THE local information and communication technology (ICT) sector, which is impacted by a global slowdown, got a shot in the arm with the recent announcement of a RM500 million government allocation for small and medium enterprises (SMEs) to upgrade their processes and increase productivity.

Deputy Finance Minister Datuk Kong Cho Ha said although Malaysia’s economic fundamentals are strong, the ICT sector is not shielded from the global slowdown as ICT is employed across the value chain in the country’s economy.

“(As such,) the RM500 million in soft loans to SMEs is expected to maintain the vibrancy of the local ICT sector,” he told the Press in Kuala Lumpur yesterday.

The government, through Bank Negara Malaysia, has established a RM500 million SME Modernisation Facility to provide financing to SMEs to modernise their operations, especially to buy or upgrade machinery and also to convert to energy-saving equipment.

Kong said the local ICT sector has good growth prospects.

"I am confident that the sector will continue to do well. The players should venture into the global market, but they must have better strategies and branding," he said.

The deputy minister also said that the recent 16th World Congress on Information Technology 2008 (WCIT 2008), hosted by Kuala Lumpur, would provide another impetus to the growth of the ICT sector.

"The spillover from WCIT 2008 will be felt probably for the next four to five years.

"This would create a few billion dollars' worth of investment in Malaysia's IT industry," he said.

Earlier, Kong witnessed the signing ceremony between Skali Group and Cradle Fund Sdn Bhd to assist Skali's potential technopreneurs to apply for the Cradle Investment Programme (CIP) Fund.

Skali E-Ventures chief executive officer (CEO) Muhammad Fakaruddin signed on behalf of the company, while Cradle Fund was represented by its CEO Nazrin Hassan.

With this collaboration, Skali, through its wholly-owned subsidiary Skali E-Ventures, will identify and develop 25 potential technopreneurs each year, to get assistance in terms of funding and guidance under CIP.

The candidates will be picked among the graduates from Skali's Spike (Skali Pioneers and Innovators in the Knowledge Economy) programme.

Fakharuddin said the company will submit applications for the CIP fund for the first five Spike candidates by next month.

Under the Cradle Fund's CIP Catalyst programme, individuals with technology-oriented ideas can apply and receive grants of maximum RM150,000 in three tranches for their ideas.

Cradle Fund's Nazrin said the collaboration with Skali is expected to increase the commercialisation rate under CIP, which currently stands at 42 per cent.

When asked about the targeted increase in commercialisation rate, he said: "The focus is to ensure that potential technopreneurs from Skali receive guidance in the commercialisation of their ideas.

The Finance Ministry has allocated RM100 million under the CIP programme, which started in June 2003.

CIP is Malaysia's first pre-seed funding programme, aimed at developing, nurturing and guiding technoprenuers to transform raw technology ideas into commercially viable ventures.