Highlights:

  1. SME non-performing loans in Malaysia among world’s highest
  2. Government aims to create 50,000 new SMEs annually over next five years
  3. Mastercard seeks more partnership with industry players
  4. Not time for ASEAN countries to adopt trade protectionist measures
  5. Time for BNM to reimpose financing quota — HBA

SME non-performing loans in Malaysia among world’s highest
Malaysia’s non-performing loans (NPLs) among small and medium enterprise (SME) entrepreneurs are among the world’s highest. Entrepreneur Development Minister Datuk Seri Mohd Redzuan Yusof said, the government had taken steps to reduce the NPLs by increasing entrepreneurs’ awareness on the ecosystem of their respective business ventures. He added that in other countries, the rate of NPLs among SMEs was low, ranging at about eight per cent or less, while Malaysia’s was in the double-digit. “When we say double digit, it means 15, 16, 20 (per cent), and that is high, as the NPLs in other countries are really low. For example, I understand that China’s NPL rate is only at two per cent. “How can they achieve this? Maybe they learnt from successful SME models, which is what we are trying to do right now. Germany has a model which can help SMEs get a high rate of return and the country’s NPL rate is only at two per cent,” he added. He said the National Entrepreneur Group Economic Fund’s (Tekun Nasional) NPLs currently stood at RM600 million, adding, there were many factors which caused entrepreneurs to default on their loans, including failure to understand the market and its demands, the cost of doing business and the lack of creativity in conducting it. On another note, he said the government aimed to create 50,000 new SMEs annually over the next five years, and a million new jobs in the country.

Mastercard seeks more partnership with industry players
Mastercard is seeking to partner with more industry players to penetrate into financial technology products and services to reach the consumers. Mastercard Asia Pacific Digital and Emerging Partnership Executive Vice-President Rama Sridhar said many financial technology (fintech) industry players wanted to create products and services that could save consumers’ time and money. “Mastercard has a long track record of powering commerce by making every transaction smarter, more seamless and more secure. “So, Mastercard is developing innovations for future proof payment solutions, so that governments, businesses and consumers can focus on what they do without worrying about the security of their transaction,” she said at a media session in conjunction with the Singapore FinTech Festival 2018 in Singapore. Rama said many governments in Southeast Asia were also planning to move towards digital economies with cashless solutions as a core component. For example, Singapore-based ride-hailing transport services, Grab has partnered with Mastercard to issue prepaid cards tailored to Southeast Asian consumers, extending the use of Grab’s digital wallet and helping its unbanked users conduct online transactions. Both companies hope to leverage Grab’s 110 million users based on downloads and Mastercard’s network of three million merchant outlets. “The partnership with Grab significantly aligns with our goal of expanding digital payments across all consumers and merchants in Southeast Asia,” Rama said.

Meanwhile, Mastercard Asia Pacific Co-President Ari Sarker said the company planned to create a channel to connect small and medium enterprises (SME) to e-commerce platforms. “It is great way for them to have a bigger perspective of the digital economy. “E-commerce has seen a significant shift across the world. The enablement of e-commerce is going to remain as powerful force and SMEs have the opportunity to participate in the supply chain via the platform,” he said. The third edition of the Singapore FinTech Festival featured over 250 speakers, 450 exhibitors, 16 international pavilions and 40,000 participants.

Not time for ASEAN countries to adopt trade protectionist measures
Malaysian Prime Minister, Tun Dr Mahathir Mohamed said ASEAN countries should engage in multilateral dialogues to resolve trade issues instead of adopting inward-looking protectionist measures. Speaking at the ASEAN Business and Investment Summit in Singapore, Tun Dr Mahathir asserted that trade tensions between the United States and China, are bound to create a “domino effect” that will affect trade reactions. He said that the trade tensions will be a reason for developed countries to adopt protective measures against developing countries, including ASEAN countries. These measures include technical barriers to trade such as quotas, embargoes, sanctions, levies and other restrictions to regulate markets, as well as discrimination against imports in order to protect big domestic industries. “The rise of trade protectionism, resurgent nationalistic movements and inward-looking policies also seems to be slowly taking place within ASEAN itself,” said Dr Mahathir. “However, this is not the time to close our doors by invoking trade protectionist measures but, instead, we should be actively engaged in finding amicable solutions and resolving trade issues through multilateral dialogues such as between ASEAN countries. Tun Dr Mahathir said the Malaysian government is prepared to take a “leading role” in expressing concerns over rising trade tensions and risks of escalating protectionism at the various Word Trade Organisation (WTO) bodies. He said this will ensure that the WTO remains a rules-based, open and non-discriminatory platform for meaningful progress towards the development agenda of developing and least developed countries. “For Malaysia, free trade must also mean fair trade, taking into account the economic levels of all trading partners. This is to ensure that trade relationships would not descend into new forms of colonialism, and to prevent trade being used as weapons to dominate,” said Dr Mahathir.

Time for BNM to reimpose financing quota — HBA
The National House Buyers Association (HBA) has called on Bank Negara Malaysia (BNM) to reimpose financing quota that the banks need to adhere to in order to assist first-time home buyers. Its Honorary Secretary-General, Datuk Chang Kim Loong said the quota system was implemented in the 1980s by BNM where banks were needed to accomplish a certain amount of quota in small-sized financing. He said the matter was proposed to the central bank to consider. “In 1980s, banks must achieve a certain amount of quota of small financing, whether for low-cost or medium-cost houses (priced) below RM100,000.  “So, we want this to be reintroduced and banks must accomplish a certain amount of quota or percentage for affordable housing (funding). So, there are no more excuses of not enough loans or not meeting the criteria,” he said at the Rahim & Co Seminar 2018 themed “The Malaysian Property Market: Where are We Heading Post-GE14?” in Kuala Lumpur.