ASIA AND THE WHOLE WORLD FACED WITH A SLOWDOWN IN THE GLOBAL ECONOMY
An Asian Development Bank (ADB) expert said that the Asian region and the whole world is faced with a slowdown in the global economy, thus, a new growth model is needed in which small to medium enterprises’ (SMEs) productivity will play a very important role.
SMEs make up an average of 96% of all registered firms and employ 62% of the labor force of developing Asia, however they contribute only 42% of economic output, said ADB senior adviser for sustainable development Noritaka Akamatsu, during the launch of the "Asia SME Finance Monitor."
The report shows how countries are working toward creating efficient financing infrastructure to support SMEs development, which leads to higher productivity of SMEs. Which in effect enables them to contribute greater to the country’s GDP (gross domestic product)," Akamatsu explained.
The report stated that in the Philippines, SMEs account for 99.7% of total registered business with the Security and Exchange Commission (SEC). But only 3 firms classified as SMEs are listed among the 263 listed firms on the stock exchange.
Limited access to bank credit is a persistent problem in Asia and Pacific and lending to SMEs has declined over the course of the global financial crises of 2008 and 2014; a period wherein they received only 18.7% of total bank loans, the report stated.
Several countries have made progress tackling this. Papua New Guinea and the Solomon Islands have made it easier for SMEs to borrow using movable assets as collateral while Kazakhstan and Mongolia have encouraged loan refinancing schemes.
The Philippines, along with Indonesia, have introduced mandatory bank lending quotas to SMEs, the report stated. (READ: BSP approves revisions on MSMEs reports from banks)
Non-bank finance industry
The ADB advocates a holistic approach to increase SME's access to financing, focusing primarily on improving access to bank loans but also looking at other less traditional ways.
In developing Asia, the financial sector is dominated by banks so our support and the countries support naturally focuses first on access to bank credit but at the same time many countries are exploring other avenues of financing, Akamatsu shared.
These include equity based financing through crowd funding and SME capital markets and leasing programs for capital equipment SMEs need such as factories and machines, he explained.
Its important that governments in the region, Akamatsu said, are aware of these new financing methods and explore them in an effort to provide comprehensive support.
SMEs make up an average of 96% of all registered firms and employ 62% of the labor force of developing Asia, however they contribute only 42% of economic output, said ADB senior adviser for sustainable development Noritaka Akamatsu, during the launch of the "Asia SME Finance Monitor."
The report shows how countries are working toward creating efficient financing infrastructure to support SMEs development, which leads to higher productivity of SMEs. Which in effect enables them to contribute greater to the country’s GDP (gross domestic product)," Akamatsu explained.
The report stated that in the Philippines, SMEs account for 99.7% of total registered business with the Security and Exchange Commission (SEC). But only 3 firms classified as SMEs are listed among the 263 listed firms on the stock exchange.
Limited access to bank credit is a persistent problem in Asia and Pacific and lending to SMEs has declined over the course of the global financial crises of 2008 and 2014; a period wherein they received only 18.7% of total bank loans, the report stated.
Several countries have made progress tackling this. Papua New Guinea and the Solomon Islands have made it easier for SMEs to borrow using movable assets as collateral while Kazakhstan and Mongolia have encouraged loan refinancing schemes.
The Philippines, along with Indonesia, have introduced mandatory bank lending quotas to SMEs, the report stated. (READ: BSP approves revisions on MSMEs reports from banks)
Non-bank finance industry
The ADB advocates a holistic approach to increase SME's access to financing, focusing primarily on improving access to bank loans but also looking at other less traditional ways.
In developing Asia, the financial sector is dominated by banks so our support and the countries support naturally focuses first on access to bank credit but at the same time many countries are exploring other avenues of financing, Akamatsu shared.
These include equity based financing through crowd funding and SME capital markets and leasing programs for capital equipment SMEs need such as factories and machines, he explained.
Its important that governments in the region, Akamatsu said, are aware of these new financing methods and explore them in an effort to provide comprehensive support.