Banks urged to extend cheaper loans to SMEs

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,” said the minister.

“I understand that banks have to manage their risks but there’s no need to be overly risk-averse.

“We hope to see cheaper loans extended, failing which, I would have to issue a directive to that effect,” said Lim at the Syarikat Jaminan Pembiayaan Perniagaan Bhd (SJPP) launch of guarantee schemes, here, yesterday.

Yesterday, 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 the 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 Malaysia’s gross domestic product last year. That is expected to rise to 41 per cent by 2020,” said Lim.

“Since SJPP is guaranteeing, the loans can be considered zero rated risk,” said SJPP principal officer Chen Yin Heng.