As of August this year, RM174.5bil’s worth of loans have been disbursed to small and medium enterprises as financing options improve, driven in part by Government encouragement and support.
LOAN disbursements to small and medium size enterprises (SMEs) recorded a marked double-digit improvement of 15.4% to RM174.5bil during the first eight month of this year compared to an increase of only 1.2% increase in the corresponding period last year.
This signaled the continuous focus given by the government on the sector that has provided ample job opportunities and has played significant role in the economy.
Based on the latest number of loan disbursements, it has contributed to the rise of total SMEs loans outstanding by a hefty 17.7% to RM251.2bil, accounting to almost half, at 48%, of total business loans as of August.
It was most likely contributed by the rise in applications as well as higher approvals supported by a number of available financing options, including micro-financing, specifically structured for the various sections sector according to data in the Economic Report 2015.
In detail, financing for SMEs recorded a rebound in applications and approvals at 5.6% and 2.6% respectively during the first eight months of this year.
Most of the SMEs loans, about 28.8% were channelled to the finance, insurance and business activities sector, while wholesale and retail trade, restaurant and hotel sector commanded 24.6%.
Apart from the conventional banking system, financing for SMEs was also sourced from various special revolving funds such as Funds for Small and Medium Size Industry, Fund for Food and New Enterpreneurs Fund 2, administered by the Bank Negara.
Total financing amounting to RM26.7bil was given to 65,532 SMEs, drawing an average utilisation rate of 70.4% as at the end of August. Loan approvals were granted to 4,617 SMEs amounting to RM1.57bil in the first eight months this year as compared to 2,136 SMEs that were granted a total loan of RM836.2mil approvals in the corresponding period last year.
Meanwhile micro-enterprises also continued to have an array of access to financing through Skim Pembiayaan Mikro.
Currently, seven banking institutions and three developmental financial institutions (DFIs) provide micro-financing to entrepreneurs through conventional and Islamic products via than 2,200 access points. Under the scheme, total loans outstanding increased by 4.1% to RM891.2mil as the end of August.
A total of 11,601 micro-enterprises accounted for RM233.3mil of credit approved as at August year-to-date as compared to 11,018 worth RM207.3mil in the same period last year.
Bank Simpanan Nasional, Agrobank and Bank Rakyat continued to play significant role in supporting micro-finance activities.
Micro-finance outstanding through these DFIs stood at RM773.1mil as at the end of August, accounting for 86.7% of total micro finance outstanding.
A total of 9,642 micro-finance accounts amounting to RM197.4mil were approved.
In the update of Budget 2015 chapter, it was highlighted that SMEs would continue to play a crucial role by creating job opportunities and contributing to the gross domestic products.
To accelerate the participation of SMEs in the economic activity, the government has introduced several programmes, including the soft loan scheme for automation and modernisation (SLSAM), micro-credit financing loan as well as micro-credit scheme for Chinese hawkers and petty traders.
By providing soft loans for manufacturing companies to acquire fixed assets, the SLSAM aims to encourage innovation, automation and adoption of new technologies.
A total of RM147.1mil has been disbursed to 59 companies as at end of August.
Tabung Usaha Ekonomi Kumpulan Usaha Niaga has introduced a micro-credit financing loan faciloity for various target groups, including the armed forces veterans and young professional entrepreneurs.
Tekun Nasional has disbursed RM272.7mil, benefiting 24,990 entrepreneurs.
At the same time, to assist hawkers and petty traders among the Chinese community, the Yayasan Penjaja and Peniaga Kecil 1Malaysia was established to manage a RM30mil micro-credit facility.
A total of 435 applicants were received, of which 41 applicants were provided loans amounting to RM600,000 for this year up to August.
On a more current development, the government is developing a knowledge-friendly eco-system and enhancing the productivity of SMEs.
A Public-Private Research Network (PPRN) was launch in February through a strategic collaboration between higher education and research institutions, industries and government agencies.
The SMEs work at identifying areas with potential productivity gains while PPRN will provide grants and match the SMEs with a team of experts to develop state-of-the-art technology.
In a matter of five months, about RM7mil has been expended with 196 projects successfully matched, involving 127 companies, 17 public universities and four private universities. This reflects the government’s commitment to spurring innovation and commercialisation.
Under the Technology Commercialisation Programme, a total of RM23.2mil has been channelled to 21 companies as of July. The programme aims to remove market barriers to innovation by providing access to a range of services such as infrastructure support, financing and capacity building.
Source - http://www.thestar.com.my/metro/smebiz/news/2015/10/26/loans-to-smes-up/