MALAYSIA'S central bank has put in place facilities to ensure there is adequate bank financing for viable small- and medium-sized enterprises(SMEs), recognising they will be hurt most by the current credit crunch, says governor Tan Sri Dr Zeti Akhtar Aziz. 
"We already have all the facilities to provide credit at concessionary (interest) rates of between four per cent and six per cent to overcome the immediate difficulties faced by them," she told Business Times.
"(For instance,) we have the Credit Guarantee Corp (CGC) where SMEs can gain access to financing as well as provide advisory services and debt restructuring for smaller debts," she added.
For the first 10 months of last year, CGC offered credit guarantees to more than 6,800 SMEs.
Bank Negara Malaysia has established two funds, namely the Fund for Small and Medium Industries 2 and the New Entrepreneurs Fund 2, to support viable and new SMEs to obtain loans at concessionary rates of between four per cent and six per cent per year, which can be applied through commercial banks and development finance institutions.
Viable SMEs that have difficulty in meeting their loan obligations can restructure their loans through the Small Debt Resolution Scheme.
Banks will restructure their repayment terms to enable them to pay at an affordable lower amount.
As at October, more than 600 SMEs have benefited from this scheme. For micro-enterprises, or small businesses with revenue less than RM250,000 or fewer than five employees, Bank Negara has introduced the "Pembiayaan Mikro" scheme to help them gain access to micro loans (defined as loans less than RM50,000 without any collateral).
"The latest data show that although applications for loans moderated, the growth in loan outstanding to SMEs as at end November 2008 increased by 10.2 per cent.
"Apart from access to financing, Zeti said a high-level council, comprising 15 ministries and agencies, has also been successful in implementing 198 programmes for SMEs, including entrepreneur development, human capital development, advisory services, awareness and outreach, technology enhancement and product development.
In order to further spearhead SME development initiatives in the country, the government has transformed the Small & Medium Industries Development Corp into a SME central coordinating agency, known as SMECorp Malaysia, that has taken over the functions of Bank Negara. "SMEs represent part of the domestic economy which has been holding its ground at this point of time and we expect growth to continue with their support," said Zeti.
"Access to credit to the SME sector is key to sustaining domestic economic activity."
She added that the RM7 billion fiscal stimulus package, which will be implemented early this year, is one of the important measures taken by the government to assist and support SMEs and ensure their growth in the domestic economy.
While the banking sector may have initially over-reacted to become more cautious in this uncertain environment, they are now taking a more proactive approach in their lending activities, she added.
Based on a recent survey conducted by Bank Negara on business enterprises, SMEs form 99.2 per cent, or 558,267, of business establishments in Malaysia, of which 80 per cent are micro enterprises.
More than 80 per cent are in the services sector, followed by seven percent in the manufacturing sector and six per cent in the agriculture sector.
*Posted as published in Business Times. Jan 1 2009
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