18/05/2026

MONDAY | MAY 18, 2026

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Hitch to RM5 billion plan to help micro-entrepreneurs

‘Funding framework fails to reflect ground reality’ PETALING JAYA: The RM5 billion microfinancing push for small traders is being shaped by a banking framework that does not reflect the unpredictable nature of hawker incomes, raising questions over how “creditworthiness” is defined for micro-entrepreneurs, an expert said. The core issue lies in the continued use of conventional lending assessments that fail to capture how microbusinesses operate on the ground, said Institute of Business Advisors Malaysia Chapter president Prof Dr Fakhrul Anwar Zainol. He said many hawkers and micro-entrepreneurs work in unstable environments in which income fluctuates daily depending on weather conditions, trading location and raw material costs. “Financing for these vulnerable groups must be embedded within comprehensive entrepreneurship development programmes that include financing, training and coaching,” he added. He said the low uptake of formal assistance among hawkers points to a structural mismatch between how credit is assessed and how micro-businesses function. “The fundamental issue is that conventional financing models prioritise historical credit records over business potential. For smallholders, this approach is counterproductive. “A trader with no credit history but a sound business concept and strategic location may be far more creditworthy than traditional metrics suggest.” Fakhrul added that financing assessments should instead focus on real-world business indicators, including cash flow patterns, market demand, expansion potential and the ability to sustain repayments under fluctuating income conditions. He said traders must improve financial literacy, particularly in managing cash flow, while digital tools could help reduce reliance on physical trading locations. “Knowledge in financial management and digital marketing is crucial. “Understanding cash flow helps traders make informed borrowing decisions, while digital marketing strategies can mitigate location dependency and stabilise revenue streams.” – BY FAIZ RUZMAN only on approval targets. Borrowers should not be encouraged to take amounts beyond their realistic repayment ability.” Saravanan said the success of the RM5 billion facility should not be judged solely on disbursement figures, but also on whether businesses remain sustainable after receiving financing. He also warned that safeguards are needed to ensure funds are not diverted to personal expenses amid rising cost-of-living pressures. – BY FAIZ RUZMAN

Muhamad Sufi Mat Yusoff, 26, the issue was less about fear of loans and more about whether financing systems understood how micro-businesses actually begin. The Slim River-based founder of Cha Galau, which sells matcha and chocolate drinks, said many small traders started with temporary lots and carts long before they could afford permanent premises. He said renting a trading lot could cost close to RM1,000 a month, while his beverage cart alone costs about RM5,600. “The government should give more flexibility to these financing requirements.” The Finance Ministry said on Thursday the RM5 billion microfinancing allocation allows eligible micro-entrepreneurs to apply for loans of up to RM100,000. The ministry said applications could be made through schemes offered by Tekun Nasional, Bank Simpanan Nasional, Amanah Ikhtiar Malaysia, Mara, Agrobank and Bank Rakyat, with financing rates starting from as low as 3% annually.

Market, Rose Batik owner Rosnani Mohd Nor, 56, described a different reality faced by traders operating within the formal system. Unlike roadside hawkers, Rosnani said her business is registered, licensed and compliant with income declarations. But even then, she said financing remains a difficult option amid rising operating costs and weaker consumer spending. She estimated that setting up a proper business premises could cost up to RM100,000 after accounting for rental deposits, fittings and stock. Her rent alone stands at almost RM7,000 a month while sales this year have slowed, especially after Ramadan and Hari Raya. Rosnani added that financing could help businesses expand but many traders fear becoming trapped in repayment commitments if business conditions worsen. “It is not that I do not want to apply. It just feels like taking on more debt. Later, there is the commitment to pay every month. The economy is also not good now.” For young entrepreneur

o Many hawkers, petty traders unable to meet requirements to qualify for assistance

Ű BY FAIZ RUZMAN newsdesk@thesundaily.com

RM30,000 and RM40,000 upfront, excluding rental, utilities and stock purchases. He said traders at his site are waiting for City Hall approval as group applications require about 35 names, but the process is frequently delayed due to changes in trader numbers and repeated document submissions. After years of delays, Meor said he has taken responsibility for maintaining the site and had even offered to manage it properly if City Hall allows it. “I told the then Federal Territories minister in 2022 when he visited this lot, if the others do not want to follow the rules, let me take over this place and pay. “Whatever City Hall requires, I will try to do it properly. Every day we wash, scrub and clean the place.” At Kuala Lumpur Central

KUALA LUMPUR: Putrajaya has allocated RM5 billion to help more than 400,000 micro-entrepreneurs, but many hawkers and small traders say they remain shut out by licensing hurdles, poor credit histories and financing conditions that they claim are “almost like banks”. The concerns surfaced after Communications Minister Datuk Fahmi Fadzil said on Wednesday the Cabinet has taken note of a Khazanah Research Institute finding showing only about 5% of hawkers have received assistance from formal financing institutions. While the government is expanding access to microfinancing through agencies such as Tekun Nasional, Majlis Amanah Rakyat (Mara) and Bank Simpanan Nasional, traders said many micro-businesses are unable to meet the requirements needed to qualify for aid. For some, the obstacle is the lack of licences and permanent business premises. Others pointed to poor credit scores, unresolved debts and fears of taking on new financial commitments in an uncertain economy. In Jalan Dungun in Damansara Heights, Che’ Mok Gerai Station operator Meor Hasrulniza Hashim, 52, said many roadside traders were effectively filtered out before they could even prove their businesses were viable. He said some traders were denied opportunities because of old credit card debts while others struggled with Kuala Lumpur City Hall licensing issues and financing requirements that increasingly mirror commercial banking conditions. “Usually, the first thing they ask is whether we have a licence. If there is no licence, that becomes a problem. “For Tekun Nasional, this year it is almost like dealing with banks. They said only those with premises can apply,” the grilling and catering operator said. Meor added that moving into a shoplot simply to qualify for financing could cost between

Meor (left) said moving into a shoplot simply to qualify for financing could cost between RM30,000 and RM40,000 upfront, excluding rental, utilities and stock purchases. – NIK FAIZ RUZMAN/THESUN

Financing must include safeguards to protect against debt PETALING JAYA: The RM5 billion microfinancing facility for small traders must be accompanied by stronger borrower safeguards to prevent micro-entrepreneurs from falling into debt distress after receiving assistance, said the Federation of Malaysian Consumers Associations (Fomca). biggest concern is that some small traders and hawkers may accept financing out of urgency without fully understanding the long-term repayment obligations. “Many micro-entrepreneurs “Some traders may assume government-linked financing means ‘low risk’ or ‘easy repayment’, when in reality, they still carry legal and financial responsibilities.

Saravanan said schemes must be designed to reflect the realities of micro-traders, including flexible repayment arrangements, reasonable moratorium periods during difficult periods and lower financing costs for essential sectors such as food and small retail outlets. He also cautioned against financing providers encouraging borrowers to take amounts beyond their repayment capacity. “Financing providers should conduct proper affordability assessments instead of focusing

“Without proper explanation, misunderstandings over repayment schedules or hidden charges could create disputes and financial hardship,” he added. He stressed that microfinancing should serve as an option to strengthen businesses, not become an extra burden when sales slow or input costs rise.

operate with limited financial literacy and highly irregular daily income, making them vulnerable to repayment stress.” Saravanan said repayment schedules, interest or profit rates, late payment penalties and restructuring options must be explained before any financing is approved.

Its CEO Saravanan Thambirajah said the issue is not only about widening access to financing, but also ensuring hawkers and micro-entrepreneurs understand the financial obligations. “From Fomca’s perspective, the