Malaysia
Malaysia is a Southeast Asian country occupying the Malaysian Peninsula and part of the island of Borneo. The country has a mixed culture of Malay, Chinese, Indian and European. The population is estimated at 29.7 million (2013) with 68.4% are aged 15-64. The adult literacy rate for 15 years old and above is 93.1% (2010). The unemployment rate is 2.7% (2015).
Economy
Malaysia is a highly open, upper-middle income economy. Malaysia was one of 13 countries identified by the Commission on Growth and Development in its 2008 Growth Report to have recorded average growth of more than 7 percent per year for 25 years or more. Economic growth was inclusive, as Malaysia also succeeded in nearly eradicating poverty: the share of households living below the national poverty line (USD 8.50 per day in 2012) fell from over 50 percent in the 1960s to less than 1 percent currently. In 2014, the largest contributor to GDP is by services industry (56.2%).
Banking System
As of December 2014, total assets held by Bank Negara Malaysia amounted to MYR 440.6 billion. The financial institutions are comprised banking system and non-banking financial intermediaries.
The banking system consists of Bank Negara Malaysia, Banking Institutions (Commercial Banks, Finance Companies, Merchant Banks, and Islamic Banks), and others (Discount Houses and Representatives offices of Foreign Banks). Meanwhile, the non-banking financial intermediaries include provident and pension funds, insurance companies, development finance institutions, savings institutions (National Savings Banks and Co-operative Societies), and others (Unit Trusts, Pilgrims Fund Board, Housing Credit Institutions, Cagamas Berhad, Credit Guarantee Corporation, Leasing Companies, Factoring Companies, Venture Capital Companies).
Trend of lending in Malaysia
More banks, depending on their portfolios and risk appetites, are competing and shifting focus towards higher yielding loans or those that can give them better profitability like the small and medium enterprise (SME), credit card and personal loan segments (Dhesi, D 2015).
SME Development
In 2011, Malaysian SMEs continued to expand at a relatively stronger pace of 6.8 % and remained resilient to external environment challenges. In 2012, in line with the official GDP projection of 4.5 – 5.0% in 2012, the Malaysian SMEs were expected to record a steady growth pace of 6.5 – 7.0%. The future progress of Malaysia seems to depend greatly on the development of SMEs and they are vital for accomplishing vision 2020, to be fully developed and become an industrialised nation by the year 2020. In the year 2020, Malaysia will develop to become an industrialised nation by capitalising on the country’s strengths and by overcoming weaknesses through the SMEs.
Over the last few decades, the Malaysian economy has undoubtedly passed through a considerable transformation from agricultural-based to industry-based. Now the economy is shifting from industry-based to a knowledge-based economy to achieve the vision 2020 and to become a developed economy. Thus, Government of Malaysia has also recognised the importance of SMEs for the economy and has implemented various policies, action plans and programs to assist them in these difficult circumstances.