The Malaysia Industrial Development Finance Berhad (MIDF), in June 2004, has introduced a new facility called the “Fund for Cross-Border Investment in Manufacturing (FCBI), in order to assist Malaysian companies, including those in the textile & clothing industry, to relocate or expand the operations offshore to take advantage of lower labour cost, especially within the ASEAN region.

The Fund has an initial allocation of RM50 million, and companies must meet specific criteria to access into the Fund.

Borrowing companies must be 51% Malaysian controlled companies domiciled in Malaysia, and preference is given to those expanding or relocating offshore. Companies must have shareholders fund of at least RM5 million, and have been engaged in the manufacturing sector for at least 5 years. There is also a criteria pertaining to track record, with an average pre-tax return on shareholders' fund of not less than 7.5% over the past 3 financial years. The debt gearing should not, overall, be more than 2:1, prior to obtaining the financing and not more than 2.5:1 when the financing is included.

For companies abroad, which are applying for the facility, they must have at least 51% of shareholding held by the borrowing company in Malaysia and is engaged or will be engaged offshore in manufacturing similar or related products as that of the parent company.

Such financing of cross border investments, as provided by MIDF, can assist Malaysian companies, particularly in the Textile and Clothing industry, to relocate offshore in order to remain competitive.