BNM’s RM3.3b fund, bank preparedness will help ease SME woes

This article first appeared in The Edge Financial Daily, on March 9, 2020.
Measures undertaken by BNM are a shot in the arm for SMEs during this difficult time.

Measures undertaken by BNM are a shot in the arm for SMEs during this difficult time.

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KUALA LUMPUR: As the Covid-19 outbreak widens with Malaysia entering the second wave of the spread, the banks’ preparedness, along with measures undertaken by Bank Negara Malaysia (BNM), are a shot in the arm for small and medium enterprises (SMEs) during this difficult time.

“As the backbone of the nation’s economy, the SME sector deserves all the help it can get during these trying times,” said CIMB Group Holdings Bhd group chief executive officer (CEO) Tengku Datuk Seri Zafrul Aziz.

“The priority is to provide SMEs with additional working capital to sustain their businesses and, in turn, safeguard jobs, particularly in adversely affected sectors such as tourism, hospitality, and food and, beverage services,” he told Bernama in an email interview.

To this end, BNM’s RM3.3 billion package will definitely help alleviate SMEs’ financial burden.

“Apart from financing, we also laud initiatives such as the RM1 billion Agrofood Facility, as well as the RM300 million SME Automation and Digitalisation Facility.

“These facilities come not only with a lower financing rate, but also a longer tenure. Such financing features are crucial to facilitate the SMEs’ medium-term growth plan,” he said.

CIMB has also reassured its customers that all applications for restructuring and rescheduling of their financing facilities will be given due consideration.

“We are also open to the possibility of extending repayment periods for customers, where necessary. In complementing our national initiatives, CIMB has also committed to disburse RM15 billion in 2019-2020 to help SMEs grow and, coupled with the most recent overnight policy (OPR) rate cut, we strongly believe that the Malaysian SME sector will be well-supported to ride through the current crisis brought about by Covid-19 and other operating challenges,” he said.

BNM reduced the OPR by 25 basis points to 2.5% last Monday, which is the second rate cut by the central bank this year. The reduction is aimed at providing a more accommodative monetary environment to support the projected improvement in economic growth amid price stability. Meanwhile, Hong Leong Bank Bhd group managing director and CEO Domenic Fuda said the bank is optimistic that the domestic economy would remain resilient, supported by both monetary and fiscal measures, as well as financial institutions proactively working with clients to see them through this period.

“We are similarly committed in facilitating the ease of maintaining appropriate financing during this period, and hence, assist our SME customers that might experience short-term cash flow disruptions, enabling them to continue running their business amid this time of uncertainty,” he said.

The Covid-19 outbreak has impacted businesses globally, leading to recent market volatility, with SMEs especially vulnerable in terms of managing their cash flow, inventory and distribution of goods and services during this time, said Fuda.

He also echoed the view of Tengku Zafrul that BNM’s Special Relief Facility which will provide RM2 billion in the form of working capital for SMEs as well as the SME Automation and Digitalisation Facility of RM300 million will not only help affected SMEs ensure business continuity and ease their working capital during this challenging time, but will also give them an opportunity to shore up resources, so that they can bounce back faster as soon as the situation improves.

“As announced previously, we have put in place a Customer Financial Relief Plan to extend support to Covid-19 affected SME and individual customers, by restructuring or rescheduling their loans and financing, so as to help their short-term cash flow situation,” he said.

This, along with the latest OPR reduction and the other measures mentioned above, will provide much-needed relief for borrowers directly affected by the outbreak, he added. — Bernama