Kuala Lumpur, 21 June – In conjunction with its 40th anniversary, the Credit Guarantee Corporation Malaysia Berhad (CGC) launched its book entitled ‘Catalysing SME Growth.’ The book was officially launched by Y.Bhg Dato’ Muhammad bin Ibrahim, the Deputy Governor of Bank Negara Malaysia.
The book ‘Catalysing SME Growth’ is aimed at creating a better understanding of its role amongst its stakeholders in particular the SMEs. It documents CGC’s role in promoting the growth and development of small and medium enterprises (SMEs) through its guarantee schemes over the last 40 years.
CGC initiated the documentation of its 40 years journey to share with all its stakeholders the compelling story of the first fully dedicated SME-support institution in the country that had shaped the SME sector landscape of Malaysia to a significant extent.
“CGC was established against the backdrop of Malaysian economy that was heavily reliant on volatile primary commodities such as rubber and tin. It was during a period of great disparities in income distribution amongst the populace notwithstanding the problems of poverty and unemployment,” said CGC’s Chairman Dato’ Md Agil Bin Mohd Natt.
“A new development strategy was unveiled under the Second Malaysia Plan (1971-1975) aimed at alleviating the problems of poverty, unemployment and economic disparities. It was within this economic environment with the country poised for economic restructuring that CGC was established,” added Dato’ Md Agil.
Incorporated on 5th July 1972 with an authorised capital of RM20 million and paid-up capital of RM2.5 million, CGC’s mandated role was clearly defined to assist marginal but potentially viable SMEs in obtaining credit facilities from the financial institutions.
In its formative years, CGC as a developmental financial institution played a socio-economic role in supporting the country’s economic development agenda. It complemented the banks in financing the SMEs in the agricultural, commercial and industrial sectors with small loans ranging from RM5,000 to RM75,000. It approved close to RM12 million of loans in its first year of operation as opposed to an average of RM3.0 billion currently.
“CGC, a Bank Negara Malaysia initiative, was inspired by similar bodies that were set up by the World Bank and central banks around the world which had been successful in helping to improve the accessibility to financing by businesses,” said Dato’ Md Agil.
In the introductory message of the book, the Governor of Bank Negara Malaysia, Tan Sri Dr. Zeti said that the Credit Guarantee Corporation is a key institutional arrangement in facilitating greater access to financing by the SMEs. By providing guarantee to loans obtained by SMEs, CGC addresses one of the main constraints of SMEs, that is, the lack of collateral.
Tan Sri Dr. Zeti also noted that CGC has functioned as a key enabler in supporting the growth of SME financing. By being the link between financial institutions and SMEs, CGC has developed a deep and broad knowledge on the business challenges and the needs of SMEs and is well-positioned to leverage on its existing linkages with the SME community.””
“BNM, as the largest shareholder of CGC, is committed to ensuring that CGC continues to play an effective role in assisting viable SMEs with inadequate collateral and track record through enhancing SMEs’ access to financing,” said Tan Sri Dr. Zeti.
CGC had managed 42 guarantee schemes tailored to suit the specific needs of the SMEs in every sector of the economy and consistently been looking out for innovative ways to improve SMEs outreach especially in the financing of smaller businesses. To date, CGC has guaranteed a total of RM51.4 billion of loans benefitting more than 420,000 SMEs.
“CGC is more commercially oriented these days which BNM believes is crucial for CGC to maintain its financial sustainability while performing its developmental role effectively,” said CGC’s Managing Director, Datuk Wan Azhar Wan Ahmad.
The book launch which was held at Sasana Kijang, Bank Negara Malaysia was attended by about 400 guests who consist of BNM officials, CEOs of financial institutions, CGC’s past and present Board of Directors and senior management, representatives of the Associations of banks in Malaysia, financial institutions, Government agencies, the business and trade chambers.
Credit Guarantee Corporation Malaysia Berhad (CGC) was established on July 5, 1972. Current shareholders are Bank Negara Malaysia (major shareholder) and all commercial banks. CGC has 16 branches nationwide which were established since year 2000. 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. To date, CGC has been instrumental in the establishment of more than 420,000 SMEs, guaranteeing close to RM51.4 billion.
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