With the expanded role of private credit bureaus comes the responsibility to protect privacy and ensure the accuracy and timeliness of credit information. The Government is in the final process of developing the regulatory framework for the protection of credit information and other personal data. In addition to according greater protection to consumers, the Government is formulating the new credit reporting law and regulatory framework to achieve an appropriate balance between consumers’ right to privacy and financiers’ right to access credit information. To preserve this balance, SMEs will need to provide consent to financial institutions, for them to obtain the ratings from the SME Credit Bureau. As described earlier, the sharing of credit information will benefit the majority of SMEs, primarily through expanded access to credit, shorter processing times and lower borrowing costs. Therefore, while participation is optional, it would be in the best interests of businesses to participate in this effort and be more forthcoming in providing the information that in the final analysis will be beneficial not just to individual SMEs, but for the development of the SME sector as a whole. From Bank Negara’s perspective, the information compiled by private credit bureaus would provide us with more information on the financial, household and corporate sectors for financial surveillance and policy calibration purposes. The more comprehensive and granular information will enable Bank Negara to detect emerging risks or vulnerabilities within the respective sectors at an earlier stage, and enable us to implement pre-emptive policy measures with greater speed and precision.

This represents a significant shift in CGC’s strategic orientation and is validated by studies of the experiences in other countries that have found such advisory support to be critical in enhancing the viability of SMEs. A number of recent initiatives under CGC’s transformation plan deserve mention. These include widening the scope of guarantees to also cover financing by Islamic banks and development financial institutions, introducing a new guarantee scheme for start-up SMEs, participating in Malaysia’s first synthetic securitisation of SME loans, introducing an equity financing arm, and introducing risk-based models for determining guarantee fees. The establishment of the SME Credit Bureau is indeed a watershed event in CGC’s evolution. As a source of credible and reliable credit information that serves the needs of both the SMEs and the potential financiers, it is a natural progression of CGC's continuous effort to enhance access to financing by SMEs. The establishment of a SME Credit Bureau by CGC and D&B would no doubt complement the other initiatives of the Government and the financial sector. The significance of the SME Credit Bureau lies in dispelling the general misconception that SMEs pose higher financial risk to financiers, lack financial management disciplines and would be unable to provide relevant financial information to their financiers to facilitate assessment and monitoring of loans extended to them. Yet, SMEs are often skeptical of the benefits of credit bureaus, believing them to hurt rather than assist SMEs in obtaining access to financing. The reality is very different.