CGC 27th FI/DFI & SME Awards 2021

SPECIAL ADDRESS

YB SENATOR TENGKU DATUK SERI UTAMA ZAFRUL ABDUL AZIZ
MINISTER OF FINANCE

CGC 27TH FI/DFI & SME AWARDS 2021

SHANGRI-LA KUALA LUMPUR
Friday, 29th July 2022

SALUTATIONS

Yang Berbahagia Dato’ Mohammed Hussein
Chairman, Credit Guarantee Corporation Malaysia Berhad

Yang Berusaha En. Suhaimi Ali
Assistant Governor Bank Negara Malaysia

Yang Berbahagia Datuk Mohd Zamree Mohd Ishak
President/Chief Executive Officer, Credit Guarantee Corporation Malaysia Berhad

Chairmen and CEOs of Financial and Development Financial Institutions

Representatives from SMEs and FIs/DFIs whom we are celebrating today

Members of the Media Distinguished Guests Ladies and Gentlemen,

INTRODUCTION

1. Assalamualaikum warahmatullahi wabarakatuh and good afternoon. I am pleased to share that this is my third FI/DFI & SME Awards with CGC as Finance Minister, so thank you for inviting me today.
   
   
2. First and foremost, I would want to congratulate Credit Guarantee Corporation Malaysia Berhad (CGC) on its Golden Jubilee celebration recently, on 5th of July to be exact. This is a significant milestone in your journey. It is not in your years of existence, but what is key is the impact CGC has had in enabling and empowering SMEs in the last 50 years.
   
   
3. This awards ceremony not only recognises MSME customers who actively participate in CGC’s various financing schemes; but also acknowledges the commitment of Financial Institutions (FIs) and Development Financial Institutions (DFIs) to CGC’s role as key players in the credit supplementation ecosystem.
   
   
4. Since its inception, CGC has successfully assisted about one third of registered MSMEs with insufficient or no collateral and track records to obtain financing. As a result, many MSMEs have grown and contributed to the nation’s socio-economic development. Well done CGC!
   
   
5. Moving forward, what is key is how CGC can further help the MSMEs recover so they can continue to contribute to the nation’s post-pandemic recovery and growth.

THE EVOLVING ROLES OF FIs/DFIs POST COVID-19

Ladies and Gentlemen,

6. Since the pandemic, the Government has implemented economic assistance and stimulus packages worth 530 billion ringgit, in addition to Budget 2021 and 2022.
   
   
7. The RM40-billion Semarak Niaga programme in Budget 2022, aims to assist businesses by providing working capital or financing, as well as equity injections.
   
   
8. As of end-June 2022, various Semarak Niaga initiatives had a utilisation rate of more than 70 percent. These include the Micro Enterprise Fund (MEF), Skim Pinjaman Informal dan Mikro (SPIM), MyCIF and SME Automation and Digitalisation Facility.
   
   
9. Indeed, the banking industry has played an important role in the preservation of businesses and the facilitation of repayment assistance for borrowers.
   
   
10. As such, I am glad to note that MSMEs’ financing expanded at a faster annual rate of 6% in the first quarter of this year. There is also a strong upward trend in disbursements and repayments, which are already above pre-pandemic levels.
    
    
11. This year, the banking industry is expected to facilitate lending to businesses with flexible financing and repayment terms, including participation in the iTEKAD programme, which assists micro- entrepreneurs in starting and growing their businesses.
    
    
12. This includes encouraging digital transactions, such as QR payments, and ensuring affordable merchant fees, as well as assisting underserved borrowers, such as the hospitality sector, micro-enterprises, and women entrepreneurs through various financing schemes.
    
    
13. Banks have also offered non-debt-based facilities, such as the CAKNA and Jana Niaga liquidity schemes, to alleviate MSMEs’ cash flow constraints without increasing their gearing positions.
    
    
14. In supporting our economic recovery and growth, I would like to encourage banks and financial institutions to also support clients in adapting to the requirements of a new normal, including incorporating digitalisation into their business strategies and operations.
    
    
15. These efforts would complement larger Government initiatives such as IR4.0, as outlined in the Malaysian Digital Economy Blueprint. All these are critical in boosting the country’s economic prospects and resilience.
    
    
16. Financial institutions must also be open to alternative financing solutions such as blended finance, as well as financing supply chains or new trade-based facilities.

STRATEGIES FOR POST COVID-19 ECONOMIC RECOVERY

Ladies and Gentlemen,

17. Reforms are critical to enhance Malaysia’s resilience to future shocks. Furthermore, to become a high-income nation in the future, we must take steps to remain relevant and competitive, particularly in the face of uncertainties and new challenges.
    
    
18. As such, we at MOF feel that the three most important steps to secure the nation’s economic recovery and future resilience are:
    
    
    1. (One) Ensuring that Budget 2023 will leverage on the strong recovery momentum seen in the first half of this year, and capitalising on global growth and opportunities to secure
       Malaysia’s post-COVID recovery;
       
       
    2. (Two) Strengthening Malaysia’s economic and fiscal resilience in 2023 and beyond, while also managing downside risks such as geopolitical tensions and disrupted supply chains that have significantly increased global commodity and food prices; and
       
       
    3. (Three) Planning and executing a strategic shift from the current recovery phase to longer–term reforms for better income opportunities, as well as more inclusive and sustainable socio-economic development for Keluarga Malaysia.

BUDGET 2023: FACILITATING REFORMS TOWARDS SUSTAINABLE GROWTH AND SOCIO-ECONOMIC RESILIENCE

Ladies and Gentlemen,

19. Of those three points, allow me to expand a little on Budget 2023, which will prioritise maintaining the current economic recovery momentum and continuing reforms to improve socio- economic resilience.
    
    
20. These include firstly, developing people-centric initiatives, particularly those that improve the socio-economic wellbeing of the people; Secondly, creating a conducive business environment, including improving the competitiveness and productivity of SMEs and thirdly, driving a more inclusive and sustainable development model to support economic growth.
    
    
21. Budget 2023 will also focus on improving the effectiveness of public service delivery and enhancing the ease of doing business as an important enabler in driving the nation’s development.
    
    
22. In accordance with the whole-of-nation Keluarga Malaysia approach, MOF has invited the public and stakeholders to contribute their inputs and proposals for the 2023 Budget through MOF’s official portal, in line with the guidance provided by the Pre- Budget Statement issued on 3 June 2022.

ENTREPRENEURSHIP AND COMPETITIVENESS

Ladies and Gentlemen,

23. MSMEs contributed 37.4% of Malaysia’s GDP and employed 47.8% of the workforce in 2021. Given MSMEs’ significant contribution to the country’s economy and job opportunities, clearly this is a sector that we must actively promote.
    
    
24. On this score, I am pleased to note that CGC, in collaboration with PINTAR, has positioned entrepreneurship as a viable option for the future workforce through the CGC 100, a Youth Entrepreneurship Programme.
    
    
25. I believe that encouraging self-employment is important as a source of job creation and security, and who better to begin with than our youth? But I can fully understand some of the challenges that an entrepreneur faces in building up a business, because I, too, had had a stint in entrepreneurship when I was in my 20’s.
    
    
26. Hence, I applaud the programme that we are launching today, which is fully funded by CGC. I have been made to understand that CGC will work with PINTAR and the Ministry of Education to select 100 qualified youths based on a set criteria.
    
    
27. The objective is to ensure these youths will be carefully trained and guided in running their own businesses through specific programmes provided by CGC and PINTAR. One point that must not be lost on us, is the fact that this will also contribute to a healthier financing repayment and lower NPLs later.
    
    
28. Related to that, I would like to applaud CGC for its commitment in assisting the micro enterprises during the COVID-19 through the CGC Developmental Programme.
    
    
29. Some of the success stories of the beneficiaries, if I may share, are Encik Syukri Mata, business owner of Mimata Optometrist Sdn Bhd. And Puan Ruzainun, owner of Nozoly Food Industry Sdn Bhd.
    
    
30. Their businesses were badly hit during COVID-19. Through CGC’s programme, they equipped themselves with online marketing skills, as well as successfully sustained and even expanded their business online via GrabMart.
    
    
31. There are more similar stories of beneficiaries who have made it through the tough pandemic years with the Government’s support, featured on MOF’s YouTube channel. I also shared some of these stories of grit and determination in an op ed published last weekend. These are perfect examples of the Government working hand-in- hand with enablers and the rakyat to rebuild better.

A STRONG MSME SECTOR CONTRIBUTES TO OUR ECONOMIC RESILIENCE

Ladies and Gentlemen,

32. A strong MSME sector means a stronger economy for us. To that end, I would like to challenge CGC, banks and financial institutions on how else can we strengthen our MSME sector? A concerted effort must be made to improve MSMEs’ knowledge, digital capabilities and collaborations with the innovator community (MNCs and academia) to help MSMEs’ build better offerings.
    
    
33. Apart from digitalisation, it is also extremely important for MSMEs to embrace ESG principles. ESG assets is estimated to hit $53 trillion by 2025, a third of global Assets Under Management. Further, ESG funds now account for roughly 10% of worldwide fund assets. As such, it is critical to ensure that MSMEs are not shut out of markets, or deprived of future financing due to non-compliance with ESG principles in their operations. This is also why the Government introduced measures such as the Low Carbon Transition Facility via BNM in Budget 2022.
    
    
34. As for the banks and FI’s, it is also critical that you play an active role in facilitating the transition of MSMEs to low-carbon and sustainable practises. Your zero-carbon targets may be aggressive, in which case it is more important for you to guide and perhaps handhold the MSMEs in achieving their ESG targets.
    
    
35. The GLICs and GLCs have also embraced sustainability principles. This is extremely important as the objective is to have such principles cascade down to the MSMEs through the GLIC/GLCs’ respective ecosystems.
    
    
36. These are a few examples of the Government’s whole-of-nation initiative to make MSMEs more competitive and resilient. The 2023 Budget will also prioritise these and other similar efforts to rebuild MSMEs’ capabilities and boost their competitiveness.

CLOSING

Ladies and Gentlemen,

37. Before I end, I would like to congratulate all the award winners present today. To the FIs and DFIs, thank you for your continued support as a capital mobilizer for growing the MSME industry. To the MSMEs, all I want to say is that the Government and its agencies, as well as FIs and DFIs, including CGC, are here to support your growth. I wish you all the success in the world, and I am sure your stories will serve as an inspiration to the next generation of entrepreneurs.
    
    
38. With that, dengan lafaz Bismillahirrahamanirrahim, I hereby officiate CGC’s 27th FI/DFI & SME Awards 2021 and launch the CGC 100 Youth Entrepreneurship Programme. Thank you.

Wabillahtaufiq Wal-hidayah Wassalamualaikum Warahmatullahi Wabarakatuh.