SME financing remains supportive, but businesses must adapt, says Bank Negara governor

KUALA LUMPUR, Aug 12 — Overall financing conditions for small and medium enterprises (SMEs) remain supportive, with banks and development financial institutions (DFIs) continuing to provide financing to viable businesses.

Bank Negara Malaysia (BNM) governor Datuk Seri Abdul Rasheed Ghaffour said the Credit Guarantee Corporation Malaysia Bhd (CGC) also played an important complementary role, having facilitated more than RM103 billion in guarantees and financing to more than 544,000 SMEs since its establishment.

“That’s a significant achievement. But aggregate figures do not tell the whole story,” he said in his speech at the CGC Awards 2025 ceremony recently.

He said SMEs must continue to adapt, strengthen their capabilities and improve productivity as temporary relief measures cannot be the long-term answer to recurring shocks.

He said that many SMEs continue to face higher input costs, tighter margins, supply-chain disruptions and slower customer payments, which have increased working capital pressures and tested business resilience.

“We know that during periods of disruption, targeted relief measures help viable businesses navigate temporary cash-flow pressures. Such support remains important. 

“However, temporary relief cannot be the long-term answer to recurring shocks. Businesses must continue to adapt, strengthen capabilities and improve productivity, while financing evolves alongside them,” he said.

According to Abdul Rasheed, businesses today are operating in an environment shaped by geopolitical uncertainty, rapid technological change and increasingly frequent climate-related disruptions.

“For SMEs, these shifts are not distant global trends. They affect your input costs; they alter your supply chains; they change your customer behaviour and demand; and more importantly, they require higher capabilities to compete,” said Abdul Rasheed.

Abdul Rasheed noted that SMEs’ role is becoming increasingly important in driving Malaysia’s transformation towards a more productive, competitive and sustainable economy.

He said the question was no longer simply whether financing was available, but whether financing was evolving, adjusting to changes in business models and reflecting the risk profiles of SMEs.

“While financing opportunities are available within the system, some viable SMEs still struggle to access it because their potential is not readily captured by conventional credit assessments,” he said.

The governor said financial institutions must be prepared to widen the financing frontier by reaching beyond familiar businesses, conventional collateral and established sectors as Malaysia advances up the value chain.

He added that businesses should be assessed in totality beyond collateral and financial statements by considering factors such as cash flows, transaction records, payment behaviour and supply-chain information.

Access to financing must go hand-in-hand with capability-building, as long-term SME success also depends on productivity, management strength, technology adoption and access to new markets, he said. — Bernama