A new microcredit program in Malaysia

A commentator for the Malaysian website Sun2Surf introduces us to a new microcredit scheme. The new lending is a joint effort between the countries government and a University.

Commentator Himanshu Bhatt first tells the story of a poor single mother who may benefit from the program.

IN the course of my many field trips, I once found a destitute washerwoman living in a wooden shack in George Town while struggling to support her family on a meagre income of RM300 a month. At 42, the woman was gritty enough to try and surmount her problems, managing to make other paltry earnings by cleaning toilets and doing household chores for people.

I still remember how deeply, when I spoke to her, she expressed a yearning to be self-reliant with a job or business that could alleviate her painful situation, for the sake of her children.

People like this washerwoman now have an opportunity to work towards a more dignified life with the help of a microcredit aid scheme recently initiated in Penang. Dubbed the "People’s equality bridging project", the scheme was announced last month as a joint effort between the Penang Development Corporation (PDC) and Universiti Sains Malaysia.

Backed by a revolving fund, the scheme, which involves the issuance of very small loans, is for those at the bottom rungs of the income pyramid. These include people like single mothers and the disabled who rely on welfare aid, as well as petty traders scraping on an income of less than RM400 a month each for their families.
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In Penang, the state government and PDC have each allocated RM1.5 million for the fund for a period of three years. The maximum loan allowed by a single applicant is RM5,000. The loans are scheduled to be distributed from Oct 1.
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But it should be noted that the microcredit scheme is only meant to kick-start the improvement of the poor. Financial critics have warned of the danger of societies becoming over-dependent on such aid from the authorities. Another factor to be addressed is the importance of a monitoring mechanism to ensure that money that is given out is genuinely used for the purposes stated by the borrowers and their families.

At the heart of the matter, however, the microcredit scheme is still regarded as a practical and proven instrument for socio-economic growth. It provides a family with a springboard to have sustainable sources of household incomes, leading to fulfilment of basic needs like improvements in food and nutrition, and better quality housing.

For the hundreds of impoverished people, like the struggling washerwoman, it may be the most opportune avenue provided by the state that they can now resort to, in order to stand on their own feet, with the dignity they have long craved.