PETALING JAYA: Commercial banks are still refusing to give in to calls to provide loans to small and medium enterprises (SMEs).
Malaysian Trades Union Congress (MTUC) president Zainal Rampak said banks were still carrying on with old practices of insisting on rock-solid guarantees and securities, without looking at the contributions of SMEs to the economy. These SMEs now provide 2.8 million jobs to the Malaysian public, he said.
I personally know they have turned away many SME businessmen simply because they did not have sufficient collaterals,'' said Zainal, who spoke at a business seminar organised by the Indian Chamber of Commerce and Industry Selangor (ICCIS) at the Petaling Jaya Civic Centre yesterday.
The banks must complement the Government's effort to build a robust private sector and recognise the SMEs role in job creation,'' he said, claiming that banks had also ignored Prime Minister Datuk Seri Dr Mahathir Mohamad's advice in this regard.
He added that many SMEs had turned to illegal moneylenders and ended up losing their businesses because of high interest rates imposed on borrowing and late payment penalties.
Unlicensed moneylenders will eventually swallow all the immovable and movable assets, rendering borrowers financially insolvent,'' said Zainal.
On the same issue, ICCIS president P. Muguntha said data collected from 800 people also revealed that banks were too rigid with their loan approval procedures to small businessmen.
Many of the bank officers will just turn a potential customer away after a short interview,'' he said.