SME Bank acting group president/chief executive officer Datuk Dr Mohammad Hardee Ibrahim
KUALA LUMPUR: With Budget 2025 set to be announced this Friday, SME Bank Bhd is calling for strategic measures to support the growth of small and medium enterprises (SMEs), focusing on sustainability, financial resilience, and digital transformation.
Acting group president and chief executive officer Datuk Dr Mohammad Hardee Ibrahim anticipates that the forthcoming announcement will provide comprehensive and cohesive measures to align with the government’s goals of enhancing the nation’s economy and improving the quality of life for the rakyat.
He emphasised the crucial role of financial institutions, especially development financial institutions (DFI), in economic development.
"SME Bank stands out as the only DFI in Malaysia with a dedicated capacity-building outfit through our subsidiary, Centre for Entrepreneur Development and Research Sdn Bhd (CEDAR), which has benefitted more than 82,000 entrepreneurs, the majority being micro-enterprises,” he told Bernama.
SME Bank is also proactively involved in engagements with the Ministry of Finance (MoF), Bank Negara Malaysia (BNM) and Ministry of Entrepreneur and Cooperatives Development (KUSKOP) regarding the annual budget announcement, including the upcoming Budget 2025.
Extending financial assistance for affirmative segments
For 2025, SME Bank aims to extend financial assistance to the affirmative segments, including tourism, transportation, education, construction, healthcare and manufacturing sectors, as they require additional support to navigate the current climate.
"The expansion of funding requirements and government guarantee schemes are crucial, predominantly for the affirmative segments, such as women entrepreneurs, tourism and Halal sectors, exports and the adaptation of IR 4.0, which involves SMEs evolving within the digital and technology realms.
"As such, we hope the government can consider providing greater access to more affordable financing via profit rate subsidies or grant allocation altogether, which should be supported with capacity building programmes,” he stated.
Mohammad Hardee affirmed the bank’s commitment to ensuring the entrepreneurs are market-ready with a proven business model, providing practical technical and non-technical training.
He noted that with deeper integration of artificial intelligence (AI), entrepreneurs could nurture an environment that facilitates faster financing approval processes with lesser human intervention.
Currently, SME Bank offers various programmes to help SMEs digitise their businesses, including the SME Technology Transformation Fund (STTF) and High Green Tech and Green Facility (HTG).
Aiming for a sustainable, inclusive future
Mohammad Hardee said the bank is dedicated to making a positive impact on society and the environment. Thus, its sustainability journey is built on three pillars, namely, responsible banking, responsible business practices, and creating social impact.
Through these pillars, SME Bank aims to contribute to a more sustainable and inclusive future, supporting the national goal of achieving carbon-neutral operations by 2030 and Net Zero by 2050.
"Our commitment to sustainability is reflected in our three-year Sustainability Roadmap (2021-2023), which is divided into three phases such as building a strong foundation, institutionalising environmental, social, and governance (ESG) culture, and promoting ESG adoption into customers’ business operations,” he explained.
Additionally, the bank also developed its own Sustainability Sukuk Framework (SSF), adhering to international standards set by the International Capital Market Association (ICMA), the ASEAN Capital Markets Forum (ACMF), and the Sustainable and Responsible Investment (SRI) Framework put forth by the Securities Commission.
From 2022 until August 2024, SME Bank has approved sustainable financing worth RM7.76 billion, and it underscores its mission to empower SMEs and promote sustainable growth, contributing to the nation’s economic prosperity.
"As such, we hope the government can consider profit subsidies or tax benefits such as a waiver or lower stamping fee for green or transition financing on legal documents. This can certainly accelerate the take-up rate and facilitate a more encouraging market response.
"This can also include tax deductions or credits on profits from sustainable financial instruments, in addition to providing more incentives for Green Sukuk,” Mohammad Hardee said.
He said that by implementing these measures, banks could leverage the tax exemptions on the income derived from Green Bonds and Sukuk, which in turn would encourage greater issuance of green financial instruments.
Mohammad Hardee also called for the government to formulate policies centred on carbon credits and sustainability-linked financing, allowing banks to earn tax credits when financing SME projects linked to carbon reduction or environmental sustainability.
To promote energy-efficient technologies, he suggested the government explore providing capital allowances for Green Investments, offering accelerated capital allowances for SMEs, which banks could further support through targeted financing.
Tax reduction for the export sector
To support the export sector, one of the key contributors to Malaysia’s economy, Mohammad Hardee proposed that the government consider tax exemptions on export earnings, including tax breaks or reduced tax for financing extended to SMEs engaged in international trade.
"It would be greatly appreciated if the government can consider enhancing or expanding government-backed guarantees for SME financing related to exports, particularly when lending to small businesses seeking international expansion to mitigate the risks and exposure of banks,” he added.
Mohammad Hardee emphasised that SMEs are the backbone of Malaysia’s economy, serving as key drivers to the country’s economic growth and contributing significantly to its gross domestic product (GDP).
He said the development of SMEs remains a priority, with 1.2 million SMEs making up 97.4 per cent of business establishments.
According to reports, the SME segment contributed about 39 per cent or more than RM613 million to Malaysia’s GDP in 2023.
Future plans to support SMEs
Moving forward, SME Bank will continue to assist SMEs in scaling up through developmental programmes aimed at elevating the socio-economic status of entrepreneurs, especially from the unserved and underserved segments.
Mohammad Hardee said the bank’s Business Export Programme (BEP) has seen an increase in export sales, encouraging it to develop further grants that stimulate the export market.
"We also plan to continue the HalalBiz Financing Programme in 2025, and we look forward to introducing additional financing and programmes of sizeable value to energising this growing segment,” he said.
For start-up enterprises, SME Bank aims to address their challenges through its umbrella programme to help accelerate their growth journey by engaging more established anchors.
SME Bank is also preparing to introduce a new green or transition financing programme to be launched in the near to mid-term period that aims to facilitate SMEs’ green transition to meet their decarbonisation plan. - Bernama
