Allocation for development financing is expected to increase next year, said chairman of the Association of Development Finance Institutions of Malaysia (ADFIM) Datuk Mohd Nasir Ahmad.

Mohd Nasir, who is also the chief executive officer of Perbadanan Usahawan Nasional Bhd (PUNB), said PUNB’s development funds allocation was likely to rise to RM170mil in 2009 from RM130mil this year.

“We’ll continue funding whether in an economic turmoil or not,” he said after the launch of the Fifth International CEO Forum of the Development Financing Institutions yesterday.

As development financing was targeted at start-ups or growing businesses, it carried higher risk portfolio than conventional loans. Non-performing loans (NPLs) were expected to increase next year as a result of the economic crisis, he added.

PUNB’s retail clients, for example, had the highest risk level as the sector was always pressed on margins. NPL ratio for this segment was about 20%, Nasir said.

He added that ADFIM members were prepared to reschedule or restructure loans to ease repayment.

“It’s not true that development financing will slow in tough times. Certain sectors, such as jewellery or automotive maintenance related businesses, will still see growth,” he said.

Bank Pembangunan Malaysia Bhd, the biggest development financing institution in the country, also expects to give out more loans next year.

President and group managing director Datuk Tajuddin Atan said that besides the mandated RM2bil maritime fund and RM3bil transport fund, the bank would also finance the high technology sector.