Turkey and Malaysia Prompts Support to SMEs, Providing Sanctuary to Crisis

Istanbul, Turkey | June 05, 2009 by D-8 Secretariat

SMEs in Turkey and Malaysia are receiving support to cope the burden resulted from the destructive waves of the financial crisis

The Development Bank of Turkey (TKB) plans to provide some $1 billion in loans for Turkish small and medium-sized enterprises (SMEs) that are feeling the worst of the global financial crisis, as quoted by Turkish leading english newspaper, TodaysZaman.

Speaking on Monday this week, TKB General Manager Abdullah Çelik, who is in Ashkabad to attend the annual meeting of the Islamic Development Bank (IDB), said they will extend the loans before the end of this year. Çelik said they will sign a contract with IDB officials on June 3 for a $40 million loan for Turkish SMEs.

TKB head Çelik said Turkish SMEs will be able to receive nonrecourse loans for a three-year period and will then start to repay their debts over the following seven years. “In total this loan contract covers 10 years, and such long terms will ease the burden on some SMEs to a great extent,” he noted, adding that firms have long been seeking sanctuary from the destructive waves of the crisis.

The IDB will also extend some $100 million in loans with one-year terms to Turkish exporters through Turkish Eximbank. Eximbank finalized their talks, which started two months ago over loan support from the IDB, and reached an agreement after resolving all the remaining details on Sunday during the meeting in Ashkabad.

Çelik said they had exerted efforts to secure as much loan support from the IDB as they could and that the new loan will be used exclusively by small businesses. “We have already been receiving loan requests from firms, and they will be able to receive the money soon after we sign the contract,” he added.

Çelik asserted that the European Investment Bank (EIB), in addition to the IDB, will also extend another 100 million euros for Turkish SMEs. The loan contract with the EIB could be signed on June 8, and this package will also cover long-term loans with low interest rates available to companies from all sectors. Giving further details, the TKB head said they have also recently secured some $180 million in loans solely for renewable energy investment in Turkey, $150 million of which came from the World Bank while the remaining $30 million was supplied by the Clean Technology Fund (CTF). TKB officials had worked unceasingly to provide further support for Turkish SMEs, Çelik said, and they had never sought to make a profit, being more concerned with the state of small companies.

Malaysia to Speed Up Bank-Lending Process to SMEs

The other D-8 memberstates, Malaysia, has also responded to the appeal of SMEs by forming a unit that will rate the country’s small businesses to help speed up the bank lending process. State-owned Credit Guarantee Corp (CGC) has set up SME Credit Bureau (M) Sdn Bhd, which will compile the credit ratings of small and medium enterprises (SMEs).

SME Credit Bureau chairman Datuk Wan Azhar Wan Ahmad said ratings will be based on local data for all SMEs in the country. “We provide financial institutions and other lenders with easy access to timely, accurate and reliable credit information on SMEs, thus help speed up the evaluation process,” he said after the launch of SME Credit Bureau’s corporate identity in Kuala Lumpur last week by Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz.

However, the credit ratings are not recommendations for banks to give or deny loans to SMEs.

“We do not make value judgements but we offer value-adding propositions. Our objective is to help them (SMEs) build a track record and financial standing,” he said.

It will also help SMEs better understand their financial status and weaknesses.

“SMEs can use their positive credit history as `collateral’ to access loans at better rates and seek more competitive terms from different lending institutions,” he said.

In the future, the bureau hopes to have information from other credit providers like suppliers and utility companies.

In conjunction with the launch, CGC signed a memorandum of understanding with Dun & Bradstreet Malaysia Sdn Bhd and ABM-MCD Holdings Sdn Bhd as joint-venture partners of SME Credit Bureau.

Earlier, Zeti in her speech encouraged SMEs to keep information that will enhance their access to credit.

“Consistent with the importance of the SME segment in the total loan portfolio, financial institutions should regularly interface with SME associations for financial services rendered to be more customised and meet specific requirements of the sector,” she said.

D-8 Economist, Esen Gonen, expressed her impression with the Turkish and Malaysian initiatives, and said that other D-8 memberstates can learn much these experiences, and work and focus more on the roles of SME in their respective economies. “With this kind of encouragement, I think it is very potential to our member countries’ private sector to be more involved actively in D-8 intra-trade, since we have been getting good progress on PTA, Visa Agreement, Costum Agreement, and other trade facilitation activities among fellow member countries,” said Gonen.

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