KUCHING: Central Bank Malaysia’s (BNM) rate cut may bring relief, but Sarawak’s businesses won’t feel the impact unless banks and policymakers follow through, said Datuk Jonathan Chai Voon Tok.
The Sarawak Business Federation (SBF) Secretary-General said the decision to reduce the Overnight Policy Rate (OPR) to 2.75 per cent signals a pre-emptive move to support domestic activity in the face of softening global demand and ongoing geopolitical uncertainty.
“It suggests that BNM is prioritising growth stability, especially as signs of economic moderation have emerged.
“The cut also reflects confidence that inflationary pressures are under control, giving room for a more accommodative monetary stance to spur consumption and investment,” he told Sarawak Tribune.
A lower OPR, he said, reduces borrowing costs and could offer timely support to Sarawak’s small and medium enterprises (SMEs) and exporters, particularly those grappling with cash flow, rising costs, and fulfilment challenges.
“This is especially timely given the ongoing challenges faced by small businesses in managing cash flow, upgrading technology, or fulfilling overseas orders amid a weaker global economy.
“For Sarawak-based exporters dealing with logistics and infrastructure costs, cheaper credit can be a welcome relief and help improve competitiveness,” he added.
However, Chai stressed that the rate cut may not translate into real relief unless commercial banks pass on the lower rates effectively.
“The effectiveness of the rate cut ultimately depends on how quickly and to what extent commercial banks pass on the lower cost of borrowing to businesses.
“If lending criteria remain tight or loan approvals are slow, the intended stimulus may not materialise meaningfully,” he explained.
Chai noted that many SMEs in semi-urban and rural parts of Sarawak still face structural barriers that limit their access to credit.
“Many SMEs still face issues such as lack of collateral, limited credit history, or digital readiness – challenges that rate cuts alone cannot solve,” he said.
To maximise the impact, he urged banks to adjust their lending strategies and called for more targeted government support.
“Faster processing, more flexible collateral requirements, and targeted financing schemes could accelerate recovery momentum.
“Policymakers, on the other hand, should complement monetary easing with structural support, such as export grants, digitisation incentives, and upskilling initiatives.
“In Sarawak, rural-focused outreach and capacity-building for small businesses can ensure that the benefits of monetary policy are not confined to urban centres,” Chai concluded.
