RM10 Bln Support To Strengthen MSMEs’ Resilience Against Impact Of The West Asia Crisis

By K. Naveen Prabu

KUALA LUMPUR, April 21 (Bernama) -- The government’s combined RM10 billion support for micro, small and medium enterprises (MSMEs) is expected to strengthen their resilience against the impact of the West Asia crisis, says an economist.

Prof Emeritus Dr Barjoyai Bardai of the Malaysia University of Science and Technology said the move reflected the importance of MSMEs as a key fiscal priority for the government.

The support comprises RM5 billion in guarantees under the Syarikat Jaminan Pembiayaan Perniagaan (SJPP) scheme and a RM5 billion special relief facility under Bank Negara Malaysia (BNM).

“Without such measures, many viable businesses would otherwise postpone expansion, innovation or digitalisation due to financing constraints rather than a lack of demand,” he told Bernama in a written response following the announcement.

Prime Minister Datuk Seri Anwar Ibrahim today announced a special relief facility to help MSMEs cope with the impact of the West Asia crisis, with details of the facility under BNM to be announced in the near future.

The facility aims to support affected MSMEs, including those in construction, agriculture and agri-food, logistics and transport, as well as tourism, with financing coverage of up to 80 per cent from 70 per cent previously and a guarantee period of up to 10 years compared to seven years.

Anwar, who is also the Finance Minister, said the facility complements the RM5 billion guarantee under the SJPP, which was announced yesterday to support affected MSMEs.

On the SJPP scheme, Barjoyai said risk-sharing under the scheme lowers rejection rates as banks are more willing to lend when a significant portion of default risk is absorbed.

“Pre-approved guarantee frameworks also enable faster approval cycles compared to ad hoc government support and allow for broader sectoral reach, particularly benefiting service-based, halal, green and digital businesses that typically lack sufficient collateral,” he said.

Barjoyai pointed out that over the next six to 12 months, the measure is expected to stabilise MSMEs’ cash flows, prevent business closures and support employment, particularly in domestic-demand sectors.

“From a macroeconomic perspective, MSME financing has a high domestic multiplier, supports bottom-up growth rather than enclave investment, and complements large-scale infrastructure and industrial policies.

“While the measure alone will not significantly shift headline gross domestic product (GDP), it can improve the quality and resilience of growth, making it less vulnerable to external cycles,” the economist said.

Barjoyai also said the expansion of the SJPP scheme could help cushion MSMEs against external shocks, including geopolitical tensions and slower global trade.

“The SJPP expansion can help MSMEs cope with supply chain disruptions, higher input costs, delayed payments from export markets, and volatility arising from geopolitical tensions or slower global trade.

“Guaranteed financing allows MSMEs to smooth cash flow mismatches, diversify suppliers or markets, and restructure operations rather than resorting to abrupt retrenchments,” he said.

He added that, importantly, the measure acts as a pre-emptive buffer, helping otherwise healthy firms remain solvent during periods of uncertainty while reducing knock-on effects on employment, defaults in the banking system and pressure on social assistance programmes.

-- BERNAMA