FINANCIAL institutions will play an important role in rebuilding Malaysia and recovering the economy post-Covid-19, according to Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz (picture).
He said as the health of the financial sector is tied to the wider economy, banks must double down on driving a strong economic recovery while supporting business continuity, especially in jumpstarting businesses.
“In this regard, the banking industry is expected to facilitate lending to businesses with accommodative financing and repayment terms, including participating in the offering of the iTEKAD programme that supports micro entrepreneurs to start and sustain their business.
“This includes encouraging digital payments like accepting QR payments and ensuring affordable merchant fees and supporting the underserved segments of borrowers, be it the hospitality sector, micro-enterprises or women entrepreneurs via various financing schemes.
“Banks must also provide non-debt-based facilities such as the CAKNA and Jana Niaga liquidity schemes that relieve cashflow constraints of small and medium enterprises (SMEs) without increasing their gearing positions,” he said at the 2021 Malaysian Banking and Finance Summit organised by the KSI Strategic Institute for Asia Pacific yesterday.
Also present were Economic Club of Kuala Lumpur advisory council chairman Tan Sri Abdul Wahid Omar and KSI Strategic Institute for Asia Pacific president Tan Sri Michael Yeoh.
Tengku Zafrul said in building resilience, banks and financial institutions can support clients in their transition to the needs of a new normal, including embracing digitalisation in their business focus and operations.
He noted that banks need to enhance the role of financial intermediation throughout the business cycle of any enterprise, be it the aspiring entrepreneur or the conglomerate on the verge of an IPO.
He said financial and banking institutions must also explore alternative forms of financing including blended finance, supply chain financing or new trade-based facilities.
Tengku Zafrul said these efforts would complement wider initiatives by the government including IR4.0, where digitalisation and technological adoption are crucial in boosting the country’s economic prospects and resilience, in accordance with the Malaysian Digital Economy Blueprint.
“Just as it is crucial for us to exit this pandemic safely and systematically, it is equally critical that we build back better. That is why the financial sector must step up and play its part in the climate and sustainability agenda.
“It is encouraging to see that the financial sector is stepping up on this front, including via the offering of sustainable finance solutions and assistance to companies in their transition journey. However, more can and must be done,” he said.
He added that as a mobiliser of capital, banks are key in helping companies transition towards low carbon and sustainable practices via financing and investment beyond the pandemic, be it supporting renewable energy adoption, new technologies or ways of doing business.
Speaking on Budget 2022 which is to be tabled on Oct 29, Tengku Zafrul said it will remain expansionary and is conceptualised as a recovery budget while complementing the government’s wider and longer-term reform
efforts under the 12th Malaysia Plan (12MP). Budget 2022 will focus on 3R — namely Recovery, Resilience and Reform — and it is through those three lenses that banks and financial institutions including development financial institutions will play a critical role moving forward.
“Next year will be critical for Malaysia, a rare window to jumpstart not just an economic recovery, but a recovery of industries, livelihoods and jobs, especially those hit hardest by the pandemic,” he said.
Additionally, Tengku Zafrul urged more financial institutions to augment their business with the objectives of the Sustainable Development Goals (SDGs) and the Paris Climate Agreement.
In doing so, he said it will ensure the deep integration of sustainability across all business areas of a bank from strategic decisions to credit appetite and procurement.
“Efforts like these will certainly complement the government’s embrace of the United Nations SDGs in its annual budgets.
“Beginning with Budget 2021, this feature will continue in Budget 2022 and through wider initiatives such as the SDG-aligned 12MP and the Shared Prosperity Vision 2030,” he concluded.
Source: https://themalaysianreserve.com/2021/09/22/tengku-zafrul-financial-institutions-role-important-in-economic-recovery/