Petaling Jaya: The Association of Small and Medium Enterprises (Samenta) is reassured that the overnight policy rate (OPR) will remain unchanged, allowing economic conditions to stabilize in favor of its members.
The reaction comes after Bank Negara (BNM) announced today that it maintained its operating profit margin at 3.00% at its Monetary Policy Committee meeting.
The central bank’s decision was hailed by members as allowing the economic environment to remain stable and unpredictable, said Chin Chi Son, secretary general of the Malaysian Association of Small and Medium Enterprises.
“This may help businesses keep their borrowing costs down, make consumer spending more predictable, and plan cash flow. We will be able to operate,” he told SunBiz.
He added that any increase would further burden small businesses and exacerbate “already problematic cash flow problems.”
The association conducted a survey earlier this week and found that more than 50% of small businesses are in trouble and more than 50% are having difficulty managing cash flow or lacking cash.
“Most SMEs are facing tough economic conditions in Malaysia, where consumer spending has been eroding, especially since the Hari Raya Adelfitri government, especially in the retail, trade and services sectors.
“It is very important for the government to focus immediately on how to help improve the economic situation, especially in the country. will certainly be severely affected,” he said.
Sammenta State Secretary Yoh Seng Hooy said the decision will benefit small and medium enterprises as it will lower their financial costs.
He said the focus should be on stimulating domestic demand. He pointed out that political stability and ease of doing business also improve the business environment.
On the other hand, he believes the retail industry is being affected by tightening and disposable income issues.
“The threat of targeted subsidies is scaring M40 and leading to restrained spending. Non-essential items such as white goods and furniture may be affected,” he said.
He added that inflation was not the main “bogeyman” at the moment and consumer spending needed to pick up to boost the economy. He cited the Vistage-MIER CEO Confidence Index report, which found that projected sales growth in the first quarter of 2023 is down significantly from 151 compared to 141 in the previous quarter, calling this a “concerning what should be done,” he said.
As for whether BNM will boost operating margins, he said the association expects decision makers to target the right policy variables as a panacea to stimulate domestic demand.
“Local traders with imports have been shaken by the weaker ringgit and weaker domestic demand. ” he said.
Meanwhile, Dinh Hong Singh, National Chairman of the Malaysian Small and Medium Enterprise Association, said members were happy with the decision to keep operating margins on track as SMEs can maintain “business as usual”.
He said companies no longer have to fight cost-cutting strategies to maintain profit margins, such as product price hikes that affect consumers.
But he expects the central bank to raise operating margins, perhaps at the end of the year, but expects a delay of a year or two until the economy stabilizes.
