Foreign banks urged to help SMEs

MALAYSIA's 19 foreign banks must do more to help local small and medium enterprises (SMEs) by giving out more loans to finance their operations.

Source from (Business Times): http://www.btimes.com.my/Current_News/BTIMES/articles/LIMFUN/Article/
Published: September 27, 2012

Deputy Finance Minister Datuk Donald Lim Siang Chai said while foreign banks in Malaysia operate with full banking licences that allow them to offer all sorts of loan products, they cater more to big corporate clients.

"With more funding available, SMEs will be able to boost their export activities, especially between the SME and the bank's country of origin," Lim said here yesterday after opening the Malaysia's Exporters Market Access Solutions seminar.

"The Finance Ministry is currently in talks with several foreign banks on allocating more funding for local SMEs," Lim added.


At present, there are no provision under the law to compel the foreign banks to allocate a certain percentage of their loans for SMEs but it is hoped that they will do so voluntarily.

As an example, a SME that exports to China can apply for loans from Chinese banks that have operations here as they would know better the market conditions at their home country.

Lim said SMEs' dependence on loans provided by local and foreign financial institutions has increased in line with their encouraging business growths and their increasingly significant contribution to the country's gross domestic product.

In 2010, total funding for SMEs amounted to RM148.7 billion involving 650,000 accounts, of which financial institutions provided 80 per cent, or RM119.3 billion.