Funding Malaysia’s SMEs is about quality and not quantity, says economy minister

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The government wants to improve the quality of financing for small and medium enterprises (SMEs) to strengthen local firms’ global competitiveness ...

KUALA LUMPUR, Nov 11 — The government wants to improve the quality of financing for small and medium enterprises (SMEs) to strengthen local firms’ global competitiveness and enable workers to earn higher wages and hold better-quality jobs.

Although Malaysia had recorded encouraging economic growth, Economy Minister Akmal Nasrullah Mohd Nasir said today that structural challenges still needed to be addressed so that SMEs could expand and improve productivity.

He said the main challenge was no longer simply ensuring firms had access to credit, but making sure the financing met their investment and expansion needs.

“The real issue is the quality of funding being channelled. It is not just about how firms obtain credit, but how we ensure our firms remain competitive globally.

“Particularly in ensuring productivity improvements that can eventually translate into higher wages and quality employment,” he told reporters after the launch of the World Bank’s 33rd Malaysia Economic Monitor, titled ‘From Quantity to Quality: Financing Malaysia’s Productive SMEs’, here today.

He said relying on conventional collateral such as property could limit firms’ access to loans, even when they had other assets that could serve as security.

“Among the problems in obtaining loans is the collateral requirement, which typically requires property to be pledged as security.

“Yet firms also have other assets that should be considered, such as machinery and accounts receivable, to broaden the financing options available to them,” he said.

He added that financing mechanisms also needed to be implemented more transparently so that firms received facilities suited to their needs.

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