Flexibility for project finance risk criteria


KUCHING: Malaysian banks and financial institutions need to be more flexible with their project-finance risk criteria to allow more industry players, especially the small and medium enterprises (SMEs) to capitalise on the financial mechanism. 

Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg said this is crucial to support the country’s economic growth and make Malaysia great again. 

He said the changing economic landscape and the emerging industries will create a ripple effect on the micro, small and medium enterprises (MSMEs) as well as mid-sized companies. 

These enterprises, he said, have been the backbone of the nation’s economy as they are very much involved in the supply and value chain activities of the industries.

In realising this, Abang Johari said Sarawak had extended interest subsidy for the three financing facilities under Bank Negara Malaysia (BNM) to assist local SMEs during the Covid-19 pandemic economic meltdown.

“We are the only state in the country to extend the interest subsidy for our local SMEs as they are a key contributor to Sarawak economy, employing almost 50 per cent of our workforce” he said. 

The total budget for the interest subsidy for Special Relief Facility (SRF), Targeted Relief and Recovery Facility (TRRF), and Penjana Tourism Financing (PTF) is approximately RM80.7 million and the Sarawak government has provided the interest subsidies for three and a half years, he said.

“A total of 1,918 Sarawakian SMEs have benefited from the scheme with a total loan facility of RM560.67 million and an estimated interest subsidy of RM47 million,” he said. 

Abang Johari was speaking at the 2023 Malaysian Banking and Finance Summit on “Sarawak’s Post Pandemic Economic Recovery – Growing Opportunities for Banks and Financial Institutions to Drive Sarawak’s Future Growth” at a hotel in Kuala Lumpur yesterday.

Sarawak, he said, used to have five privately owned commercial banks until the late 90s, namely, Kwong Lee Bank, Bian Chiang Bank, Hock Hua Bank, Wah Tat Bank and Bank Utama.

However, all these legendary banks were consolidated as part of Malaysian banking industry rationalisation in the late 90s.

In the early 19th century, he said, these family-owned commercial banks were behind the rapid growth of Sarawak economy back then. 

“They played important role in facilitating trade and commerce with their simple processes and ease of doing business. Our SMEs flourished and expanded, contributing to Sarawak’s gross domestic product (GDP) back then. Looking at these historical events, I am even more committed to develop the funding capacity for our SMEs as one of the key building blocks to achieve Sarawak’s Post Covid-19 Development Strategy (PCDS) 2030 aspirations,” he added.