Guan Eng Calls for Moratorium on Loans for All Except T20 Segment, Warns SMEs Need Urgent Financial Aid | Malaysia

A food vendor waits for customers during the movement control order at Jalan Alor in Kuala Lumpur on June 23, 2021. – Photo by Firdaus Latif

KUALA LUMPUR, June 25 – Former Finance Minister Lim Guan Eng today urged the Perikatan Nasional (PN) administration to provide urgent financial assistance through a moratorium on auto bank loans until the end of the year for all Malaysians except T20 grade.

He said Putrajaya is also expected to provide Ringgit 35 billion in subsidies for hiring, wages and utilities, hiring and salary incentives to create new jobs, as well as subsidies to help the public do so. facing the last movement control order.

“The moratorium is expected to be borne by a banking sector which recorded after-tax profits of over 23 billion ringgit in 2020 and 32.3 billion ringgit in 2019, and continues to generate healthy profits in the first quarter of 2021,” Lim said in a statement. .

The Bagan MP said the moratorium on bank lending targeted by PN has clearly failed as not all loan applications have been approved.

“Even loans to small and medium-sized enterprises (SMEs) have not been used due to their lack of borrowing capacity.

“The Minister of Finance, Tengku Zafrul Abdul Aziz, revealed that in terms of tourism financing, the government has an allocation of RM 600 million for SMEs and micro-SMEs which were still affected by Covid-19 “, did he declare.

Lim quoted the finance minister’s remarks that as of June 11, there had been 669 applications, of which 331 had been approved with a total funding of 65.9 million ringgit, meaning that approved applications only exceeded ‘just over 10%.

“Pakatan Harapan had proposed an automatic moratorium on loans until the end of the year, except for T20, and an injection of 45 billion ringgit of financial aid as soon as possible to save jobs, resources economic and business livelihoods.

“Of these 45 billion ringgit, at least 35 billion ringgit must be set aside to help companies in difficulty, especially SMEs. Some 98.5% of business establishments in Malaysia are SMEs and nearly one million SMEs contribute 39% of our country’s GDP in 2019, ”he said.

The Secretary General of the DAP added that the current economic recession caused by the Covid-19 pandemic has particularly affected the critical sector of SMEs.

“The World Bank not only downgraded the PN government‘s growth projection from 6% to 7.5% for 2021 to 4.5%, but also highlighted the survival crisis that many Malaysian companies face.

“He said Malaysian businesses are less equipped to withstand shocks than their regional counterparts, with less cash on hand to deal with a crisis like Covid-19,” he said.

According to the bank’s report “Malaysia Economic Monitor: Weathering the Surge”, liquidity is an urgent issue as the median Malaysian company has only two months of free cash flow, while the average Malaysian company has 4 months. , 9 months of free cash flow, which is lower than that of Indonesia. 9.5 months and Vietnam free cash flow over 5.9 months.

Some 60 percent of businesses are in arrears or are at risk of doing so within the next six months, and businesses appear less willing to borrow due to fear of repayment risks, with sellers also appearing less willing to extend credit.

Lim said the report is corroborated by a survey from the Ministry of Entrepreneurial Development and Cooperatives released on June 4, which said more than 90% of micro-SMEs were at risk of shutting down, with 54% saying they could not. survive only three to six months, and 72 percent expect losses.

“The Malaysian SME Association revealed that 100,000 SMEs closed last year and another 50,000 are expected to suffer the same fate.

“With only 10% of the loan amount given to the crippled tourism sector which lost RM100 billion last year, Malaysian businesses, especially small and micro enterprises, are in big trouble,” he said. -he declares.

As the direct tax injections of Ringgit 77.6 billion so far have been woefully insufficient to deal with hundreds of billions of ringgit in economic losses, Lim asked if the PN government would offer an automatic moratorium on loans. banks and a 45 billion ringgit infusion as needed, or it continues to disappoint until growth prospects for this year weaken and disappear.


Source link

About Christopher Easley

Christopher Easley

Check Also

Former RBI Deputy Chief Warns Of Rising Bad Debt Due To Covid

India’s increase in credit to help small borrowers overcome the impact of Covid-19 risks fueling …

Leave a Reply

Your email address will not be published. Required fields are marked *