SME Bank targets higher financing

KUALA LUMPUR: SME Bank Malaysia Bhd, which is embarking on a two-year transformation programme, is targeting to approve RM3.5bil in financing to small and medium enterprises (SMEs) this year.

Group president and CEO Aria Putera Ismail (pic) said the amount, which it is targeting to approve, is higher than last year’s figure of RM1.8bil.

Since its establishment in 2005 until the end of 2018, SME Bank had assisted 17,000 SMEs in various sectors with financing of more than RM30bil.

Despite some slowdown in the applications, the bank has rolled out various initiatives and conducted relevant engagements with SME entrepreneurs to ensure robust lending.

“We have a role to play in the economy, as SMEs form close to 98% of the total business establishments in Malaysia. For example, through the Outreach Programme in 2018, SME Bank had approved financing of RM257.17mil. We have conducted this programme in 14 locations nationwide and met up with existing and new SMEs for possible opportunities to assist them in financing,” he said in an interview.

In terms of SME financing, the biggest exposure was the services sector which formed 56% of total financing, followed by construction and manufacturing.

On whether the bank was exercising stringent lending, Aria Putera said SME Bank was different from other commercial banks in that it has been mandated by the government to assist the unserved and underserved SMEs to obtain financing.

Towards this end, he said the bank reviewed loan applications objectively. Business viability, market opportunity and compliance with financial terms and agreements were the criteria when approving loans.

“The bank has been working with various agencies and our internal teams to assess, for example, which states needed genuine financing. It is not a one-size-fits-all type of approach,” Aria Putera noted.

Among others, the bank provides various initiatives, one of which is via its subsidiary, Centre for Entrepreneur Development and Research (Cedar). The role of Cedar is to provide facilities beyond financing like training to entrepreneurs and holding roadshows to assist them. More than 38,000 participants have benefited from business coaching and training sessions conducted by Cedar.

The lender also provides an “intervention role” to develop SMEs via a hand-holding approach from the entry point to inculcate business acumen among entrepreneurs, he said, adding that a total of 1,503 SMEs have successfully migrated to a higher level.

These included expansion into the export market, improvement in technology and higher growth in profit.

Via the Best Exporters Programme (BEP), it has helped SMEs to further boost their exports. As of December 2018, 73 companies had enrolled in the BEP and total export sales during the period stood at RM384.07mil. Twenty new exporters were created last year and 52 companies recorded incremental values in their export sales.

According to Aria Putera, the bank adopts the Performance Measurement Framework, an initiative by Bank Negara aimed at ensuring that all development financial institutions would be measured on the outcome of their mandated role. This includes placing the focus on developing and implementing high-impact programmes for SMEs in targeted sectors in line with the mandate set by the government.

SME Bank is also embarking on a two-year transformation programme. This is to enhance its role in providing financial assistance and capacity-building to assist the development of the SMEs.

Describing the SME Bank digital transformation as a game-changer, he said it would revolve around implementing the digital transformation plan to revolutionise the way SME entrepreneurs are being supported and developed.

“SME Bank’s digital transformation will be a part of the National SME Digital Platform, which will provide a clear demarcation on the targeted segments. It will create a greater synergy between agencies and avoid overlapping and be more focused towards the bank’s targeted segment. This will increase the income contribution of SME Bank from fee-based income by providing the above services,” he added.

The National SME Digital Platform is targeted to be launched in the third quarter of this year.

For the digital transformation programme, SME Bank is collaborating with its partners including Orion IXL, TELEKOM MALAYSIA BHD

and Commerce.Asia.

On the SME Bank 90-Day Biz Challenge programme competition, Aria Putera said: “Collectively, the 20 finalists have garnered net sales of RM102,829.26 within just four months of the competition.

“This is a good start, as the participants of this competition are still studying and are not able to operate the business on a full-time basis.”

To further expand the reach of the competition, starting this year, the 90-Day Biz Challenge was opened to all polytechnic students throughout the country in addition to the community college students.

The competition was organised through an online platform where participants have to submit their business plans through the portal.

A total of 192 entries were received with the involvement of 768 students.

This is an increase of 120% in participation compared with 2017.