05/07/2026 05:04 PM

Ending Support Letters Will Strengthen Entrepreneur Financing Ecosystem - Experts

KUALA LUMPUR, July 5 (Bernama) -- The move to end the practice of using support letters in the approval of entrepreneur financing is seen as a clear signal that the government intends to sever the link between political influence and cronyism in the Bumiputera entrepreneur financing ecosystem, analysts said.

Public policy expert Prof Dr Kartini Aboo Talib @ Khalid said the move was not merely an administrative reprimand but reflected efforts to reshape the culture of power within the bureaucracy and political parties.

She said Prime Minister Datuk Seri Anwar Ibrahim's statement also served as a form of public communication to demonstrate the government's commitment to addressing leakages and strengthening governance.

"In the current challenging economic climate, messages like this help build confidence that public funds are being managed more responsibly," she told Bernama today.

Kartini, the Malaysian Studies chairholder at Victoria University of Wellington, New Zealand, said the Prime Minister's directive would only have a meaningful impact if the changes were implemented comprehensively, encompassing work culture, systems and incentives within the relevant institutions.

"This is not merely a ban on the practice of support letters. It is a structural reform aimed at breaking the culture of political patronage and restoring integrity to the entrepreneur financing ecosystem," she said.

Economist Prof Barjoyai Bardai said that from an economic perspective, entrepreneur financing would generate the greatest returns for the country only if it was channelled to the most viable projects.

He said financing approvals influenced by support letters, cronyism or political connections could result in the misallocation of resources, with capital failing to reach entrepreneurs who genuinely have strong potential.

"As a result, financing failure rates could increase, business productivity could decline and returns on public funds would be lower," he said.

The Provost and Dean of the Institute of Graduate Studies at Malaysia University of Science and Technology also said that, in the long term, such practices could weaken economic competitiveness, as capable entrepreneurs without access to influential parties risk being left behind.

In this regard, he proposed that financing approvals be based on merit, the viability of the business model, management capability and financial track record to strengthen the country's entrepreneurship ecosystem.

"At a time when the country's fiscal position is becoming increasingly challenging, every ringgit of financing must generate optimum economic impact. Therefore, an independent, transparent and merit-based evaluation system is not merely a matter of good governance but also an economic necessity," he said.

Meanwhile, Malay Chamber of Commerce Malaysia (DPMM) president Norsyahrin Hamidon said financing entrepreneurs who are not genuinely committed could prevent the economic cycle from functioning effectively.

He said this occurred when the businesses or projects obtained were simply handed over entirely to certain parties, resulting in little or no value added to the economy.

"When entrepreneurs genuinely carry out the business or project themselves, the financing received is used to expand operations, hire workers and generate income.

"However, if the project is merely handed over entirely to certain parties, economic benefits such as job creation, skills development and the recirculation of spending within the market do not materialise fully," he said.

Yesterday, Anwar said the practice of using letters of support, political connections and cronyism in approving financing for entrepreneurs must be stopped because it is detrimental to government agencies and has caused many businesses to fail.

-- BERNAMA

 

 

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