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1. Introduction

Fund for Food (3F) was launched by the Government in 1993, and as at today the Government has allocated RM1 billion for this Fund.

The objective of the fund is to support the Government's efforts to promote investment in the food production activities at reasonable cost. This fund is offered by the Participating Financial Institutions (PFIs) which is made up of all the commercial banks, Bank Islam Malaysia Berhad, Bank Muamalat Malaysia, Bank Pertanian Malaysia, Bank Industri dan Teknologi Malaysia Bhd., and Bank Pembangunan dan Infrastruktur Malaysia Berhad.

2. Scope of Activities

Scope of activities that can be financed under 3F are:

(i)  primary food production including sea-food (both fresh and sea water), animal husbandry, vegetables and fruits;

(ii)  related to food products covering mainly processed food, provided the raw food materials are from domestic sources, and

(iii)  distribution of food and food products.

3.    Eligible Sectors

The sectors that are eligible for this fund are livestock, crop and fishery. Details of the activities are as follows:

3.1    Livestock

3.2    Crops

(i) Cultivation of vegetables (including tea)

(ii) Short term crops

(iii) Paddy

(iv) Roselle

(v) Cultivation of crops for animals feed including:

(vi) Cultivation of herbs/spices including

(v) Production of seeds and planting materials for food crops.

3.3    Fishery

3.4    Biotechnology

4.    Eligibility

Malaysians and Malaysian owned companies (minimum 51%)

5.    Lending Rate

The maximum lending rate is 4% per annum.

6.    Tenure of Funding

A maximum of 8 years begining from the first drawdown of the fund from Bank Negara. Financing of the projects after the eighth year will be at the market rates.

7.    Minimum Size of Funding

The minimum size of funding will be RM10,000 per project.

8.    Maximum Funding of Project Cost

The fund will provide financing up to 90% of the project cost. The maximum loan is not exceeding RM3 million.

9.    Eligibility

(i)  Financing will be available to Malaysian-owned company (at least with 51% ownership) or to Malaysians.

(ii)  The project costs include cost of land and working capital (i.e. feed for poultry farming, seeds and fertilizers) associated with food production and processing, storage and distribution, but exclude labour costs. The cost of land that can be financed should not exceed 20% of the total project cost.

(iii)  The fund is mainly for the medium and small sized projects, as long as the investment is categorized in the eligible sectors.

(iv)  The projects can be financed by direct lending, co-financing or syndication by the PFIs.

(v)  For export oriented projects, at least half of the total production should be for the domestic market.

(vi) For project expansion.

10.    Ineligibility

11.    Procedures for Obtaining Funding from 3F

Potential customers interested in getting this facility should approach any PFIs for advice. Customers should make formal application to the PFIs to apply for the fund. Under certain circumstances, the customers may submit the loan application to Bank Negara for onward submission to the PFIs. All applications will be subject to the normal loan procedures and security requirements of the PFIs. The PFIs will process and make decision on the applications.

12.    Bank Pertanian Malaysia Credit Facilities

Besides 3F, BPM offers credit facilities that are related to food production. There are term loans, revolving credits, trade financing and equipment financing. Malaysian companies, cooperative bodies and individuals are eligible to get loans from BPM.

The scope of financing ranges from production activities, processing and marketing of food products. Among the terms and conditions of the credit facilities also include the followings:

(a)    Amount of Financing

Financing is up to 70% of the project cost.

(b)    Funding Cost

1.5%-3% above the current BPM base lending rate.

(c)    Type of Facilities

Term loan, revolving credit, equipment financing, and trade financing.

(d)    Tenure of Funding

Maximum of 10 years.

(e)    Scope of financing

Production, processing and marketing of agricultural products.

(f)    Eligibility

Individuals, cooperatives and Malaysian companies.

13.    Further Information and Assistance.

Potential investors can contact BPMs nearest branches for further information or Credit Department at the following adress:

Assistant General Manager
Credit Operation Department
Tingkat 2, Menara Patriot
Leboh Pasar Besar
P.O Box 10815
50726 Kuala Lumpur

Telephone : 03-2692-2033

Fax : 03- 2691-7605

email :

This paper is prepared by :

Abd Rahaman Rasid.
Bank Pertanian Malaysia
Kuala Lumpur
Telephone: 03-2699-2619

Last Revision: 6 October 2000