KUALA LUMPUR: Rationalising capital financing institutions to enable the small and medium enterprises’ (SMEs) participation in new economic sectors is among the proposals under the Shared Prosperity Vision 2030 (WKB2030) launched today.
The introduction of alternative credit rating systems based on digital footprints such as online purchases, Internet usage and social media usage will also help to strengthen SMEs’ financial capital, Economic Affairs Ministry said.
The ministry also suggested for a policy review and improvement to ensure the success in financing SMEs, which also takes into account the problems in the classification of SME businesses.
It also proposed to enhance SME management support programmes by providing professional accounting services at a reasonable fee through the provision of accounting services through resource sharing.
Other proposals include encouraging accounting firms to provide training to the SMEs, and spurring micro-businesses to upscale as SMEs, and SMEs to expand as large companies by through widened funding eligibility criteria and conditions that support its growth.
Financial capital is defined as funds provided by certain parties as financial support for SMEs.
The initiatives are being introduced to address inequalities between income groups, to boost SME capabilities in the supply chain and encourage SMEs’ participation through the SME-friendly financing system.
Currently, most financial institutions are not inclined to consider applications for funds from privately-owned SMEs, claiming that private unlimited companies possess high credit risks.
According to Bank Negara Malaysia’s 2016 Annual Report, 25.1 per cent of financing applications from SMEs were rejected.
Meanwhile, a survey by the Department of Statistics in 2015 revealed that 73 per cent of SMEs employed self-financing.
Among the factors which affected the SME’s success in obtaining financial support are incomplete and unsystematic documentation system, especially in the account and financial management, uncompetitive businesses, credit background and poor loan repayment capability. -- Bernama