CGC Paves the Way for SMEs to Adopt Good Credit Culture

KUALA LUMPUR, June 23, 2014: Credit Guarantee Corporation Malaysia Berhad’s rebate mechanism introduced as part of its initiatives to assist its customers with cost of borrowing and to create awareness on the importance of credit history amongst SMEs has received favourable response from their customers.

Introduced in January 2014 to assist SMEs lower their financing cost, the rebate mechanism has seen a total of 250 customers benefiting from the incentive, some as high as 38% of their guarantee fees payable. CGC’s President and Chief Executive Officer Datuk Wan Azhar Wan Ahmad said it was encouraging to note that to date all eligible customers who had a good repayment track record on their accounts with CGC have benefited from the rebates offered on their guarantee fees.

The CGC rebate is a mechanism whereby a reduction of a certain percentage on guarantee fee is offered to its customers. To fulfil this purpose, CGC has allocated RM1.7 million that is expected to benefit about 1,800 of its valued customers this year.

“It is encouraging to see SMEs adopting a healthy credit culture. By doing this, we hope to inculcate among them, the awareness and good practice of paying up promptly. On the part of the SMEs, it indicates that they are disciplined and there is a conscious effort being made to improve on their credit track record and bankability.”

“We are happy to announce that to date, we have received favourable response from our customers and other stakeholders, and we will continue to provide this incentive to all of our customers who are eligible for the rebates,” he said at CGC’s inaugural Customer Appreciation Luncheon for Preferred Customers held at Lanai Kijang, Bank Negara Malaysia.

Datuk Wan Azhar said the rebate mechanism was applicable under its four main schemes namely Direct Access Guarantee Scheme (DAGS)/DAGS-i, Enhancer/Enhancer-i, Enhancer Bumi / Enhancer Bumi-i and Enhancer Direct/Enhancer Excel.

This was a proactive measure undertaken under CGC’s 2014 business agenda, in light of the recent overall escalation in the cost of doing business for the SMEs.

“For the year 2014, the Corporation’s business plan has been formulated to achieve a few strategic objectives, namely to perform a developmental role in a financially sustainable manner and to enhance the access to financing for start-ups. We have also undertaken the responsibility to continue managing Government-funded schemes, support the national Bumiputera development agenda and to offer financing at a reasonable cost. Aside from this, we will enhance our operational efficiency and our relationship with FIs,” he said.

He said with the steady economic growth and encouraging development in the SME sector, CGC will seize opportunities to further expand its SME outreach agenda, and fostering its affiliation with FIs was essential to ensure the SME sector’s constraints and concerns were attended to, accordingly.

“We have to continue to enhance the SME outreach to enable viable SMEs in all segments gain access to financing from the FIs,” he said, adding the move was to strengthen its position as a strategic partner in SME financing.

Datuk Wan Azhar said in recent years, it had successfully forged strategic partnerships with a number of banks on the Portfolio Guarantee (PG) and Wholesale Guarantee (WG) schemes to facilitate greater financing options and quicker access to the required funds for the SMEs. More of such partnerships will be explored with other participating financial institutions going forward.

In total, CGC targets to provide RM2.7 billion of financing to about 5,600 SMEs in 2014.

Datuk Wan Azhar added that CGC was also actively working with its subsidiary, the Credit Bureau Malaysia, to help SMEs build a creditable credit history and track record to further enhance their credibility and bankability, to enable them to negotiate with credit grantors on their own merit and secure the required amount of financing and at reasonable cost.

“In pursuing these priorities, CGC will continue to establish successful collaborations with domestic authorities and government agencies to further facilitate its outreach agenda” he said.

The Customer Appreciation Luncheon was attended by the Deputy Governor of Bank Negara Malaysia, Dato’ Muhammad bin Ibrahim, CGC’s Chairman Dato’ Agil Natt, the board of directors of CGC, key representatives from the local and foreign financial institutions, the various Trade Chambers of Commerce representatives and their members.

The selected customers and SMEs had earlier attended an entrepreneur’s clinic, organised by CGC. The session saw an exchange of ideas and dialogue on financing that are applicable for the development of the SME sector in the country.

About CGC

Credit Guarantee Corporation Malaysia Berhad (CGC) was established on July 5, 1972. Current shareholders are Bank Negara Malaysia (major shareholder) and commercial banks. The core business focus of CGC is to assist SMEs, especially those without or with inadequate collateral and track record to obtain credit facilities from financial institutions by providing guarantee cover on such facilities. Since 1972, CGC has guaranteed loans worth RM52 billion, empowering thousands of SMEs to accomplish their vision of owning and managing their business.

CGC, known as the ‘credit firm for the small man’ in its early years, focused on helping small enterprises in the agricultural, commercial and industrial sectors. As the Malaysian economy expanded over the years, the demand for CGC’s guarantee services also grew in tandem. The range of products and services were also expanded to cater to larger credit facilities required by medium-sized SMEs. CGC’s support for SMEs is not only confined to the provision of loan guarantees and financing facilities, but also credit information and credit rating services through its subsidiary Credit Bureau Malaysia. Through the Bureau, CGC assists SMEs to build a credit history and track record to enhance their credibility and bankability to secure financing on their own merit and at reasonable cost.

Other funds currently managed by CGC include the Green Technology Financing Scheme (GTFS) and the Bumiputera Entrepreneur Project Fund (TPUB-i) with a total allocation of RM3.5 billion and RM300 million respectively. CGC had managed a total of 42 guarantee schemes including 16 government-funded schemes.

To date, 15 Islamic banks, 17 commercial banks and seven (7) development financial institutions (DFIs) are participating in CGC’s guarantee schemes, providing customers with a wide network of more than 2000 branches nationwide to avail financing.

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