Kuala Lumpur, Tuesday, 4 October 2016: This is with reference to the Global Competitiveness Report 2016 – 2017 by the World Economic Forum. It was mentioned that access to financing is one of the problematic factors for doing business in Malaysia. The Association of Banks in Malaysia (ABM) would like to clarify this misperception by the Report. Commercial banks remain fully supportive of businesses and SMEs by ensuring that they continue to have access to financing. This is reflected by the increase in the total loans disbursed by the banking system in 2015 to the business sectors amounting to RM787.2 billion, a growth of 2.2% compared to the preceding year. As of July 2016, the total outstanding loans extended by the banking system to the business sector amounted to RM532.6 billion.
Commercial banks are in the business of lending and viable businesses will continue to be able to obtain financing. Bank lending decisions are made on the basis of commercially acceptable risks. This comprises two key aspects: firstly, the extent to which the business idea is convincing and sustainable; secondly, the quality of financial acumen which would include maintaining fiscal discipline, committing towards financing repayments and ensuring proper business records and audited accounts are maintained. Although a good track record would be extremely useful in support of a loan application, it is not the only criterion which is considered. The application is appraised holistically as the applicant must show commitment towards repayments. A business may not necessarily have the track record but the business strategy may be strong enough or the entrepreneurs behind the business itself may have the requisite experience and contacts.
ABM and the other relevant governmental agencies have also emphasized the range of financing options open to SMEs/entrepreneurs in our on-going engagements. There are various types of financing available for SMEs/entrepreneurs based on the size of businesses, such as micro-financing and/or the various grants and funds offered by the Government.
In addition, there are various funds and options available to SMEs such as Bank Negara Malaysia’s SME Funds, Credit Guarantee Corporation’s Guarantee schemes, Green Technology scheme, and SME Emergency Fund. Businesses should also consider obtaining financing via the Investment Account Platform, which is a platform that facilitates the channeling of funds from investors to finance viable ventures and projects.
Businesses facing difficulties are requested to seek help early by either approaching their bankers for assistance or apply for the Small Debt Resolution Scheme, which is a pre-emptive scheme to support SMEs with impaired financing. Furthermore, corporates that are facing difficulties in servicing their debt obligations may seek assistance from the Corporate Debt Restructuring Committee. Banks on their part will continue to enhance their capability to support businesses and entrepreneurs including coming up with various loan packages to meet the needs of innovative enterprises.
While banks’ lending to the SMEs sector is strong, ABM recognises that for some small businesses being able to access finance is still a concern. In this regard, ABM also provides avenues for businesses and entrepreneurs to highlight issues which they may face with their banks in connection to their loans or loan applications. Entrepreneurs may contact ABMConnect at 1-300-88-9980 or write in to eABMConnect via our website, www.abm.org.my
so that we can address general queries on financing or specific issues related to commercial banks.