By Ranjit Singh
SMALL and medium enterprises (SMEs) are the lifeblood of the economy. In Malaysia, almost 98% of all businesses are SMEs and they contribute 40% of the nation’s gross domestic product (GDP) and employ around 70% of the workforce.
SMEs have been hit hard by the Covid-19 pandemic as the government has imposed a Movement Control Order (MCO) from March 18 that has been extended to May 12. The disruptions to demand had taken a toll on them and many had to liquidate as they could not continue their businesses.
In a move to ease the economic impact on SMEs, the government had on March 27 introduced a Special Relief Facility (SRF) fund amounting to RM5 bil. The fund provided by Bank Negara Malaysia is for a maximum loan of RM1 mil each for 5.5 years at a preferential rate of 3.5%; 80% of the fund is guaranteed by the Credit Guarantee Corporation (CGC) of Malaysia.
The fund was to alleviate the short term credit crunch of SMEs and allow them to operate. However many SMEs have lamented that banks which have been given the responsibility of managing the fund have been slow in processing loans under it.
In a webinar organised by the SME Association of Malaysia yesterday, participants rued the fact that they had to wait for more than a month for their loans to be processed.
“The banks know that we need the funds urgently but they are dragging their feet in the processing. They should relax the processing rules as this is a special situation,” said one participant.
“In reality, the process of application is still the same, they still check your credit score, debt service ratio (DSR), gearing, exposure and everything else before comparing with the respective bank’s internal criteria. Only then will your application be approved.
“So what is the purpose of this SRF fund if the process and criteria are still the same? Shouldn’t it have leeways and exemptions? Shouldn’t the process be simpler?” said another participant.
An application is done because financial assistance is required in these trying times. The government has pleaded for all employers to maintain salaries, maintain jobs, and yet the assistance provided isn’t easy or accessible.
Asean Retail Chain and Franchise Federation advisor Datuk Malik Abdullah told FocusM that the banks should cut the red tape in processing the SRF applications.
“The current situation is an abnormal one. Banks should consider the gravity of the situation and relook at their procedures in processing loans. They should not be so stringent in processing the applications under SRF as the SMEs are in dire need of funds to keep afloat,” said Malik. – April 28, 2020
