Malaysia, a high middle income country, has experienced one of the fastest economic growth rates in Asia. GDP growth rate increased from 5.8% in 1999, to 8.5% in 2000. But Malaysia is not exempt from the poverty problem. In 1997, 10.9% of households in rural areas were poor and 56,000 households were under the poverty line. Although, the poverty rate has decreased over the years, the percentage of people in poverty increased recently as a result of the world economic slowdown and declining commodity prices. AIM, which began replicating Grameen in 1986, plays an important role in reducing poverty in Malaysia today. It is also one of the largest GB replications until now.

AIM was established in September 1987 as an NGO, registered under Trustee Act 1965, as a private trust. Trusted and recognized by the Malaysian government, it aims directly to eradicate poverty in the rural areas of peninsular Malaysia.

Achievements

AIM has gradually become a national programme for poverty alleviation and until December 2000 had 60 branches, with 66,130 clients. It currently employee 820 staff. A new training and research facility called CMCTRD has been operating since 1998. An entrepreneurship development unit has also been functioning from 1996. Total loan disbursement until now amounts to 5.5 million Malaysian Ringgit. Four types of loan products have been developed. These are :

SPI 1 for loans up to M$ 1,000 - 4,900
SPI 2 for loans up to M$ 5,000 - 9,900
SPI 3 for loans up to M$ 10,000
SPI 4 for loans up to M$ 20,000

In addition AIM has introduced a number of savings & insurance schemes.

AIM has received government support from the very beginning. It has received financing from the following sources:

	Government of Malaysia
	Islamic Economic Development Foundation (YPEIM)
	Credit Guarantee Corporation (CGC)
	Financial institutions
	State government
	Other organizations

Financial Sustainability

Since 1997, AIM has managed its operations with own income generated from its financial service. Its income that year, was M$ 15.5 million and the operational expenditures were M$ 11.9 million. The surplus was M$ 3.6 million. In 1998, AIM carried over a surplus of M$ 25.6 million to the next year with an income of M$ 39.9 million and an operational expenditure of M$14.2 million. In 1999, income was M$ 28.9 million and the operational expenditure was M$ 16.3 million, leaving a surplus of M$ 12.5 million.

Constraints

	Average drop-out rate - 6% per year
	Coverage area - geography is a factor in certain areas specially in Sabah and Sarawak, which are sparsely populated
	Impact of global and national economic factors such as fluctuation of rubber and oil palm prices
	To maintain operational cost and ensure sustainability - interest rate has to be increased and there is a need for a good investment environment

Future Plan

	2005 target: 160,000 members
	70 branches
	Loan amount to be disbursed: RM 800 million
	Extend urban poverty coverage to include single mothers
	Client demand product base
	Create new entrepreneurs among poor people - a new Entrepreneur Loan Scheme will be launched
	Maintain financial sustainability
	Involved in short and long term investment - i.e. bond and property investment

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By Haji Mukhtar Ramli, Managing Director, AIM