KUALA LUMPUR, April 3 — Eligible small- and medium-sized enterprises (SMEs) have adequate access to credit facilities, Bank Negara Malaysia (BNM) said in a report released after businesses clamoured for government aid to survive the coronavirus disease (Covid-19) pandemic.
In its Financial Stability Review 2019 released today, BNM also said SMEs were offered more favourable terms on collateral requirements and financing rates from local banks.
“In the second half of 2019, banks received 131,152 applications from SMEs and about three out of every four loan applications processed have been approved.
“This was in line with past trends,” BNM said in the report.
BNM conceded that the tough operating environment businesses endured in 2019 would worsen due to the Covid-19 pandemic, particularly for those in tourism and manufacturing.
However, it pointed out measures already taken to help mitigate this, such as the deferment of business loans for six months and the option to restructure corporate loans.
“Depending on the duration and severity of the pandemic, the pre-emptive measures taken should enable firms to recover more quickly once business conditions normalise,” BNM said.
According to official definitions, SMEs include any non-manufacturing business with fewer than 75 employees or an annual turnover of below RM20 million. For manufacturing, the limits are 200 workers or RM50 million.
The broad definition meant SMEs accounted for over 98 per cent of businesses in Malaysia and nearly 70 per cent of jobs in the country.
These businesses have been hit especially hard by the movement control order (MCO) put in place to contain Covid-19 as all but those in essential services have had to stop their operations.
Even those in essential services have been affected, either from collateral damage or social distancing restrictions placed on their operations.
According to the SME Association of Malaysia, a third of its members would have run out of money last month due to not being able to operate in the MCO while another third will exhaust their funds this month.
While the government included a RM100 billion allocation for SME credit in its Prihatin stimulus package, the businesses have kept up calls for more assistance including interest-free loans and subsidies to help tide them over.
The SME Association said many businesses were wary of taking on more debt as they were already highly leveraged and must face an economy made uncertain by Covid-19 and efforts to contain the pandemic.
