value added products; the brand may be construed as foreign made; companies are reluctant to disclose their business strategy and companies have brands which are difficult to register and thus, fail in their local or international trademark applications.
To avoid the common pitfalls mentioned above, it is best that companies consult MATRADE advisers prior to submitting any Grant applications. The Application Form for the Grant is available in hard copy from the MATRADE Office or can be downloaded from the MATRADE website: www.matrade.gov.my
MATRADE’s contact details are as follows:
Jalan Khidmat Usaha,
Off Jalan Duta,
50480 Kuala Lumpur,
General Tel: 603-6207 7077
General Fax: 603-6203 7037 / 7033