Lim: New financing guarantee scheme to spur SMEs

KUALA LUMPUR: The government will increase access financing for small and medium enterprises (SMEs) through a new financing guarantee scheme worth RM2bil via Syarikat Jaminan Pembiayaan Perniagaan Bhd (SJPP).

The RM2bil is part of RM6.5bil in guarantee schemes announced by the government in Budget 2019.

The RM2bil guarantee scheme will see up to 70% of SME borrowings being guaranteed by the SJPP that will see improved SME access to financing, given that it encourages the banks to take on more risk, Finance Minister Lim Guan Eng said in his speech during the launch of the guarantee here yesterday.

“Banks are very risk-averse and generally prefer to lend to large companies, as well as those who do not need any financing. Through the SJPP, we hope to change this and help spur the SME sector,” Lim said.

“SJPP is a company under the Finance Ministry that manages the government’s guarantee schemes for SMEs. Since its inception in 2009, SJPP has made available a total of RM35bil guarantees, of which RM18bil has been used. This has benefitted more than 14,000 SMEs nationwide,” Lim added.

Out of the RM4.5bil that had been announced in Budget 2019, RM1.0bil is reserved exclusively for bumiputra SMEs.

The rest of the guarantee schemes under the SJPP, which are open to all, have a guarantee fee of 1% per annum while the special bumiputra programme has a lower guarantee fee of 0.75% per year.

He noted that such guarantees were a cheap way to encourage SME growth, especially when non-performing loans are 0.9% across all active SJPP schemes.

“As I understand it, 13 banks are actively working to promote the guarantee schemes coming from the SJPP. I would like to see more of this kind of public-private partnerships to drive the economy forward,” Lim said.

He noted that RHB Bank, SME Bank, Maybank Islamic, Standard Chartered Bank Malaysia and UOB Malaysia have provided some RM5.2bil of approved loans under the various active SJPP guarantees, which is 70% of the total approved financing for SMEs.

SJPP said in a statement that it has been mandated by the government to administer and manage the following guarantee schemes: the Working capital guarantee scheme, working capital guarantee scheme – bumiputra, working capital guarantee scheme - start-ups and automation process guarantee scheme.

The contribution of SMEs to the economy is expected to rise to 41% by 2020 from 37% of the country’s gross domestic product last year.

“Figures from the Department of Statistics showed that SMEs employed two-thirds of all workers in Malaysia. Perhaps more starkly, SMEs make up about 98.5% of total business establishments in the country,” Lim said.

The government should ensure that SMEs were competitive and capable of going to the next level to compete internationally.

Meanwhile, on the sidelines of the event, Lim said updates on the Samurai Bond would be announced next month.

Banks are very risk-averse and generally prefer to lend to large companies.

Lim Guan Eng