SME Credit Bureau Malaysia

Malaysian SME’s today have become significant contributors to the gross domestic product of Malaysia. Over the past few years, the SME sector has seen a considerable rate of growth, and currently contributes up to 32% of the total GDP. It has also been noted that 19% of Malaysia’s total exports were made by local SME’s. However, due to the lack of a verifiable track record and official documentation, many SME’s lack avenues to funds that would help them take their business a step further.

The SME Credit Bureau was launched on the 16th of April 2009. It is a joint venture between Dun & Bradstreet Malaysia and the Credit Guarantee Corp (CGC), a subsidiary of Bank Negara Malaysia. The SME Credit Bureau was created to act as a key contact point for financiers and other entities, to receive information that can be use to evaluate SME’s prior to providing them with financing or credit.

In his address to the press, SME Credit Bureau CEO Mr. Alex Lim stated that loan approval rates tend to be higher when an avenue is created for SMEs to document their credit information.

“Right now, information is mostly obtained via public domains such as the internet and newspapers. Now with the bureau, we have a single source of cooperation and data collection verification”.

Since its official launch, the SME Credit Bureau provides two main types of reports on SME’s. Firstly, a basic business information report, detailing information related to the company’s registry and its founders. The second is a credit rating report that provides a detailed account of the risks involved in providing credit to the entity in question. The methodology utilized in creating this report was created by Dun & Bradstreet and has been utilized for over 20 years. In addition to detailing credit risk, the credit rating report is of particular use to financial institutions and credit providers, due to the inclusion of the SME’s payment behavior rated against its peers in the industry. With this information, a financier will have a gauge of when a SME will be able to make payment upon the issuance of credit, and its probability of default.

For a business entity to have access to these reports, the company will have to register with the bureau and provide its trade data. The purpose of this practice is to ensure that information on SME’s are both protected and free from abuse. Currently, the SME Credit Bureau holds a membership of 22,000 members and in an effort to promote good payment behavior, more SME’s have been requested to join. Given that most SMEs have clients who in turn are SME’s themselves, having access to this information will be of great value to them.