LETTERS: The rakyat is elated that finally, the government and opposition have mustered enough trust and goodwill to work together for the rakyat's benefit via the Memorandum of Understanding on Transformation and Political Stability.
One of the efforts include providing an interest-free exemption for bank loan moratoriums for the bottom 50 per cent of Malaysians, for the last three months of 2021.
As we have seen the ravages caused by the Covid-19 pandemic, not just to the lives of the rakyat but also economically, we need to be cautious with how assistance is provided to lift the rakyat out of this crisis.
Although an interest-free exemption creates nice sound bites, those who are already enjoying the moratorium or repayment assistance have no worries about paying interest for the time being.
An interest-free exemption does not have any positive impact while the economy continues to be in a worrisome state.
Money from this exemption does not go to the customers as disposable income. It doesn't go to businesses to buy raw materials, to hire workers and boost employment and it doesn't create profit so they can then contribute to the government via taxes.
Instead, why not let banks play its role in rebuilding the nation's economy? It is their role to provide financing while protecting their stakeholders, which include depositors, shareholders and the government.
Now, it is more crucial than ever that they exercise that skill to help ailing small- and medium-sized enterprises (SMEs).
Having a policy for banks to provide financing to businesses to help them get back on their feet, particularly the micro and small business enterprises, would help create the multiplier effect that the nation needs now.
According to SME Corp Malaysia, 97.2 per cent of business establishments last year consist of SMEs. Out of 1.15 million SMEs, 78.4 per cent or 903,174 firms are in the micro-SME category, followed by 20 per cent or 229,876 firms in the small-SME category.
Imagine if the government can work with banks to provide a guarantee to finance these SMEs, particularly the micro SMEs, which are mostly unbanked, the nation's economic engine will restart in no time.
These businesses will start selling their goods and hiring staff to support their business operations. More people will soon be getting their jobs back and be able to put food on the table.
As opposed to giving an interest waiver which doesn't contribute any positive effect during this critical juncture, every ringgit that goes to the SMEs via this financing route will go a long way.
W. L
Petaling Jaya
The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times