THE National Recovery Council (NRC) recommends that banking institutions should consider offering moratoriums to small and medium enterprises (SMEs), especially those that are still struggling to recover post-Covid-19. 

Its chairman Muhyiddin Yassin said there have been three NRC meetings to discuss SMEs, which, among other things, have asked for financial assistance since some of them are still unable to recover and business is declining. 

This is coupled with the increase of the overnight policy rate (OPR) three times this year, which is seen to not only affect the momentum of the country’s economic recovery but also the performance of SMEs, which now contribute to 90% of the country’s economic activity, added the former prime minister. 

“In the last (NRC) meeting, they (SMEs) requested that the banking institutions review (whether) it is possible to hold another special moratorium. (I think) even with the moratorium, they (banks) will not lose much. For a little while, they (SMEs) want to recover, but cannot recover anymore (now). 

“(If SMEs) want to borrow money, the bank (will) say first that they have not paid (the loan). Now, the OPR has gone up, (if) they want to borrow again, (the bank will) ask for a track record of the past year or two, (but) after a year or two, they will show a loss. If you want to base it on normal conditions, (SMEs) will not recover,” he told reporters after the Jualan Prihatin Rakyat in Bukit Pasir in Pagoh today. 

Muhyiddin, who is also Pagoh MP, hopes the government is aware of the impact on the SME sector, which is seen as one of the main contributors to the national economy. 

“It (OPR increase) will have an impact. Even now, we (NRC) are paying attention. Among other things, the issue of people’s poverty and the issue of the recovery of the economic sector, especially SMEs.

“If they (SMEs) are not active in producing marketable products, which can be competitive, it means that their recovery will be affected. (Recovery) is slowing with the burden of costs, the increase in the inflation rate, and so on, and this will be a big problem,” he said. 

Muhyiddin also hopes the government will look into the OPR increase while finding a way to help reduce the burden on the people in the coming presentation of Budget 2023.

“If there are no decisive steps in the presentation of the budget that will be presented (by Prime Minister Ismail Sabri Yaakob), if it is not addressed and not seen seriously to deal with such problems, the budget will not have an impact and will not help speed up recovery or help ease the burden of the people,” he said. 

Two days ago, Bank Negara Malaysia’s Monetary Policy Committee announced the highest and lowest corridor rates for the OPR, increasing them to 2.75% and 2.25%, respectively, which is the third increase this year after hikes in May and July.

It also invites public concern about the possibility of having to finance a loan at a higher rate. – Bernama, September 10, 2022.