New Straits Times
18 February 2019
Guan Eng urges banks to give cheaper loans to SMEs
Finance Minister Lim Guan Eng urged banks to extend cheaper loans to small and medium-sized enterprises (SMEs) to ease the cost of doing business. NSTP photo by ROSELA ISMAIL
KUALA LUMPUR: Finance Minister Lim Guan Eng urged banks to extend cheaper loans to small and medium-sized enterprises (SMEs) to ease the cost of doing business.
“The current spread of 3.5 per cent is excessive. I urge banks to immediately lower this to facilitate cheaper loans to SMEs,” the minister said.
“I understand that banks have to manage their risks but there's no need to be overly risk averse,” he added.
“We hope to see cheaper loans extended, failing which, I would have to issue a directive to that effect,” Lim told reporters at the Syarikat Jaminan Pembiayaan Perniagaan Bhd (SJPP) launch of guarantee schemes here today.
Today, SJPP launched RM2 billion in government guarantees to help SMEs incorporate more efficient technological practices of Industry 4.0.
This is part of the RM6.5 billion guarantees allocated in 2019 Budget.
SJPP will guarantee up to 70 per cent of the bank loans extended to SMEs by 13 banks nationwide.
“The RM2 billion guarantee scheme provided by SJPP is designed having in mind that SMEs contributed 37 per cent of the Malaysian gross domestic product last year. That contribution is expected to rise to 41 per cent by 2020,” said Lim.
“Since SJPP is guaranteeing, the loans can be considered zero rated risk. We hope banks will be able to lower their spread from the current 3.5 per cent to a more reasonable margin of 1.5 per cent,” said SJPP principal officer Chen Yin Heng.
“The SJPP guarantee schemes carries a fee of 1 per cent per annum while the special Bumiputera programme has a lower 0.75 per cent fee annually,” Chen added.
SJPP, which is owned by Minister of Finance Incorporated (MoF Inc), guarantees loans given out by banks to SMEs.
Prokhas Sdn Bhd, which is also wholly owned by MoF Inc manages the daily operations of SJPP.
Since its inception in 2009, SJPP has made available RM35 billion guarantees of which RM18 billion has been used up and benefited more than 14,000 SMEs nationwide.