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Maintaining OPR Enables SMEs to Evaluate Financial Health

KUALA LUMPUR : 20 January 2023

SME Bank, a developmental financial institution under the Ministry of Entrepreneur Development and Cooperatives, welcomes the decision from Bank Negara Malaysia to maintain the Overnight Policy Rate (OPR) at 2.75 percent to allow for the impact of past cumulative OPR adjustments to filter through the economy.

SME Bank Group President/Chief Executive Officer, Datuk Wira (Dr.) Aria Putera Ismail commented, "This decision will assist entrepreneurs particularly SMEs to evaluate their financial health and build cash reserve, especially in preparing for a potential economic slowdown this year, arising mainly from external fronts.  In that event, SME Bank is committed to fulfilling its mandate in serving SMEs on their financial needs."

Datuk Wira Aria added, "The potential removal of blanket fuel subsidy is seen as a key upside risk for inflation pressure depending on its implementation timeline and roll-out mechanism. Hence, it is crucial for SMEs to be proactive in forecasting, budgeting, and being agile to changing market conditions to ensure a healthy cash flow during a higher rate environment."

SME Bank Chief Economist, Lynette Lee opined, "BNM is expected to pause OPR at 2.75% in anticipation that headline and core inflation will continue to ease in 2023. Currently, core inflation stood at 4.1% in December 2022 while headline inflation has declined to 3.8% from its high of 4.7% in August. Knock-on effects from China reopening, global commodity price developments and changes in domestic subsidy policies may put pressure on inflation. As such, any future OPR hikes will be data-driven."

SME Bank will continue to support the SMEs through its various financing and development programs that are specifically tailored to meet the working capital requirement, purchase of assets as well as sustainability-linked financing such as High Tech and Green Facility (HTG), Low Carbon Transition Facility (LCTF), Young Entrepreneur Fund 2.0 (YEF 2.0) and IBS Promotion Fund 2.0 (IBS 2.0). In addition, SME Bank also provides equity investment through SME Recapitalisation Fund to further support the recovery of SMEs.

Find out more about SME Bank’s programs and initiatives www.smebank.com.mySME Bank Facebook or call SME Bank’s Contact Centre at 603-26037700.