Speech by Y.Bhg. Datoí Zamani Abdul Ghani Chairman, Credit Guarantee Corporation Malaysia Berhad at the 14th Top SMI Supporter Award Presentation Ceremony 21 May 2009   Bismillahirrahmanirrahim   Fellow members of the Board of Directors of CGC   Distinguished Guests   Members of the media   Ladies and Gentlemen,   Assalamualaikum w.b.t. and a very good morning.     On behalf of the Board of Directors and Management of Credit Guarantee Corporation Malaysia Berhad (CGC), I would like to extend our warmest welcome to all of you to the Top SMI Supporter Awards Presentation ceremony this morning. The event is organised in conjunction with the Corporationís 36th AGM which was successfully concluded earlier this morning. As you are aware, the Top SMI Supporter Award ceremony is one of the most important events in our corporate calendar. On this day, we officially recognise and express our appreciation to our financial partners in SME development for their active participation in the Corporationís credit guarantee schemes. This is the 14th edition in its series. I am pleased to note that SME outreach is gaining strength each year with the support of participating financial institutions who value the significance of the award in the context of SME development in the country. We are honoured to have accorded these awards to 19 financial institutions since its introduction in 1996.   Ladies and gentlemen,   2. This year, 2009, the Corporation will be turning 37 years old. We believe CGC has achieved significant success as a credit enhancer to SMEs in the country. It has enabled the operation of more than 390,000 SMEs by guaranteeing loans close to RM42 billion to date. This is surely a feat for an institution that started in a small way in 1972, supporting enterprises in the agricultural, commercial and industrial sectors, with individual loans ranging from RM5,000 to RM75,000. We have progressed in tandem with the development of the nation that increasingly became more industrialised and diversified. Our target groups expanded to include medium-sized businesses, and guaranteeing loans from as low as RM10,000 to as high as RM10 million.   3. We acknowledge that we could not have accomplished the above without the active participation and continued support of the financial partners in our guarantee schemes. The confidence and commitment of these financial partners has enabled the Corporation to stamp its mark in SME development, through the provision of easier access and more affordable financing for business growth and expansion. In 2008, for example, the Corporation extended loan guarantees of more than RM3 billion, benefiting close to 10,400 SMEs. About 74% of the loans guaranteed was contributed by the seven award recipients today. In view of their significant contributions and to further encourage them to continue participating actively in our schemes, we shall be according them the Top SMI Supporter and Best Financial Partner awards. These awards not only recognise the contributions of the participating financial institutions to loans growth but also to asset quality. These two contributions, i.e. participation and asset quality, are critical for both parties, especially to the Corporation as it gears itself to be more commercially-driven and achieve financial sustainability.   Ladies and gentlemen,   4. The forecast for the year ahead is that of one that will be full of challenges. It is, therefore, imperative for the government-private sector collaboration to be accelerated in order to address some of the pertinent concerns of the SMEs. This is especially so in the pace of loan approvals, in ensuring a more efficient and speedier credit flows to SMEs without compromising prudential requirements. To resolve this, the Corporation and its financial partners have to iron out whatever stumbling blocks there are in the processing pipeline and explore innovative ways through which funds could be disbursed more effectively and speedily to deserving customers. In this respect, the Corporation has recently established a strategic alliance with one of its financial partners to provide guarantee on a portfolio basis. A general improvement of administrative efficiency is noted with the use of an automated mechanism. Borrowers no longer have to go through the routine administrative procedures to get their applications processed as the guarantee cover provided is automatic upon approval by the financial institution. This model provides the most effective delivery channel and, moving forward, we are optimistic of entering into such partnerships with more financial institutions in the near future.   5. The Corporation has also adopted pragmatic approaches in the implementation of its business strategies, which are all aimed at being more customer-centric and providing greater value to the borrowers. The Corporation has been forthcoming in terms of ensuring credit lines remained open to the SMEs by participating actively in the Bank Negara Malaysia-initiated funds, the most recent is the SME Assistance Guarantee Scheme. As at mid-May, a total of 1,544 accounts valued at RM312 million has been approved. These initiatives come at a critical time when the business community struggles to survive the current economic slowdown.   Ladies and gentlemen,   6. Looking back into 2008, it is certainly noteworthy that the financial institutions have contributed significantly to SME financing, accounting for 42.3% of total business financing as at end 2008. To the Corporation, their contributions were substantial and we are indeed grateful for having received their fullest support and cooperation. As a matter of fact, we have seen increased participation from both commercial banks and development financial institutions in our credit guarantee schemes in recent years. Several foreign-owned banks too have been quite robust in their support of the SMEs.   7. In view of this positive development, we have concluded that there need to be a level playing field for all financial institutions to compete for the Corporationís Top SMI Supporter Award. Thus, we would like to announce that beginning 2009, we will no longer have the Top Foreign-Owned Bank and Development Financial Institutions as separate award categories. We are confident that this move would allow the institutions to compete on level terms and indirectly promote healthy competition amongst them. Most importantly, for us, it is a step forward to ensure the financial institutions are motivated to participate in our guarantee schemes and contribute to SME development.   8. We are pleased to announce that, for this edition of the Top SMI Supporter Awards, a total of seven financial institutions shall be accorded the honour for having fulfilled the criteria set by the Corporation. These criteria include number and value of loans guaranteed, loans growth and the number and value of loans to Bumiputera borrowers. Besides, we also have the Best Financial Partner Award category that recognises the financial institution that has contributed the most towards the asset quality in CGC.   Friends and Colleagues,   9. On behalf of the Corporation, I would like to take this opportunity to congratulate all award recipients. It is our hope that these awards will foster a higher level of competition and inspire other financial institutions to play a bigger role in SME development and be a catalyst for economic growth by participating actively in the Corporationís credit guarantee schemes. Deserving and viable SMEs need our support to sustain their businesses during this critical period. The Government too requires our commitment and cooperation to help it stimulate the economy, all for the benefit of our citizens.   Thank you and have a pleasant day. 09-Jun-2009 12:44:16 PM