KUALA LUMPUR, Oct 31 (Bernama) -- The Higher Education Ministry is making amendments to the Private Institution of Higher Learning (IPTS) Act to allow for sterner action, including higher fines, on private universities for various offences.
Its minister, Datuk Seri Mohamed Khaled Nordin said, the amendments are expected to be presented in Parliament next year.
He said appropriate action will be taken against IPTS should they be found to administer examinations to foreign students who did not attend classes.
"The university will also be prohibited from taking in foreign students for the subsequent intake," said Mohamed Khaled when wrapping up a debate on the Supply Bill 2012 relating to the ministry, at the Dewan Rakyat today.
He said the Home Ministry has already retracted approvals for foreign student intake from six IPTS so far this year.
"Among the reasons for the retraction is failure to effectively manage international students," said Mohamed Khaled.
He said private universities with foreign student intake approval from the ministry are required to issue quarterly reports on their foreign students, which includes attendance.
He said this monitoring will be jointly conducted by the Malaysian Immigration Department.
Meanwhile, in response to a question from Azan Ismail (PKR-Indera Mahkota) on National Higher Education Fund Corporation (PTPTN) loan repayment through salary deduction, he said they expect to implement this method only by 2013.
He said the rumour that the Inland Revenue Board (IRB) began deducting salaries of PTPTN loan borrowers was not true.
"No salary deductions have been made so far," he clarified.
Mohamed Khaled said if the method is implemented it may only be compulsory for new borrowers, while others will resume paying through existing methods.
-- BERNAMA
Monday, October 31, 2011
Sunday, July 10, 2011
Banks eye bigger share in SME market
THE small and medium enterprise (SME) business is becoming an important portfolio for banks although there are hurdles which many face in expanding their market share in this business.
In terms of its importance and market size, SMEs at the moment contributes about 32% of the country’s gross domestic product and makes up 59% of total employment. In totality, this segment accounts for 99% of business establishments and contributes 19% of Malaysia’s exports.
Judging from these figures, it explains why banks are eyeing to have a bigger market share for the SME business. Some of the challenges faced by banks in the SME business include the ability to roll out simple and convenient products, the difficulties in reaching out effectively to the SMEs due to their highly dispersed population and in providing a full range of banking services apart from loans.
OCBC Bank (M) Bhd emerging business head Wong Chee Seng says the SME sector continues to be an important part of the bank’s business and will remain so in terms of growth. For this year, he adds the bank has “upped the momentum” and open up more avenues for SMEs to gain financing and enjoy better financial services. These include the participation in various government-initiated lending programmes and the rolling out of more channels for SMEs to perform their banking needs.
OCBC Bank is one of the few foreign banks to be named the Top SMI Supporter by the Credit Guarantee Corporation (CGC), he says, adding that it understands the SME’s nature of business and risk profile despite the diversity of their business.
Wongs says the bank expects improvement this year in terms of revenue growth and loans outstanding for the SME sector compared with last year with more than double-digit growth. Net profit for this sector is also expected to increase by double digit over last year due to improving loans portfolio quality, he notes.
In Malaysia, OCBC has over 200 customer-facing managers in its branches nationwide and they possess in-depth knowledge and skills to deal with various types of SMEs and their respective local and international financing needs.
He says the dedicated Business Banking Centres and Business Banking Commercial Service Centres are other channels which can connect the SMEs to the bank’s suite of business banking products and services.
Wongs says the bank is committed to delivering simple, fast and convenient products and services to assist SMEs in growing their businesses domestically and globally.
In terms of its importance and market size, SMEs at the moment contributes about 32% of the country’s gross domestic product and makes up 59% of total employment. In totality, this segment accounts for 99% of business establishments and contributes 19% of Malaysia’s exports.
Judging from these figures, it explains why banks are eyeing to have a bigger market share for the SME business. Some of the challenges faced by banks in the SME business include the ability to roll out simple and convenient products, the difficulties in reaching out effectively to the SMEs due to their highly dispersed population and in providing a full range of banking services apart from loans.
OCBC Bank (M) Bhd emerging business head Wong Chee Seng says the SME sector continues to be an important part of the bank’s business and will remain so in terms of growth. For this year, he adds the bank has “upped the momentum” and open up more avenues for SMEs to gain financing and enjoy better financial services. These include the participation in various government-initiated lending programmes and the rolling out of more channels for SMEs to perform their banking needs.
OCBC Bank is one of the few foreign banks to be named the Top SMI Supporter by the Credit Guarantee Corporation (CGC), he says, adding that it understands the SME’s nature of business and risk profile despite the diversity of their business.
Wongs says the bank expects improvement this year in terms of revenue growth and loans outstanding for the SME sector compared with last year with more than double-digit growth. Net profit for this sector is also expected to increase by double digit over last year due to improving loans portfolio quality, he notes.
In Malaysia, OCBC has over 200 customer-facing managers in its branches nationwide and they possess in-depth knowledge and skills to deal with various types of SMEs and their respective local and international financing needs.
He says the dedicated Business Banking Centres and Business Banking Commercial Service Centres are other channels which can connect the SMEs to the bank’s suite of business banking products and services.
Wongs says the bank is committed to delivering simple, fast and convenient products and services to assist SMEs in growing their businesses domestically and globally.
Sunday, June 26, 2011
Recron Inks US$190 Million Syndicated Term Loan Deal
KUALA LUMPUR, June 24 (Bernama) -- Recron (M) Sdn Bhd, an integrated polyester and textile company, has signed an agreement for US$190 million (RM570 million) syndicated term loan with six banks, including Citibank Bhd and HSBC Bank Malaysia Bhd.
The rest are Barclays Bank plc, Bank of Tokyo-Mitsubishi UFJ Ltd, Sumitomo Mitsui Banking Corp and Mizuho Corporate Bank Ltd, according to a statement from the company.
Recron is part of the Reliance Group, India's largest private sector enterprise, with businesses in the energy and materials value chain.
The Malaysian unit has state-of-the-art manufacturing sites in Nilai and Melaka, with 90 per cent of its products exported to more than 60 countries.
It has a turnover of RM3.2 billion last year, and earned foreign exchange to the tune of US$895 million for the country, the statement said.
-- BERNAMA
The rest are Barclays Bank plc, Bank of Tokyo-Mitsubishi UFJ Ltd, Sumitomo Mitsui Banking Corp and Mizuho Corporate Bank Ltd, according to a statement from the company.
Recron is part of the Reliance Group, India's largest private sector enterprise, with businesses in the energy and materials value chain.
The Malaysian unit has state-of-the-art manufacturing sites in Nilai and Melaka, with 90 per cent of its products exported to more than 60 countries.
It has a turnover of RM3.2 billion last year, and earned foreign exchange to the tune of US$895 million for the country, the statement said.
-- BERNAMA
Tuesday, May 31, 2011
New Power Tariff Not An Excuse To Increase Prices - Muhyiddin
PUTRAJAYA, May 31 (Bernama) -- Deputy Prime Minister Tan Sri Muhyiddin Yassin Tuesday reminded traders and businesses not to increase prices of goods following the new electricity tariff effective Wednesday.
Describing the tariff hike as reasonable and one that would not burden the people, he said it should not be an excuse for manufacturers, retailers and traders to gain extra profit.
"There shouldn't be an increase in the prices of consumer goods. The industrial sector and some businesses may be affected, and it's only a seven per cent increase," he told reporters after launching the 10th anniversary celebration of the Energy Commission of Malaysia and opening the Diamond Building here.
Muhyiddin ordered the Domestic Trade, Cooperatives and Consumerism Ministry to closely monitor the prices of basic necessities towards ensuring that they were not increased indiscriminately.
The deputy prime minister said the government had made a careful study and factored in the interest of all people before announcing the tariff revision.
Muhyiddin said the government had looked in depth possible implications of the new power rate on the cost of living, inflation rate and prices of goods.
The deputy prime minister said he was heartened by the attitude of certain traders who were receptive to the electricity tariff hike.
The government yesterday announced that from tomorrow, consumers would pay 33.54 sen per kilowatt hour (kWh) for electricity from 31.31 sen, an increase of 2.23 sen per kWh or 7.12 per cent.
However, the new rate will not affect 75 per cent of domestic users whose consumption is less than 300 kWh per month.
Describing the tariff hike as reasonable and one that would not burden the people, he said it should not be an excuse for manufacturers, retailers and traders to gain extra profit.
"There shouldn't be an increase in the prices of consumer goods. The industrial sector and some businesses may be affected, and it's only a seven per cent increase," he told reporters after launching the 10th anniversary celebration of the Energy Commission of Malaysia and opening the Diamond Building here.
Muhyiddin ordered the Domestic Trade, Cooperatives and Consumerism Ministry to closely monitor the prices of basic necessities towards ensuring that they were not increased indiscriminately.
The deputy prime minister said the government had made a careful study and factored in the interest of all people before announcing the tariff revision.
Muhyiddin said the government had looked in depth possible implications of the new power rate on the cost of living, inflation rate and prices of goods.
The deputy prime minister said he was heartened by the attitude of certain traders who were receptive to the electricity tariff hike.
The government yesterday announced that from tomorrow, consumers would pay 33.54 sen per kilowatt hour (kWh) for electricity from 31.31 sen, an increase of 2.23 sen per kWh or 7.12 per cent.
However, the new rate will not affect 75 per cent of domestic users whose consumption is less than 300 kWh per month.
Thursday, May 26, 2011
CIMB Net Profit Rises 9.4%
KUALA LUMPUR—CIMB Group Holdings Bhd., Malaysia's second-largest lender by assets after Maybank, said first-quarter net profit rose on lower loan loss provisions even as it reported lower net interest and non-interest income.
The lender, which has sizable operations in Indonesia and Thailand, also said Wednesday that it is indefinitely postponing its plans for a dual listing on the Stock Exchange of Thailand due to regulatory problems.
The Bursa Malaysian-listed firm, which first announced its intention to pursue a Thai listing in November, said the regulatory issues include the tax treatment of investors in foreign companies traded on the Thai exchange.
CIMB said in a stock exchange filing that net profit for the January-to-March quarter rose 9.4% to 916.5 million ringgit ($299.5 million) from 838.1 million ringgit a year earlier.
"We had a good start to 2011 on the back of a strong showing by our Malaysian consumer banking operations and continued high growth at [Indonesia unit] CIMB Niaga," CIMB Group Chief Executive Nazir Razak said in a statement.
The lender, which has sizable operations in Indonesia and Thailand, also said Wednesday that it is indefinitely postponing its plans for a dual listing on the Stock Exchange of Thailand due to regulatory problems.
The Bursa Malaysian-listed firm, which first announced its intention to pursue a Thai listing in November, said the regulatory issues include the tax treatment of investors in foreign companies traded on the Thai exchange.
CIMB said in a stock exchange filing that net profit for the January-to-March quarter rose 9.4% to 916.5 million ringgit ($299.5 million) from 838.1 million ringgit a year earlier.
"We had a good start to 2011 on the back of a strong showing by our Malaysian consumer banking operations and continued high growth at [Indonesia unit] CIMB Niaga," CIMB Group Chief Executive Nazir Razak said in a statement.
Wednesday, May 11, 2011
Malaysia central bank raises key rate to 3 pct
At the Monetary Policy Committee (MPC) meeting today, Bank Negara Malaysia decided to raise the Overnight Policy Rate (OPR) by 25 basis points to 3.00 percent. The floor and ceiling rates of the corridor for the OPR are correspondingly raised to 2.75 percent and 3.25 percent respectively.
The global economic recovery has continued in the first quarter of the year, but the growth has been highly uneven across regions. Growth in the advanced economies during this period has remained modest.
In the region, despite some moderation, the growth has remained strong, supported by robust domestic economic activity. Global inflation has, however, increased on account of rising energy and commodity prices.
In several countries, further upward pressure on inflation has been exerted by domestic demand conditions. Although the global recovery is expected to continue going forward, downside risks have increased, arising from the potential for higher energy and commodity prices, possible supply disruptions following developments in Japan, and the heightened volatility in capital flows to emerging economies.
In the domestic economy, the latest indicators point towards the continued strengthening of private investment and sustained private consumption expenditure in the first quarter. The export performance also improved, supported by regional demand.
Going forward, the assessment is for the Malaysian economy to remain firmly on a steady growth path, with growth improving gradually during the course of the year. Growth will be underpinned by the firm expansion of domestic demand. Sustained employment conditions and income growth is expected to provide support to private consumption, while private investment is projected to strengthen amidst the improved investment environment. The developments in Japan are expected to have a limited impact on the overall domestic economy.
Positive prospects for the region and strong demand for commodities are expected to continue to support the Malaysian economy. Domestic headline inflation has continued to increase, rising to 3% in March to average 2.8% for the first quarter of 2011. The increase was mainly due to higher food and fuel prices. The assessment is that supply factors will continue to be a key determinant affecting consumer prices. Global commodity and energy prices are projected to remain elevated during the year, with inflation in major trading partners also expected to rise further. There are also some signs that domestic demand factors could exert upward pressure on prices in the second half of the year.
With the economy firmly on a steady growth path, the MPC decided to adjust the degree of monetary accommodation. At the current OPR level, the stance of monetary policy remains supportive of growth. The future stance of monetary policy will depend on the assessment of the risk to growth and inflation prospects.
The global economic recovery has continued in the first quarter of the year, but the growth has been highly uneven across regions. Growth in the advanced economies during this period has remained modest.
In the region, despite some moderation, the growth has remained strong, supported by robust domestic economic activity. Global inflation has, however, increased on account of rising energy and commodity prices.
In several countries, further upward pressure on inflation has been exerted by domestic demand conditions. Although the global recovery is expected to continue going forward, downside risks have increased, arising from the potential for higher energy and commodity prices, possible supply disruptions following developments in Japan, and the heightened volatility in capital flows to emerging economies.
In the domestic economy, the latest indicators point towards the continued strengthening of private investment and sustained private consumption expenditure in the first quarter. The export performance also improved, supported by regional demand.
Going forward, the assessment is for the Malaysian economy to remain firmly on a steady growth path, with growth improving gradually during the course of the year. Growth will be underpinned by the firm expansion of domestic demand. Sustained employment conditions and income growth is expected to provide support to private consumption, while private investment is projected to strengthen amidst the improved investment environment. The developments in Japan are expected to have a limited impact on the overall domestic economy.
Positive prospects for the region and strong demand for commodities are expected to continue to support the Malaysian economy. Domestic headline inflation has continued to increase, rising to 3% in March to average 2.8% for the first quarter of 2011. The increase was mainly due to higher food and fuel prices. The assessment is that supply factors will continue to be a key determinant affecting consumer prices. Global commodity and energy prices are projected to remain elevated during the year, with inflation in major trading partners also expected to rise further. There are also some signs that domestic demand factors could exert upward pressure on prices in the second half of the year.
With the economy firmly on a steady growth path, the MPC decided to adjust the degree of monetary accommodation. At the current OPR level, the stance of monetary policy remains supportive of growth. The future stance of monetary policy will depend on the assessment of the risk to growth and inflation prospects.
Saturday, April 23, 2011
Najib: It’s for Tricubes to explain 1Malaysia e-mail project
SERDANG: The onus is on Tricubes Bhd to explain to the public its 1Malaysia e-mail project, the Prime Minister said.
“Let them give their explanation. Not everything is on me. It is their proposal, they should sell it to the public,” Datuk Seri Najib Tun Razak said.
He reiterated that the project did not involve public funds as it was a private sector initiative.
Najib had announced on Tuesday that the initiative by Tricubes was part of the seven new projects in the Economic Transformation Programme.
Many had questioned the need to have the 1Malaysia e-mail account for those aged 18 and above. There are also concern about security issues.
Najib had previously said Malaysians would not be forced to set up the account.
More on The Stars
“Let them give their explanation. Not everything is on me. It is their proposal, they should sell it to the public,” Datuk Seri Najib Tun Razak said.
He reiterated that the project did not involve public funds as it was a private sector initiative.
Najib had announced on Tuesday that the initiative by Tricubes was part of the seven new projects in the Economic Transformation Programme.
Many had questioned the need to have the 1Malaysia e-mail account for those aged 18 and above. There are also concern about security issues.
Najib had previously said Malaysians would not be forced to set up the account.
More on The Stars
Saturday, April 2, 2011
CIMB, CIMB Islamic to increase BLR
CIMB Bank Bhd and CIMB Islamic Bank Bhd have announced an increase in their Base Lending Rate (BLR) and Base Financing Rate (BFR) by five basis points from 6.30 per cent to 6.35 per cent, effective April 4.
A statement by the CIMB Group said that the change in the rates followed Bank Negara Malaysia’s decision to increase the Statutory Reserve Ratio (SRR) requirement by 1.0 per cent to 2.0 per cent with effect from April 1. -- Bernama
A statement by the CIMB Group said that the change in the rates followed Bank Negara Malaysia’s decision to increase the Statutory Reserve Ratio (SRR) requirement by 1.0 per cent to 2.0 per cent with effect from April 1. -- Bernama
New SME loan scheme gets mixed feedback
A NEW financing scheme for small and medium enterprises (SMEs) has drawn mixed reactions. While observers recognise that the scheme is a good initiative, they say there is room for improvement.
Koong ... ‘CGC should top up the RM100mil financing amount to benefit more SMEs.’
Credit Guarantee Corp Malaysia Bhd (CGC) has allocated RM100mil of financing for SMEs under a newly-launched credit guarantee scheme called Enhancer Express. The scheme is aimed at promoting the growth and development of SMEs, particularly those in the wholesale and retail sectors, and is available at financial institutions throughout the country for a limited period of three months or until loan approvals hit RM100mil, whichever comes first.
It said: “Enhancer Express offers loan ranging from RM50,000 to RM100,000. The loans are offered to small businesses that have been in operation for more than three years.”
Under the scheme, borrowers will enjoy a fixed guarantee fee of 4.5% per annum, which is relatively lower compared with a maximum fee of 5.75% for other CGC schemes. The guarantee fees are calculated based on the borrowers' individual risk profiles.
According to CGC, the lending rate for Enhancer Express will depend on the financial institutions, but the maximum rate would be BLR (base lending rate) plus 1.75%, on top of the fixed guarantee fee of 4.5% per annum. The guarantee cover for the scheme is at 70% by CGC.
CGC managing director Datuk Wan Azhar Wan Ahmad says: “The Enhancer Express was designed specifically to expand our SME outreach by improving on our turnaround time for loan processing and approvals. To achieve that, we have simplified the documents required by both the financial institutions and CGC.“By aligning with the industry practice, we expect to further improve on our processing and approval time, which will translate into speedier disbursement of funds to the borrowers.”
He further emphasises that the introduction of Enhancer Express is in line with the Government's initiative to support small businesses towards financial inclusion within the economy, thus enabling this critical segment to develop in tandem with other business segments of the economy.
“With attractive features that are beneficial to the financial institutions as well, we are also looking forward to their greater participation in the Enhancer Express scheme to further promote the development of the small business community,” he adds.
CGC, a subsidiary of Bank Negara, provides credit enhancement services to SMEs with inadequate collateral or without collateral and which has no track record. It has cumulatively guaranteed about RM47bil to more than 400,000 SMEs in the country.
Associated Chinese Chambers of Commerce and Industry Malaysia SMEs deputy chairman Koong Lin Loong says it is a good scheme that SMEs can consider applying for. However, the response will be based on the lending rates because the SMEs' margins are very tiny.
To him, a guarantee cover of between 70% and 80% is reasonable for the scheme. He adds that the tenure of the loan is also important and a payment period of between five to seven years is still manageable for SMEs.
“CGC should top up the RM100mil financing amount to benefit more SMEs, and the loan should be opened for all sectors and not just limited to wholesale and retail sectors. Other sectors, such as manufacturing, construction and services, are also contributing to gross domestic product significantly,” he argues.
Koong says if the qualified SMEs are entitled for a minimum loan of RM50,000, the RM100mil can only benefit 2,000 SMEs. Thus, he reckons that the total loan amount should be increased. However, he acknowledges that Enhancher Express is a good initiative.
Meanwhile, SMI Association of Malaysia national president Chua Tiam Wee says CGC's new financing scheme is not that exciting as the net rate to be borne by the SME will still be high. “Taking into consideration the base lending rate at 6.3% plus 1.5% to 2% lending rate, and the additional CGC fixed fees of 4.5%, the overall cost of borrowing under Enhancer Express is expected to be in region of 12.3% to 12.8%.
“Any borrowing cost above 12% will be burdensome under the current business environment. Retailers now face rises in the cost of goods, and are facing constraints in passing the cost increase to consumers due to price controls and competition from hypermarkets,” he says. He adds although the fixed rate of 4.5% appear to be reduced from the maximum rate that can be charged of 5.75%, it will not benefit those SME borrowers who are good paymasters. As such, Chua contends that those SME borrowers who settle loan promptly should be given rebates to reduce the guarantee fees to between 2.5% and 3%. According to him, prior to the hike in guarantee fee rates by CGC to a maximum 5.75% in mid 2010, the maximum rate was only 3.5%. Chua says the the RM100mil allocated under this scheme is modest and is expected to benefit only 1,000 to 2,000 SMEs in the wholesale and retail sector. Nevertheless, it will be helpful as SMEs in this sector account for almost 45% of the total SMEs in the country.
He thinks that the requirement for a minimum three-year track record should be reviewed because the newer SMEs are the ones requiring help from CGC as banks are reluctant to lend to them. “CGC should play a more active nation-building role, for which it was originally set up for, by helping SMEs who lack collateral,” he says.
Reducing the CGC approval time with simplified forms is welcome, he adds. However, the association proposes further simplification of the application process by using a single form for submission to the bank and CGC as against having to fill two different forms and going through two different approving authorities.
“Merging the application process with a single approval authority will save time. Also a common standardised loan application form with a single application window will ease further the application process,” he says.
Koong ... ‘CGC should top up the RM100mil financing amount to benefit more SMEs.’
Credit Guarantee Corp Malaysia Bhd (CGC) has allocated RM100mil of financing for SMEs under a newly-launched credit guarantee scheme called Enhancer Express. The scheme is aimed at promoting the growth and development of SMEs, particularly those in the wholesale and retail sectors, and is available at financial institutions throughout the country for a limited period of three months or until loan approvals hit RM100mil, whichever comes first.
It said: “Enhancer Express offers loan ranging from RM50,000 to RM100,000. The loans are offered to small businesses that have been in operation for more than three years.”
Under the scheme, borrowers will enjoy a fixed guarantee fee of 4.5% per annum, which is relatively lower compared with a maximum fee of 5.75% for other CGC schemes. The guarantee fees are calculated based on the borrowers' individual risk profiles.
According to CGC, the lending rate for Enhancer Express will depend on the financial institutions, but the maximum rate would be BLR (base lending rate) plus 1.75%, on top of the fixed guarantee fee of 4.5% per annum. The guarantee cover for the scheme is at 70% by CGC.
CGC managing director Datuk Wan Azhar Wan Ahmad says: “The Enhancer Express was designed specifically to expand our SME outreach by improving on our turnaround time for loan processing and approvals. To achieve that, we have simplified the documents required by both the financial institutions and CGC.“By aligning with the industry practice, we expect to further improve on our processing and approval time, which will translate into speedier disbursement of funds to the borrowers.”
He further emphasises that the introduction of Enhancer Express is in line with the Government's initiative to support small businesses towards financial inclusion within the economy, thus enabling this critical segment to develop in tandem with other business segments of the economy.
“With attractive features that are beneficial to the financial institutions as well, we are also looking forward to their greater participation in the Enhancer Express scheme to further promote the development of the small business community,” he adds.
CGC, a subsidiary of Bank Negara, provides credit enhancement services to SMEs with inadequate collateral or without collateral and which has no track record. It has cumulatively guaranteed about RM47bil to more than 400,000 SMEs in the country.
Associated Chinese Chambers of Commerce and Industry Malaysia SMEs deputy chairman Koong Lin Loong says it is a good scheme that SMEs can consider applying for. However, the response will be based on the lending rates because the SMEs' margins are very tiny.
To him, a guarantee cover of between 70% and 80% is reasonable for the scheme. He adds that the tenure of the loan is also important and a payment period of between five to seven years is still manageable for SMEs.
“CGC should top up the RM100mil financing amount to benefit more SMEs, and the loan should be opened for all sectors and not just limited to wholesale and retail sectors. Other sectors, such as manufacturing, construction and services, are also contributing to gross domestic product significantly,” he argues.
Koong says if the qualified SMEs are entitled for a minimum loan of RM50,000, the RM100mil can only benefit 2,000 SMEs. Thus, he reckons that the total loan amount should be increased. However, he acknowledges that Enhancher Express is a good initiative.
Meanwhile, SMI Association of Malaysia national president Chua Tiam Wee says CGC's new financing scheme is not that exciting as the net rate to be borne by the SME will still be high. “Taking into consideration the base lending rate at 6.3% plus 1.5% to 2% lending rate, and the additional CGC fixed fees of 4.5%, the overall cost of borrowing under Enhancer Express is expected to be in region of 12.3% to 12.8%.
“Any borrowing cost above 12% will be burdensome under the current business environment. Retailers now face rises in the cost of goods, and are facing constraints in passing the cost increase to consumers due to price controls and competition from hypermarkets,” he says. He adds although the fixed rate of 4.5% appear to be reduced from the maximum rate that can be charged of 5.75%, it will not benefit those SME borrowers who are good paymasters. As such, Chua contends that those SME borrowers who settle loan promptly should be given rebates to reduce the guarantee fees to between 2.5% and 3%. According to him, prior to the hike in guarantee fee rates by CGC to a maximum 5.75% in mid 2010, the maximum rate was only 3.5%. Chua says the the RM100mil allocated under this scheme is modest and is expected to benefit only 1,000 to 2,000 SMEs in the wholesale and retail sector. Nevertheless, it will be helpful as SMEs in this sector account for almost 45% of the total SMEs in the country.
He thinks that the requirement for a minimum three-year track record should be reviewed because the newer SMEs are the ones requiring help from CGC as banks are reluctant to lend to them. “CGC should play a more active nation-building role, for which it was originally set up for, by helping SMEs who lack collateral,” he says.
Reducing the CGC approval time with simplified forms is welcome, he adds. However, the association proposes further simplification of the application process by using a single form for submission to the bank and CGC as against having to fill two different forms and going through two different approving authorities.
“Merging the application process with a single approval authority will save time. Also a common standardised loan application form with a single application window will ease further the application process,” he says.
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