Image credit: Malay Mail
PETALING JAYA: Malaysian micro, small and medium enterprises (MSME) are taking bold and innovative steps to stay abreast of technological advancements to unlock their potential and grow faster, an indication of improved economic confidence post-pandemic, said Small and Medium Enterprises Association (Samenta) national secretary Yeoh Seng Hooi.
The CEO Confidence Index survey for second-quarter 2023 by Vistage-MIER registered 95.5, reflecting optimism that MSME are heading in the right direction to enhance their performance to contribute positively to the nation’s gross domestic product (GDP).
“While some quarters have shown lower results, the performance is far from dismal,” he told SunBiz.
According to Samenta’s survey on business conditions and economic outlook for SME 2022-2023, which was published last year, it found that in terms of the assessment of current business performance, 59.43% of respondents indicated it was “fair” and 27.36% a combination of “good and excellent”. The survey revealed that only 13.21% of respondents reported “a bad result”.
Yeoh noted that while the criteria for funding can be improved to include cash-flow lending rather the fixation on collateral, SME do not face such an acute situation compared to micro enterprises.
“Development financing institutions (DFI) should revamp their credit assessment policy and not be so fixated on collateral, otherwise, there is no need for DFI.
“We are still waiting for the rollout of digital banks, which is where digitalisation and data analytics can make a difference,” he said.
Yeoh suggested that small loans be given to micro and small businesses based on incremental revenue and cited Hong Kong-based company MicroConnect as an example, which practises giving out the loans for small businesses in China. Recently, it raised another round of financing worth US$458 million (RM2.1 billion) with a valuation of US$1.7 billion.
“Credit assessment can be based on revenue or invoice data with percentage deductions. They have introduced a new asset class called daily revenue contracts. For the small businesses, Fintechs like peer to peer service, have made inroads into invoice financing and working capital financing,” Yeoh said.
On cost of doing business, he said the excessive regulations have contributed to higher expenses.
Yeoh remarked that other than health and safety issues, encroachment into business governance and administrative guidance should be reduced.
Yeoh called for an increase in matching grants and soft loans for digitalisation, automation, export promotion as well as environmental, social and governance compliance.
He said SME need catalytic support to fund their growth and transparency of access as well as equitable allocation to ensure funds will be allocated fairly.
The association, he added, supports the intent of the Madani Budget and hopes that the execution can be more efficient and effective.
On immediate challenges facing SME, Yeoh said they are still short of skilled workers and talent.
Source: https://www.thesundaily.my/business/samenta-msme-taking-bold-steps-to-enhance-performance-DF11362634