Many hawkers and micro-entrepreneurs work in unstable environments in which income fluctuates daily depending on weather conditions, trading location and raw material costs.
PETALING JAYA: The RM5 billion microfinancing push for small traders is being shaped by a banking framework that does not reflect the unpredictable nature of hawker incomes, raising questions over how “creditworthiness” is defined for micro-entrepreneurs, an expert said.
The core issue lies in the continued use of conventional lending assessments that fail to capture how microbusinesses operate on the ground, said Institute of Business Advisors Malaysia Chapter president Prof Dr Fakhrul Anwar Zainol.
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He said many hawkers and micro-entrepreneurs work in unstable environments in which income fluctuates daily depending on weather conditions, trading location and raw material costs.
“Financing for these vulnerable groups must be embedded within comprehensive entrepreneurship development programmes that include financing, training and coaching,” he added.
He said the low uptake of formal assistance among hawkers points to a structural mismatch between how credit is assessed and how micro-businesses function.
“The fundamental issue is that conventional financing models prioritise historical credit records over business potential. For smallholders, this approach is counterproductive.
“A trader with no credit history but a sound business concept and strategic location may be far more creditworthy than traditional metrics suggest.”
Fakhrul added that financing assessments should instead focus on real-world business indicators, including cash flow patterns, market demand, expansion potential and the ability to sustain repayments under fluctuating income conditions.
He said traders must improve financial literacy, particularly in managing cash flow, while digital tools could help reduce reliance on physical trading locations.
“Knowledge in financial management and digital marketing is crucial. “Understanding cash flow helps traders make informed borrowing decisions, while digital marketing strategies can mitigate location dependency and stabilise revenue streams.”
