Local SMEs’ NPL ratio among world’s highest

JOHOR BARU: The ratio of non-performing loans (NPLs) among Malaysian small and medium enterprises (SMEs) is among the world’s highest, said Entrepreneur Development Minister Datuk Seri Mohd Redzuan Yusof.

As such, he said, the government has taken steps to reduce NPLs by increasing entrepreneurs’ awareness on the ecosystem of their business ventures.

In other countries, Mohd Redzuan said, the rate (ratio) of NPLs among SMEs is low, ranging at about 8% or lower, while Malaysia’s is in double digits.

“When we say double digits, it means 15, 16, 20 (per cent), and that is high, as the NPLs in other countries are really low. For example, I understand that China’s NPL rate is only at 2%.

“How can they achieve this? Maybe they learnt from successful SME models, which is what we are trying to do right now. Germany has a model which can help SMEs get a high rate of return and the country’s NPL rate is only at 2%,”Mohd Redzuan told reporters after launching a Mini One-Stop Centre for Entrepreneurs in Plaza Angsana here yesterday.

He said the National Entrepreneur Group Economic Fund’s NPLs stand at RM600 million.

Mohd Redzuan added that there are many factors which caused entrepreneurs to default on their loans, including failure to understand the market and its demands, the cost of doing business and the lack of creativity in conducting it. – Bernama