SME Association: Delay legal action on SMEs
Published on: Tuesday, December 07, 2021
By: Bernama
.jpg "SME Association: Delay legal action on SMEs")
Kuala Lumpur: The SME Association of Malaysia has urged commercial banks not to take legal action against Small and Medium Enterprises (SMEs) that failed to repay their loans, as they have been affected adversely by the Covid-19 pandemic.The association, which expressed support for Prime Minister Datuk Seri Ismail Sabri Yaakob’s call on commercial banks to spare hawkers and petty traders who failed to make repayments, said SMEs should be given a similar chance to allow them to recover and contribute positively to the real economy and financial markets.
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It said most businesses are barely surviving or trying to improve their cash flow.
“Business activity is vibrant traditionally during the November to February period. This period will encourage businesses to recover, increase employment, and promote growth.
“Delays in legal action against SMEs, as well as allowing a rollover of maturing debt, will allow more businesses to cover their operating expenses and interest payments with their cash buffers and revenues in the future,” the association said in a statement.
The SME Association of Malaysia noted that the pandemic has placed enormous strains on corporate cash buffers.
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“As a result of the economic lockdown caused by the pandemic, several businesses had either closed or were barely surviving. Fortunately, the reopening of economic and social activities in mid-August has improved business sentiment, it said.
The association’s national president Ding Hong Sing said it is important to have policy intervention to avoid the negative consequences for the real economy and financial markets.
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“By providing guarantees or credit enhancements, the government can ease the rollover of credit lines and this will reduce bank capital needs when businesses use them. “This reprieve for SMEs will allow them to recover during this vibrant period. Looking at the big picture, this will contribute positively to the real economy, financial markets, and financial institutions,” he added.
On Dec 3, Ismail Sabri called on banks to emulate the initiative taken by the financial institutions under the Ministry of Entrepreneur Development and Cooperatives, such as Bank Rakyat and SME Bank, not to take any legal action against hawkers and petty traders if they failed to make repayments until June 2022.
The prime minister said other financial institutions under the government such as Bank Simpanan Nasional and Bank Pembangunan were also asked to make a reasonable judgment on this matter as the micro traders were also badly affected and burdened by the Covid-19 pandemic.
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