BANKS can do more to help micro, small and medium enterprises (MSMEs) reeling from rising operating costs coupled with disruptions to supply chains due to the Middle East conflict, said a former finance minister.
Lim Guan Eng stated that, based on the profit margins earned from the banking industry, they have the capacity to offer more credit deals and financing to MSMEs to weather the challenges arising from the conflict.
It was pointed out that it may take up to six months to restore normalcy to the global supply chain following the escalation of the conflict amid the Iranian war.
According to Lim, the banking industry recorded a 13.5% or RM 6.5 billion hike in profit before tax to RM 54.8 billion in 2025.
The lenders can help offset the expected decline in Manufacturing Purchasing Managers’ Index (PMI) this year by offering interest-free loans for the first RM50,000 and a one-year interest rate moratorium on existing loans for MSMEs.
The S&P Global Malaysia Manufacturing PMI for business conditions deteriorated from 51.6 in April to 49.9 in May, marking a return to growth contraction (where 50.0 is the no-change mark), after the previous two consecutive months of improvement in the health of the Malaysian manufacturing sector, Lim said in a statement.
"Many sides expect both economic conditions and the Manufacturers PMI to either further decline or linger in the growth contraction territory caused by the continuing Middle East conflict that spiked the cost of both fuel and raw materials."
To counter the negative effects of a possible slowdown, the government must employ both fiscal and monetary measures to stimulate the 1.1 million MSMEs in the country to reduce costs but generate higher business volume, said Lim.
One urgent financial measure is to require the banking industry to impose a one-year interest rate moratorium on existing loans for MSMEs and offer an interest-free loan for the first RM 50,000.
"The banking industry can afford to do so. Which industry or business sector can record a profit before tax growth of 13.5% in 2025? Banking industry profits before tax rose from RM 48.3 billion in 2024 to RM 54.8 billion in 2025."
The time has come for the banking industry to step away from its blind pursuit of the bottom line and instead step up and do its Corporate Social Responsibility.
This is a time of need for their loan customers, underscored Lim.
He urged Prime Minister Datuk Seri Anwar Ibrahim, who is also the Finance Minister, to encourage lenders to offer more financial aid to the MSMEs in the private sector. - June 4, 2026.
