27th May, 2011

PETALING JAYA: Deputy Finance Minister, Datuk Donald Lim Siang Chai has called on foreign banks to participate more in small and medium enterprise (SME) loans in view of the importance of SMEs to the economy.

He said the SME operators were concerned a reduction in local banks following the industry’s consolidation would affect loan applications.

“Market forces decide on the number of banks. Of course, we do get complaints from SMEs that if banks are getting fewer, it is not easy for them to get loans.

“This is an area of concern,” he said after opening Standard Financial Planner Sdn Bhd (SFP’s) new office at Menara PJ8 here yesterday.

At present, there are 14 foreign banks in Malaysia while the industry consolidation could bring their local counterparts to only four or six.

When asked to comment whether it was wise not to allow private equity firms from investing in Malaysian banks, Lim said there were some pros and cons of this move.

“As we (Malaysia) are moving towards a developed nation, we are looking at ensuring that our banking system is strong. We want to protect the people and ensure that businesses and individuals can still get loans from banks,” he said.

It has been widely speculated that Bank Negara Malaysia is disinclined to consider private equity firms as significant shareholders in domestic banks.

Meanwhile, Lim said there was a need to accelerate the financial literacy of the people.

“It is important to position prudent financial management as the key ingredient of raising living standards in Malaysia,” he said.

Lim added that financial management was crucial in these global uncertain times and the opening of SFP’s office was in line with the government’s 2020 Vision and the need for pre-retirement wealth creation and post retirement strategies.