SME Bank is urging SMEs to re-evaluate business strategies to remain competitive in the current economic climate, in light of the monetary policy normalisation by Bank Negara Malaysia (BNM) to 3.00%. BNM’s move was partly attributed to resilient domestic demand where the country’s gross domestic product (GDP) expanded above its historical trend, at 5.6% YoY in 1Q 2023.

SME Bank Group President/Chief Executive Officer, Datuk Wira (Dr.) Aria Putera Ismail commented, “As overnight policy rate (OPR)  decisions are meant to keep inflation in check while the economy grows, a higher OPR should encourage savings, reduce excessive risk-taking and speculative investments. The normalisation of the OPR to 3.00% has lifted the monetary stimulus intended to address the COVID-19 crisis.”

“Under the SME segment, strong expansion was observed in the application for financing (1Q 2023: 21.1% YoY vs 4Q 2022: -0.1% YoY), which signals that SMEs’ demand for financing is still healthy. Given that the present monetary policy stance is slightly accommodative and supportive of the economy, SMEs that face challenges arising from higher financing costs should review their business strategies to improve efficiency and productivity. This may include managing operational costs, exploring new revenue streams, diversifying their customer base or employing new pricing strategies. ,” he added.

Lynette Lee, SME Bank’s Chief Economist commented, “On the 1Q 2023 GDP performance, all sectors recorded positive growth, underpinned by firm domestic demand. While activities in the manufacturing and services sectors had surpassed the average 2019 pre-pandemic levels, 5 out of 17 sub-services sectors are still lagging, namely food and beverage, real estate, and wholesale trade. The recovery momentum for tourism-related industry is expected to continue given the ongoing shift in consumption from goods to services. Although economic growth in 2023 will still be driven by resilient domestic demand, SMEs need to be vigilant and agile as we expect some moderation in the growth trajectory moving forward amid rising external headwinds, waning pent-up demand and high base effect from last year.”

SME Bank together with our subsidiary, Centre for Entrepreneur Development and Research Sdn. Bhd. (CEDAR) is at the disposal to provide end-to-end business advisory and financial support to help SMEs navigate changes in the current economic climate.

For more information on SME Bank’s programmes,  contact our Customer Service Centre at 03-26037700 or