MP SPEAKS | Bank Negara’s decision yesterday to maintain the overnight policy rate (OPR) at 2.75 percent hinges on rising global commodity prices and supply chain disruptions linked to the West Asia conflict that could negatively impact economic growth and inflation.

Even though the current domestic economic conditions remain resilient, this negative impact on economic growth and inflation is already evident on 1.1 million micro, small, and medium enterprises (MSMEs) in Malaysia.

The Federation of Malaysian Manufacturing (FMM) states that Malaysia’s manufacturing sector is not just facing a crisis but a deepening crisis as the ongoing conflict in West Asia cripples supply chains, inflates costs, and now threatens jobs.

The SME Association of Malaysia also confirmed that MSMEs are grappling with drastic cost increases and declining demand.

FMM even said that 68 percent of manufacturing companies are facing cash flow pressure, of which 13 percent have stated that it is severe enough to affect their ability to pay suppliers.

Meanwhile, 28 percent of the manufacturing companies are eyeing job cuts, with five percent having already implemented retrenchments.

These associations have sought help from the government, but the most immediate and effective short-term solution is to provide RM5 billion in interest-free loans of RM50,000 to 100,000 MSMEs and a one-year interest rate moratorium for MSMEs’ existing loans.

Banks should fund loan proposal

Meanwhile, maintaining the OPR has helped banks retain and maintain their profit margins. This is reflected by the increase in banking stocks yesterday.

The banking sector’s profits in 2025 surged by RM6.5 billion or 13.5 percent from RM48.3 billion in 2024 to RM 54.8 billion in 2025.

Such high profits should be shared with the borrowers, such as via the above-mentioned measures proposed by the MSMEs.

If the banking sector can afford it, why let only banks profit at the expense of MSMEs suffering from the economic crisis?

LIM GUAN ENG is Bagan MP.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.