20100423 - sme & micro financing malaysia's experience
TRANSCRIPT
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SME and Micro financing: Malaysia’s Experience
Presentation for the Financial Inclusion Advisors ProgrammeKampala, Uganda
Development Finance and Enterprise DepartmentBank Negara Malaysia
26 April 2010
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Outline
• Context:
The Malaysian economy
The Malaysian financial system
Bank Negara Malaysia’s mandate
• Malaysia’s Experience:
SME financing
Micro financing
Consumer protection & redress
• Way Forward
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2009Global
Recession
1997-98Asian Crisis
1957-2008: Four different phases of economic growth
Commodity-driven and import substitution
Rural development and nascent industrialisation
Rapid industrialisation and global integration
Towards higher knowledge-based economy…
In the last 5 decades, Malaysia has witnessed major structural transformation of the economy
1957-70 1971- 85 1986-99
1960 1970 1980 1990 20002009
2000 onwards
• A private-sector driven, commodity-based economy
• Pursued an import substitution strategy
• Government emphasised on rural development and initiated effort on industrialisation
• Malaysia entered first recession in 1986 - collapse in commodity prices, twin deficit position
1985 Recession
• Policy thrust to develop Malaysia into a knowledge-based economy
• Growth was driven by domestic demand
• Post-crisis, Government pursued rapid industrialisation, export promotion and introduced economic liberalisation
• Malaysia entered second recession in 1998 – due to speculative attacks on Asian currencies
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Outcomes of four decades of economic transformation
Transformation into an upper middle income economy
− 7-fold increase in per capita income from RM1,132 in 1970 to RM25,800 in 2008
− Incidence of absolute poverty reduced from 49% in 1970 to 3.6% in 2007
Sectoral diversification into services and manufacturing
− Services share of GDP grew from 42% in 1970 to 55% in 2008
− Manufacturing share of GDP rose from 13% in 1970 to 29% in 2008
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Outline
• Context:
The Malaysian economy
The Malaysian financial system
Bank Negara Malaysia’s mandate
• Malaysia’s Experience:
SME financing
Micro financing
Consumer protection & redress
• Way Forward
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OFFSHOREOFFSHORE
Financial Markets
ONSHORE ONSHORE
Payments and Settlement Systems
Malaysian Financial System Landscape
A dual financial system with conventional and Islamic finance operating in parallel
• Commercial Banks• Islamic Banks• Development Finance
Institutions• Investment Banks• Insurance Companies• Takaful Operators• Reinsurance Companies
• Insurance Intermediaries• Money Brokers• Dealers / Brokers• Venture Capital / Private Equity• Unit Trust Companies• Fund Management Companies• Stock Broking Companies /
Universal Brokers
Offshore financial
institutions
• Money Market• FOREX market• Derivatives Market
• Capital Market Equities Market Bond Market
Non-Bank Financial Intermediaries
Financial Institutions
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Size of financial system participants
Commercial banks40.9%
Bank Negara Malaysia13.1%
EPF & other pension funds
16.8% Other financial intermediaries
7.1%
General insurance funds
0.9%
Life insurance funds4.9%
Islamic banks8.1%
Investment banks2.2%
Development financial
institutions5.9%
2
8
3
25
6
15
11
9
1
4
9
13
1
15
0
0
0 5 10 15 20 25 30 35 40 45
Retakaful Operator
Takaful operator
Reinsurer
Insurance Co
DFI
Investment Bank
Islamic Bank
Commercial Bank
Domestic
Foreign
• Total assets of financial system at end-2009 was RM2.8 trillion
• Banking system continues to be primary financial intermediaryAccounted for >50% of financial system assets
No. of financial institutions in Malaysia (as at end 2009)
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The financial sector today is more resilient, efficient and competitive
Commercial Banks
Domestic Foreign
2003 2009 2003 2009
Profitability
Return on Equity (%)
Return on Assets (%)
11.7
1.1
12.7
1.2
21.0
1.6
25.7
2.0
Asset Quality
NPL Ratio – 3mth classification (%)
9.5 1.7 4.5 1.7
Av. Asset Size
(RM bil)44.9 95.9 12.3 21.0
Shareholders’ Funds
(RM bil)4.0 9.3 0.9 1.7
Finance & Insurance
Sector2003 2009
Annual Growth 6.4% 4.4%
Share of GDP 9.7% 11.7%
Strong key financial indicators Enhanced contribution of financial sector to economy
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Outline
• Context:
The Malaysian economy
The Malaysian financial system
Bank Negara Malaysia’s mandate
• Malaysia’s Experience:
SME financing
Micro financing
Consumer protection & redress
• Way Forward
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Central Banks in emerging economies have a wider role to promote balanced & equitable growth
• Developmental role in charting direction and institutional set-up of financial system and overall economy
• Financial inclusion to ensure that all segments of society have access to financial services
• Greater sensitivity to political & socio-economic imbalances
Approach
Consideration to socio-economic
agenda
Greater challenges in preserving financial stability
as emerging markets are more fragile
• More hands on approach to ensure efficient, competitive and resilient financial sector that contributes to overall economic growth and stability
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Principal objects
Promote monetary stability and financial stability conducive to the sustainable growth of the Malaysian economy
Principal objects
• Issue currency and to keep reserves safeguarding the value of currency
• Promote monetary stability and a sound financial structure
• Promote the reliable, efficient and smooth operation of national payment and settlement systems and ensuring that systems policy is directed to the advantage of Malaysia
• Act as a banker and financial adviser to the Government
• Influence the credit situation to the advantage of Malaysia
Mandate under the new Central Bank Act 2009
Primary functions
• Formulate and conduct monetary policy
• Promote exchange rate regime consistent with fundamentals
• Regulate and supervise financial institutions
• Promote sound, progressive and inclusive financial system
• Provide oversight over the money and foreign exchange market
• Hold and manage foreign reserves of Malaysia
• Issue currency
• Exercise oversight over payment system
CBA 1958
Mandates broadly defined
CBA 2009
Strategically focused
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Outline
• Context:
The Malaysian economy
The Malaysian financial system
Bank Negara Malaysia’s mandate
• Malaysia’s Experience:
SME financing
Micro financing
Consumer protection & redress
• Way Forward
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Malaysia ranks high in terms of access to financing
Category Ranking / Response Source
‘Getting Credit’ No. 1 for 3 years World Bank (Doing Business 2008, 2009 & 2010 Reports)
‘Loans accounts per 1,000 adults’
No. 5 Consultative Group to Assist the Poor (Financial Access Report 2009)
‘Ease of Access to Loans’ No. 13 in 2009 (up from no. 15 in 2008)
World Economic Forum (Global Competitiveness Reports 2008-2009 and 2009 – 2010)
‘Obtaining Financing from FIs’
62.9% of respondents did NOT face difficulties
FMM (3rd Survey on Global Economic and Financial Crisis, 2009)
‘Financing from FIs’ 77% of respondents received financing from the FIs
SME Corp (3rd Survey on Impact of Global Crisis on SMEs, 2009)
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Banking system is the major financier to SMEs
• More than 80% of total SME financing are from banks
• Banks have 522,141 SME accounts
Financing Outstanding as at end-Feb 2010 RM billion
Factoring and Leasing2
1.8
DFIs16.7
BIs120.4
Government Funds and Schemes1
8.9
Venture Capital2
1.9
Source: Bank Negara Malaysia, SME Corp and Securities Commission
1/ At end-Sep 2009
2/ At end-2008
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Banks continued to support financing needs of SMEs in difficult environment
TitleMeasure
84
72
50
75
100
2003 2004 2005 2006 2007 2008 2009 2010J-F
Approval rate remained high at 84%%
SMEs
All customers
Source: Bank Negara Malaysia
SMEs’ share of business financing increased significantly to 39%%
End-199827
End-Feb 2010
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SMEs in all economic sectors have access to financing
• BIs continue to support the financing needs of the key economic sectors
Agriculture5% Others
9%
Construction12%
Manufacturing24%
Services50%
RM 120.4 b as at end-Feb 2010
Financing Outstanding by Sector
• Services sector accounted for the largest share (50%) of total financing outstanding at end-Feb 2010
Source: Bank Negara Malaysia
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Comprehensive initiatives to ensure continued access to financing for SMEs
Financing Schemes
• BNM SME Funds
• EXIM Overseas Guarantee Facility
• Venture Capital Funds for Agriculture
Financial Infrastructure
Guarantee Schemes
• SME Assistance and Modernisation Facilities (RM1.2 bil)
• SME Assistance Guarantee Scheme (RM 2 bil)
• 2 Government Guarantee Schemes (RM10 bil)
Working Capital Guarantee Scheme & Industry Restructuring Financing Guarantee Scheme
• Credit database to facilitate a more efficient & effective credit process
• Check financial standing of customers & suppliers
Central Credit Reference Information System
SME Credit Bureau
Credit Guarantee Corporation
• Assist SMEs that have inadequate track record or collateral to obtain credit facilities from FIs by providing guarantee cover
• Offer a wide range of products (e.g. credit enhancement products) and services (e.g. advisory, market research) to enhance SMEs’ ability to obtain financing
Recent
stimulus
measures
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Central Credit Reference Information System (CCRIS) as the main credit database in Malaysia, enhances access to financing for SMEs
Description
• Managed by and located at BNM
• Collect info from banks and regulated FIs
• Comprehensive database
Benefits
Benefits of CCRIS
• Provide credit information to FIs to:– Facilitate credit
assessment of customers– Facilitate credit risk
management– Promote more efficient
credit processes
To FIs
• Facilitate BNM for regulatory, supervision and analytical purposes
To BNM
• Conduit to inculcate good credit culture
To the public
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CGC’s SME Credit Bureau (www.smecreditbureau.com.my)
• One-stop central database of credit-related info on SMEs that provide consolidated credit information, including credit ratings
• Benefits to SMEs
• Access financing on more favourable terms, and obtain faster decisions on financing applications
• Have financing applications evaluated on a more balanced and objective basis
• Identify areas for improvement (reports and ratings as a self-evaluation tool)
• Check financial standing of customers & suppliers
– Decide whether to give better credit terms or accept their guarantees
• Commenced operations in July 2008
• Currently open to SMEs for registration at www.smecreditbureau.com.my
• More than 28,000 SMEs and 38 FIs have registered as members
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CGC was established to assist SMEs with inadequate collateral or track record get access to financing
Outcomes
• Provide credit guarantees and advisory services to SMEs that do not have adequate collateral or track record, in a financially sustainable manner
• Bridge the gaps between businesses and banks via guarantee mechanism
• Embarked on transformation plan in 2006
• Guaranteed more than RM45.3 billion financing to 404,460 SME accounts since 1972
• Outstanding guarantee of RM11.1 billion financing to 41,646 SME accounts as at end February 2010
• SME Credit Bureau - members registered as at Feb 2010 were 38 financial institutions & 28,200 SMEs
• Expanded scope of guarantee beneficiaries to include Islamic banks and DFIs
• Expanded product range
- Participated in securitisation of SME loans as credit enhancer
- Introduced equity financing through joint venture with global fund management company
- Introduced guarantee scheme for start-ups
- Introduced direct lending
• Introduced risk based pricing structure for guarantee
• Established SME Credit Bureau in 2008, subsidiary to provided credit information services on SMEs
Roles
Key achievements
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More than 20,700 SME accounts approved No of accounts (‘000)
0.2
4.9
5.3
10.3
IRFGS
SAF&SMF
WCGS
SME AGS
RM11.0 bil approvedRM billion
1.1
0.8
2.1
7.0
IRFGS
SAF&SMF
SME AGS
WCGS (Fully utilised)
(Fully utilised)
(Completed)
SME AGS - SME Assistance Guarantee Scheme, BNM (as at 21 Mar 2010)SAF & SMF - SME Assistance and SME Modernization Facilities, BNM (as at 21 Mar 2010)WCGS - Working Capital Guarantee Scheme Facility, MOF (as at 25 Mar 2010)IRFGS - Industry Restructuring Financing Guarantee Scheme, MOF (as at 25 Mar 2010)
Recent risk sharing schemes have assisted viable SMEs to obtain financing
Source : CGC and Prokhas
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Outline
• Context:
The Malaysian economy
The Malaysian financial system
Bank Negara Malaysia’s mandate
• Malaysia’s Experience:
SME financing
Micro financing
Consumer protection & redress
• Way Forward
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Ensure that every economic activity,
geographical region & segment of society
has access to financial services
Financial inclusion objective to promote balanced growth
PROMOTE BALANCED & EQUITABLE GROWTH
Access to Financing
Access to Financial Services
Access to Financial Assistance
Access to Financial Information
FINANCIAL INCLUSION
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Importance of financial inclusion
Ensure all economic sectors, regions and the population at large have access to a broad range of financial products and services
Promote broad based and balanced growth
Promote broad based and balanced growth
• Bring lower income groups and micro enterprises into the economic mainstream
• Enable poorer segments of the population and micro enterprises to participate in income-generating economic activities, thereby, equalising opportunities and reducing inequalities
• Bring lower income groups and micro enterprises into the economic mainstream
• Enable poorer segments of the population and micro enterprises to participate in income-generating economic activities, thereby, equalising opportunities and reducing inequalities
The philosophy of development, growth with equity/balanced distribution is integrated in all Malaysian development policies
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Financial inclusion is one of a range of strategies to eradicate poverty
Healthcare
Basic services
Eradicating poverty requires access to
financial services & …Education
Housing
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History of Microfinancing in Malaysia
Amanah Ikthtiar Malaysia (AIM)
Tabung Ekonomi Kumpulan Usaha Niaga (TEKUN)
Central Bank (Amendment) Act 2009
NSDC Microfinance Institutional Framework
1987
1998
2006
2009
For sources of microcredit, people find engage in lending from pawnshops, family and friends, and from moneylenders or ceti.
For savings, people kept their money in cash or put them into tangible assets such as gold, jewellery and properties. They also engaged in rotating savings and credit associations, ROSCAs or, more commonly known as, kutu.
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Findings from a Census* in 2005 showed that there was an opportunity for the formal financial system to serve the micro enterprises
Most establishments in Malaysia are micro enterprises ..
Micro enterprises80% (435k)
Small 18% (100k)
Medium2% (12k)
• 99.2% of establishments in Malaysia are SMEs
• Total No. of SME Establishments: ~548,000
24%
20%
10%6%
16%
50%43%
26%
13%
34%
37%
39%
44%
32%
23%
27%
7%8%10%
31%
Micro Small Medium Large SMEs
FIs
Own Money
Friends & Family
Others
Main Sources of Financing
.. but only 13% indicated that financial institutions were their main source of financing
Source: Census of Establishments and Enterprises 2005 , Department of Statistics Malaysia
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Prior to 2006, micro financing was provided by Government sponsored schemes ..
TEKUN 24%
AIM22%
Govt. sponsored micro credit
schemes54%
via National Savings Bank & Agriculture Bank
Micro financing OutstandingEnd-2000
26%
74%
AIM
TEKUN
Micro financing OutstandingEnd-2005
22%
54%
24%
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Opportunity
• Attractive market currently served by shadow banking system
• Liberalised interest rate framework to generate good return of equity (ROE)
• Internet and mobile technology lower cost of outreach
Strength
• Ample liquidity in banking system
• Wide branch network
• Wide depositor outreach, source of microfinance customers
Weakness
• Existing procedures not tailored to needs of micro enterprises
• Lack of products suited for micro enterprises
• Low risk appetite for non collateralised loans
Threat
• Narrowing margins in existing business lines
Financial institutions can benefit from offering microfinancing
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Challenges Solutions− Target group that is geographically dispersed
and have low financial literacy
− Target group is averse to approaching financial institutions
− High admin cost to serve the target customer
− Lack of economies of scale
− Products that meet the needs of the target customer i.e. easy, fast and convenient
− Pricing of products that incentivise outreach
− Leveraging on existing banking branch infrastructure and that of strategic partners
− Increased promotion and awareness
Successful microfinance needs to overcome several challenges
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A sustainable microfinance mechanism needs to be in place to complement the micro financing schemes by Government
Objective: Enhance access to financing to micro enterprises
.. by encouraging financial institutions to provide sustainable microfinance
Objective: Enhance access to financing to micro enterprises
.. by encouraging financial institutions to provide sustainable microfinance
• To ensure micro enterprises has continuous access to financing to support their business activities
• To extend outreach to more micro enterprises
• To ensure FIs are financially sustainable
KEY PRINCIPLES TO ADOPT:
Commercially driven with market based lending rates to ensure sustainable operations
Funding should be self-sustaining
Crucial to have a well defined business model in place
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The National SME Development Council (NSDC) approved a comprehensive sustainable microfinance institutional framework in 2006
Definition of Microfinance
• Financing up to RM50,000 (USD16k) to micro enterprises for business purposes
• Easy, Fast and Convenient
√ No collateral
√ Minimum documentation
√ Simple application procedures
√ Fast approval and disbursement
National Savings Bank (DFI)
Agriculture Bank (DFI)
Cooperative Bank (DFI)
Banking Institutions
Cooperatives
Leverage on existing infrastructure
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Nine financial institutions rolled out micro financing products
TEKUN Tabung Ekonomi
Kumpulan Usaha Niaga in Nov ‘98
1987
AIM Skim Pembiayaan Ikhtiar in Sept ‘87
1998BPM
Modal Usahawan Tani (MUST) in Sept ’05
2005
PublicPBMicro Finance in
Dec ’06
BSN TemaNiaga in Mar ’07
2007
5th NSDC Meeting (Approved Framework in Aug ’06)
2006
AMBank AmMikro in
Feb ’07
B. Rakyat Pembiayaan Mikro-i
(Modal untuk Usahawan Koperasi – MUsK) in Apr ’07
AllianceRakan Personal Financing-I in Jul ’07
Conventional in Aug ’07
CIMB Xpress Cash Personal
Loan in Aug ‘05
UOB EasiCash in Jul ’06
EONCAP Islamic Pinjaman Peribadi – i
Pesara (3P) in Dec ’06
CIMB Xpress Cash Financing-i in Sept ‘07
Incumbent Players After NSDC’s Approval on Framework
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The microfinance industry has grown
Micro financing OutstandingEnd-2000
26%
74%
AIM
TEKUN
100% = RM151 m (USD45 m)
AIM
Govt sponsored Schemes
9 Financial Institutions TEKUN
Micro financing OutstandingEnd-2009
100% = RM2.4 bil (USD747mil)
CAGR: 35.9% yoy
27%
12%
26%35%
RM617 mil
RM295 mil
RM647mil
RM835mil
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Micro enterprises have benefited from micro financing by the 9 FIs
10,081
22,788
45,179
58,271
End-06
End-07
End-08
Feb-10
Microfinance access pointsMicrofinancing outstanding (USD mil)
913
1,868
2006
2009
Microfinance clients outstanding
197
149
70
26End-06
End-07
End-08
Feb-10 25% yoy
22% yoy
• Average financing size of RM10,200 (USD 3,188)• Available at:
1,868 access points, including outlets of strategic partners
RM634 mil
RM478 mil
RM225 mil
RM84 mil
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The steps taken to create a sustainable microfinance industry
Encourage FIs to provide microfinance
Design right product to meet needs of micros
Create widespread awareness on the availability and benefits of microfinance
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BNM encouraged financial institutions to provide microfinance
Activities
• BNM leadership organised and led FI CEOs and senior management on study visits to successful microfinance institutions in Indonesia & India
• Provided microfinance global case studies and information pack to the FIs
• Frequent discussions with FIs
Promote competition to ensure benefits flow to micro enterprises
• Diversify portfolios• Create new revenue streams• Use excess liquidity profitably• High ROE business • Can charge rates to reflect costs
Microfinance can be profitable
‘Blue ocean’ business
• High competition in existing businesses• Venture into uncontested market space
Competitive advantage
• Extensive branch network & resources • Cost effective funding source from
deposit base • Opportunity to form ‘smart partnerships’
to lower admin cost & enhance outreach (e.g. Felda, Pos, convenience stores)
Enhance image
• Contribute to national economic development
• Enhances image of bank
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Jointly designed the right product to meet the needs of micro enterprises‘Easy, fast & convenient’
Low interest rates
Safety Easy- No collateral- Min documentation- Simple procedures
FastFast approval & disbursement
ConvenientWidely accessible at branches and other distribution channels
Local moneylenders
Traditional banks that offer various types of products
Value to
micros
Product features
Formal financial institutions that provide microfinance
Market research
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Key benefits of Pembiayaan Mikro Easy, Fast & Convenient
Key Benefits of
Microfinance
Small Financing Amount
Easy
FastConvenient
Use for Business Purposes
• Loan size ranging between RM500 to RM50,000
• No Collateral• Minimum documentation• Simple loan procedure
• Fast approval • Fast disbursement
• Widely accessible
• Financing is offered to micro enterprises
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Financial institutions adopted diverse business models to provide micro financing
• Study visits
• Market research
• Pilot tests
Microfinance Business Models
MonolineMass market
Cooperatives Distributor network
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Created the Micro Enterprise Fund to lower the financing cost to micro enterprises in a responsible manner
Micro Enterprise
Fund
• RM 200 million revolving fund
• Soft loan to FIs at a concessionary rate
Financial Institutions
(FIs)
Micro Enterprises
• Micro loans at reduced retail financing rates but higher than SME financing rates to prevent leakages of assistance and disincentive to remain small
• FIs carry credit risk to encourage responsible credit approval and monitoring practices
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Various initiatives in promoting widespread awareness on the availability and benefits of microfinance
• National Microfinance Logo
• Distribution of Microfinance flyers and comparative table of microfinance product features
• Advertisements / Interviews in TV, radio and newspapers
• Information booths at exhibitions / roadshows
• Posters/Buntings of Microfinance
• Financial institutions own sales & marketing
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4343
A National Microfinance Logo to provide prominent identity and create greater awareness on microfinance
• Branches of financial institutions that offer microfinance displayed the logo
• Microfinance customers are encouraged to display the logo at their business premises
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Rationale for the National Microfinance Logo
Major organisations (e.g. FIs)
Wave-like formation at the outer ring denotes the spread of wealth and resources from major organisations to smaller organisations
Smaller organisations
Colour GREEN represents ‘life’
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Microfinance logo displayed at financial institutions, strategic partners and borrowers
(1) Financial Institution (2) Financial institution (3) Strategic partner (4) Customer
1 2
3 4
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Distribution of multi-lingual microfinance flyers at strategic locations & via direct mailing
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Comparative table on the features of various microfinance products
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Direct Mailing of Microfinance flyers to 397,209 micro enterprises
• Mailing addresses for micro enterprises provided by DOSM
• Printing and mailing of materials outsourced to the National Printing company
• Mailing materials consist of:– Pembiayaan Mikro flyers
– Comparative table of all Pembiayaan Mikro product features
– SMS Survey to gauge awareness level on Pembiayaan Mikro
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TV and radio commercials (Barber Shop)
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50
TV and radio commercials (Tailor)
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News articles & interviews on microfinance by Malaysian leaders
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5252
Microfinance articles featured in SME magazines
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5353
Information booths at exhibitions / roadshows
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Information booths at exhibitions / roadshows
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Microfinance Poster/Buntings
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Continuous promotions and awareness programmes
Above the line promotion
Below the line promotion
SME Promotions and Awareness Programmes
2009 Jan-Feb 2010
Radio advertisements 1,078 700
Advertisements in newspapers / magazines
40 5
SME articles 26 -
Live radio and TV interviews
6 2
SME Promotions and Awareness Programmes
2009 Jan-Feb 2010
Mailing of Pembiayaan Mikro flyers
400,000 -
Distribution of SME information materials
112,000 15,850
Outreach events 45 6
SME Financing Fairs and state level dialogues
3 -
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Outline
• Context:
The Malaysian economy
The Malaysian financial system
Bank Negara Malaysia’s mandate
• Malaysia’s Experience:
SME financing
Micro financing
Consumer protection & redress
• Way Forward
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Comprehensive mechanisms in place for consumer education and protection
Enhancing Financial Awareness
Fair Market Practices
Enhanced Disclosure
Structured consumer education programme e.g. websites & information booklets
Exhibitions / road shows
Distribution of promotional materials
Mass media advertisements
Transparency & disclosure requirements for banking & insurance products
Market conduct requirements for market players
Avenues to seek Help & Redress
Integrated Contact Centre: BNMLINK, BNMTELELINK, complaints management & advisory section
Complaint & SME advisory units at financial institutions
Small Debt Restructuring Scheme (SDRS)
ABMConnect Toll Free Channel
Credit Counselling & Debt Management Agency (AKPK)
Financial Mediation Bureau
Advisory services through the SMEInfo Portal
Malaysian Deposit Insurance Corporation
Financial Safety Net
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Services
Provide information on sources of financing
Facilitate in financial-related matters such as financing applications and financing restructuring / rescheduling
Mediate disputes between SMEs and financial institutions
Assist through Small Debt Resolution Scheme (SDRS) for viable but financially distressed SMEs
BNM’s financial advisory services via BNMLINK & BNMTELELINK (Integrated Contact Centre)
Tel: 1-300-88-5465 (LINK)
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BNM has assisted 253,801 clients in 2009No of clients
8,919
244,882
Debt mgt &resolution
Information& guidance
AKPK has assisted 36,848 clients in 2009No of clients
For BNM:
• Majority (96.5%) sought information
• 84% of cases related to financing were resolved
• 50% were resolved in favour of consumers
Many have benefited from the advisory and resolution services provided
16,184
20,664
Debt mgt &resolution
Information& guidance
Source: Bank Negara Malaysia and AKPK
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The Small Debt Resolution Scheme
• Objective• To assist viable but financially distressed
SMEs, by rescheduling & restructuring
• Providing a channel for SMEs to get assistance..• Committee established to provide independent
assessments on applications rejected by financial institutions
• Has assisted more than 690 SMEs to restructure their financing (78% success rate)
• Encouraged banks to restructure financing under their own schemes
• R&R more than doubled in 2008
• 2% of R&R under SDRS; 98% banks’ own scheme
• Provided discussion platform for bankers (SMEs with financing from multiple banks)
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Outline
• Context:
The Malaysian economy
The Malaysian financial system
Bank Negara Malaysia’s mandate
• Malaysia’s Experience:
SME financing
Micro financing
Consumer protection & redress
• Way Forward
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Greater role of the financial sector as an enabler, catalyst and driver of growth
Reinforce Malaysia’s position as an international hub for Islamic services through accelerated development and promotion of Islamic finance
Foster increased international linkages and regional integrationthrough enhanced presence of Malaysian financial institutions & development of the domestic and regional financial markets
Moving forward, the financial sector is well positioned to support and contribute meaningfully towards economic transformation
ENABLER
Continued intermediation of funds to support economic activities
CATALYST DRIVER
Accelerate growth of supporting and ancillary
services sectors
Generate higher contribution to gross
domestic product
PROMOTE SOCIO-ECONOMIC DEVELOPMENT OF MALAYSIA
PRESERVE FINANCIAL SOUNDNESS & STABILITY
A new Blueprint for the financial sector is being developed for the next decade
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Goals of Malaysia’s New Economic Model
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Lessons Learnt
Important to have clarity of the desired end game
Capability enhancement must be viewed in a comprehensive
manner (people, process, structure and technology) to achieve
improvements by design
Developmental initiatives must be forward looking and pre-emptive
in nature.
Change in culture must be undertaken to support transformation
Behavioural change takes a long time
Culture change must be embedded in the process & system (or
else, people will revert back to the old ways)
Critical to put in place an effective performance measurement
system
Co-ordination and collaboration with the Government is necessary
Clear philosophy underlining future path and objectives
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Useful links
• SME Info Portal
• http://www.smeinfo.com.my
• Bank Negara Malaysia (http://www.bnm.gov.my)
• BNMLINK - http://www.bnm.gov.my/bnmlink/index.htm
• CCRIS – http://creditbureau.bnm.gov.my/
• SME Corporation Malaysia
• http://www.smidec.gov.my/
• Bankinginfo and Insuranceinfo
• http://www.bankinginfo.com.my
• http://www.insuranceinfo.com.my
• Financial Mediation Bureau (FMB)
• http://www.fmb.org.my/
• Credit Guarantee Corporation Malaysia Berhad (CGC)
• http://www.iguarantee.com.my/
• SME Credit Bureau
• http://www.smecreditbureau.com.my/
• Credit Counselling and Debt Management Agency
• http://www.akpk.org.my
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SME and Micro financing: Malaysia’s Experience
Presentation for the Financial Inclusion Advisors ProgrammeKampala, Uganda
Development Finance and Enterprise DepartmentBank Negara Malaysia
26 April 2010