SME association suggests special purpose vehicle to disburse relief funds to businesses

MELAKA: Special purpose vehicles should take over the role of commercial banks in disbursing the Special Relief Fund (SRF) meant for businesses, says an association representing small and medium enterprises.

Malaysian SME Association national president Datuk Michael Kang Hua Keong said that Bank Negara should disburse the SRF through a special purpose vehicle with collateral-free, government-guaranteed loans to SMEs to cushion the effect of Covid-19.

He said the SRF is intended to provide financing support to SMEs struggling due to disruptions caused by the pandemic but some find it hard to secure financial assistance from commercial banks.

"Commercial banks have key performance index (KPI) and have to answer their respective board of directors on non-performing loans.

"For instance, those in tourism industry find it hard to get their SRF applications approved as banks felt that the industry would take some time to recover," he said.

Kang said Bank Negara should look into the grouses of SME owners on banks refusing to assist to those who are really in need of the cash.

Kang said the government should also allocate an additional RM30bil to RM50bil to assist SMEs by debuting the special purpose vehicle and channelling it through government-owned banks, among others, SME Bank Malaysia Bhd and Bank Kerjasama Rakyat Malaysia Bhd.

He said commercial banks will not help SMEs to sustain their businesses that would eventually lead to many companies ceasing operations and laying-off its employees.

"SMEs employ millions of people and making it hard for them to apply for SRF would only cause a domino effect, including employees losing jobs," he said.

Kang was asked to comment on claims made by SMEs owners that commercial banks had been denying SRF applications by giving irrational excuses.

Some SME owners were also told that the SRF total had been fully utilised, and their applications could no longer be processed.

Earlier reports stated that up to RM10bil had been disbursed by Bank Negara to some 9,000 SMEs since SRF was made available on March 6.

Bank Negara offers a maximum financing amount of up to RM1mil where 80% of the amount is guaranteed. It is valid from March 6 until Dec 31 this year, or until the exhaustion of the allocation, whichever is earlier.