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Kuala Lumpur, Malaysia, September, 14 2007 - Bank Negara has introduced a micro-finance scheme that will initially involve six commercial banks providing loans to small and medium enterprises (SMEs).
According to Bank Negara, a number of banks and development finance institutions (DFIs) had already launched their micro-finance products, which provide fast, flexible and convenient access to financing to individuals and micro enterprises.
The report also said the Census of Establishments and Enterprises 2005 showed there were about 548,000 SMEs, or 99.2% of the total number of business establishments. Over 435,000 micro enterprises made up 80% of the total number of SMEs and 78.7% of business establishments in the country.
Despite this, SMEs accounted for only 47.3% and 43.5% of the total value-added and output of the respondents.
In terms of access to financing, only 13% of the respondents indicated that
they relied on financial institutions while the rest used their own funds or borrowed from family and friends to fund their business.
To spur the development of SMEs, the National SME Development Council (NSDC) has approved a comprehensive micro-finance institutional framework to promote the development of a sustainable micro-finance industry in Malaysia.
The report said by having financial institutions provide access to financing, the potential for micro enterprises to expand would be enhanced, which would then have a spillover effect on the country’s economy.
Apart from the participating commercial banks, Bank Simpanan Nasional, Bank Pertanian Malaysia and Bank Kerjasama Rakyat Malaysia and also credit cooperatives have been identified as important providers of micro-finance.
Under the scheme, no collateral is needed while the loan size ranges between RM500 and RM50,000.
The report also said a common logo had been developed and participating banks as well as recipients were encouraged to display it to create awareness and understanding of micro-financing.
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