Move it forward with movable property law

MALAYSIA’S Movable Property Security Interest (MPSI) Bill is supposed to be passed by the third quarter of this year, but it does not appear to have been tabled, according to Parliament’s official web portal.

It is to be hoped that stakeholders continue to push for the bill to be tabled while discussing its merits, given the importance of broader and alternative financing options for small and medium enterprises (SMEs).

There should be a sense of urgency, as SMEs are the backbone of the economy, playing vital roles in domestic supply chains, employment and economic growth.

The MPSI casts a wider net by establishing a framework that enables the broader use of movable property as collateral for financing.

Startups and micro-SMEs, which often face difficulties in obtaining financing, would at least have alternatives besides using their own funds.

However, it is taking quite a while for the MPSI Bill to wind its way up to Parliament.

A personal property securities law was first mooted in 2017 and has since gone through a series of consultations at the government and industry levels in 2021 and 2023.

No updates have been forthcoming from the Companies Commission Malaysia, the designated regulatory agency, since then, not even on when the bill will be tabled.

The World Bank cited the absence of a framework allowing movable property to be used as collateral as one of three gaps that need to be addressed to help SMEs access financing beyond the traditional collateral of land and buildings used to secure bank loans.

Such a framework would enable machinery, receivables and inventory to be used as collateral.

It could also help SMEs channel funds towards more productive uses rather than having to rely solely on conventional financing arrangements.

The MPSI would certainly help banks and other financiers assess these movable assets more accurately while providing them with legal recourse.

It would establish standards and benchmarks for verifying, valuing and recovering these movable assets, while giving lenders and borrowers a ­measure of protection and certainty.